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European Commission approves biofuels initiative in Italy

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Hydrocarbon Engineering,

Under EU State aid rules, the European Commission has approved an Italian support scheme for the production and distribution of advanced biofuels, including advanced biomethane. The measure will help reach EU energy and climate change goals, while limiting distortions of competition.

The Italian scheme supports the production and distribution of advanced biofuels and advanced biomethane (also known as second and third-generation biofuels). The scheme has an indicative budget of €4.7 billion and will run from 2018 until 2022.

Advanced biofuels and biomethane are sustainable and environmentally friendly biofuels. They are produced from feedstocks that do not require agricultural land for their production, such as waste, agricultural residues, and algae. Therefore, they pose a significantly lower risk of indirect CO2 emissions caused by the use of additional land to grow crops for biofuels.

However, they have much higher production costs than fossil fuels. Under the scheme, producers of advanced biomethane and biofuels receive a premium, allowing them to compensate for the higher costs. The level of the premium will be updated each year in relation to the production costs.

Commissioner Margrethe Vestager, in charge of competition policy, said: "This is yet another step towards greater use of renewable energy in Europe […]. The scheme will encourage the production and consumption of advanced biofuels in Italy, while limiting distortions of competition."

The scheme will be financed by transport fuel retailers who are obliged by law to include a certain percentage of advanced biofuels and biomethane in their fuel blends.

On this basis, the Commission concluded that the measure will help Italy reach its 2020 target for the use of renewable energy in transport, fight climate change and replace fossil fuels in the transport sector, while at the same time limiting distortions of competition, in line with the Commission's 2014 Guidelines on State aid for environmental protection and energy.

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