The Real Decreto-ley 6/2022 de 29 de Marzo, containing measures “of emergency” linked to the national plan in response to the war in Ukraine, was published on March 30, 2022 in the Official Journal. It contains the FQD target obligation, awaited for more than a decade.
The Chapter 5 of the Decree (Articles 11 to 14) rules the obligation of GHG reduction, compulsory from the date of publication (March 30, 2022).
Article 11.1 enforces the obligation for all fuels distributors to reduce the GHG intensity of their sales by 6% compared to the baseline of 94.1 gCO2eq/MJ, corresponding to the transposition of the directive 2009/30/EC art 7a, or the Fuel Quality Directive (FQD). This obligation applies to the sale of the following fuels:
- Fuels used to propel road vehicles, non-road mobile machinery, including inland waterway vessels and railways, agricultural and forestry tractors and pleasure boats only when they are not at sea.
- Electricity intended for road vehicles, if it can be shown that the electricity supplied for use in said vehicles has been adequately measured and verified.
- Biofuels for aerial use.
Only the category 1 represents a real challenge to meet the 6% GHG reduction.
Article 11.2 enforces two additional indicative targets of 2% each, which can be met by obligated parties through various means. We don’t detail their content, as it is irrelevant, being a straight transposition of the FQD.
We confirmed with Ministry sources that the use of the UERs, which we believe is mentioned in the new Real Decreto as a mean of compliance under “reducciones en la quema en antorcha y venteo en los emplazamientos”, was regulated in Spain by the Annex part 1, 3, e of the Real Decreto 235/2018, de 27 de Abril. Their use is not capped or restrained, so we believe the new 6% GHG reduction will be met through the use of biofuels under the current blending obligation (which will cover, according to our model, 5.59% GHG savings in 2022) and a small reliance on UERs.
We also confirmed with Ministry sources that the penalty in case of non-compliance was enforced from 2023 through the modification of the Ley 34/1998, article 110. The update of this law does not express the penalty in numerical terms, but rather classify the non-compliance as a “serious infringement”, which is subject to fines up to EUR 6 million. Sources confirmed that this classification will constitute a dissuasive tool preventing from non-compliance, so creating a UERs market opportunity in Spain from 2023, depending on the level of the blending mandate. If it is increased above 10% e.c, physical blending of biofuels might be enough to cover it.