It has been calculated that bio-blend is cheaper than fossil fuel, emphasized in the expert discussion “Which fuel will be cheaper and how will we compensate for the price increase?”
Currently, fossil fuels are cheaper, but renewable energy resources are less used, and subsidies are currently available for both types of fuel. In the future, fossil fuels will become more expensive and renewable energy resources will be used more and more, and price increase compensation mechanisms will have to be applied more widely, emphasizes Armands Gūtmanis, Chairman of the Board of the Latvian Climate Neutrality Cluster.
“The information report on Latvia’s greenhouse gas emissions, their forecasts and the fulfillment of climate commitments shows that Latvia will not be able to achieve the 17% target either in the scenario with existing measures or in the scenario with additional measures. Non-fulfillment of annual targets could begin as early as 2024 and it may be necessary to use flexibility options – to buy emission quotas from other countries, therefore decisive action to reduce transport emissions is important,” says Gūtmanis.
The wider use of renewable resources must be cheaper than fossil fuels, emphasizes Baiba Miltoviča, a representative of the Latvian Consumer Protection Association, noting that Latvia will have more than 600 million euros available from the Social Climate Fund to support its residents.
“The government has two major tools to limit fuel prices – first, to promote the wider use of renewable resources (including resources produced in Latvia), and second – targeted use of money from the European Social Climate Fund to compensate for price increases and make the price lower than for fossil resources. Overall, this will allow the green transition to proceed fairly and help consumers make more sustainable choices,” says a representative of the Latvian Consumer Protection Association.
Justs Dimants, the leading researcher of the Latvian Climate Neutrality Cluster, emphasizes that, “when thinking about the various climate and renewable energy goals that must be gradually achieved by 2030 and the associated costs, it is necessary to look for the most advantageous scenarios. Some scenarios require aggressive subsidies (for fuel production, infrastructure development, car purchase), and accordingly large expenditures in these areas. Other scenarios do not require subsidies, as they allow the use of already established infrastructure and car fleet. One quite realistic way to achieve the 16% GHG emission intensity reduction target included in the Transport Energy Bill would be to use R33 fuel*, E10 gasoline, renewable electricity and replace the currently used natural gas with biomethane.”
To ensure a fair and inclusive transition process, the European Union has established a Social Climate Fund, which will start operating in 2026. Andris Kužnieks, Deputy Head of the European Commission Representation in Latvia: “The work initiated by the European Union and the Member States on the implementation of the Green Deal will continue with vigor in the coming years, as we clearly see that retreating in the face of climate change and geopolitical challenges is not possible and is not feasible. It is worth remembering that one of the central elements of the Green Deal is emissions trading, or attaching a price to carbon. The new quota trading system, which will start operating in 2027, will provide significant support for achieving climate goals, directing investments to decarbonization and further reducing emissions. It is essential to use the opportunities of the newly established Social Climate Fund, which will be formed from both contributions from the Member States and other attracted finances, to ensure support for vulnerable groups in society and achieve fairer conditions in the green transition.”
Aija Timofejeva, Director of the Energy Sustainability Department of the Ministry of Climate and Energy (KEM), emphasizes that transport energy should be understood not only as classic fuel, but as any type of energy that powers transport, noting that from 2030 it has been mandatory for all EU member states to have a certain amount of renewable energy in their fuel.
“Latvia currently ranks first with the lowest share of renewable energy in fuel. According to the current plan, Latvia is not going to wait until 2030, but the system could be gradually introduced from 2027, so that quota payments can start to be reduced even then,” says a representative of KEM, indicating that for every percent that is mixed into diesel to make it greener, it will be possible to avoid paying quota.
“It’s a discussion about which is cheaper: to mix in another fuel or to pay a quota fee. What we have calculated is that bio-blending is cheaper than fossil fuel,” says the Director of the Department of Energy Sustainability.
*R33 is a fuel that contains 26% renewable diesel HVO and 7% ‘regular’ first generation biodiesel. This fuel has been tested and positively evaluated in Germany and can be used in all diesel cars.