EU Biofuel Legislation & CSR: Finland

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EU Biofuel Legislation & CSR: Finland

University of Eastern Finland Law School Faculty of Law Environmental Policy and Law 30 April 2021 Writer: Elina A. Huculak (309030) Supervisors: Dr. Seita Romppanen, Dr. Moritz Wüstenberg

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Abstract

UNIVERSITY OF EASTERN FINLAND Faculty

Social Sciences and Business Studies

Unit

Law School Author

Elina Annikki Huculak Name of the Thesis

EU Biofuel Legislation & CSR: Finland

Major

MICL Environmental and Climate Change Law

Description Master’s thesis

Date 30/04/2021

Pages 73

Abstract

With increasing climate change impacts, the implementation of sustainable biofuels is becoming more prominent within the energy and transportation sector in the European Union. Furthermore, with the concepts of Corporate Social Responsibility and Sustainable Development becoming key points of international social justice, scientific, legal, and economic discourse, the European’s integration of these concepts into its norms, policies and legal sphere has made the EU a leader in international environmental politics. Through the legislation of biofuels via the EU’s 2030 Climate and Energy Framework, the Renewable Energy Directives I & 11, and the Fuel Quality Directive the EU has begun paving the way to mitigate climate change impacts. Notwithstanding these guidelines, many EU Member States are still unable to reach transportation-associated emissions reductions nor are they able to achieve their renewable energy integration shares. However, one Member State, Finland, through the creation of their national government’s CSR committee as well as general cultural embracement of CSR, is on track to succeed their national renewable energy and emissions targets. Finland’s application of CSR can further legal research by serving as a reference point in how Member States can ensure that the EU can attain climate neutrality. This in turn can support the EU in legislative further policies to assist underperforming Member States regarding national ambition and delivery gaps in reaching climate targets.

Key words

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Biofuels, Renewable Energy Directive, Fuel Quality Directive, Finland, European Union, CSR, Sustainable Development, Transportation, 2030 Climate and Energy Policy Framework

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4.4 How Businesses can employ Corporate Social Responsibility to remediate industry-produced damages ... 57 4.5 Challenges Businesses Face in their Role as Political Actors / Governance Dimensions of Corporate Social Responsibility ... 58 5 FINLAND’S HISTORY WITH CORPORATE SOCIAL RESPONSIBILITY ... 60 5.1 The Interlinkages between Finnish Manufacturers, Biofuels, and Corporate Social Responsibility 60 5.2 Finnish Public Sentiment regarding biofuel ... 65 5.3 Finnish Corporate Social Responsibility within the Oil and Gas industries; Domestic versus Abroad ... 66 6 LOOKING FORWARD TO 2030 ... 69 6.1 Answering the Thesis Research Questions ... 69 6.2 Looking Ahead; The role of Digital Transformation on CSR, SMEs, and Sustainability’s Future .. 71

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ABBREVIATIONS

BTL Biomass to Liquid (Fuels)

CEN European Committee for Standardization

CSR Corporate Social Responsibility

DOE (US) Department of Energy

EBTP European Biofuels Technology Platform

ECtHR European Court of Human Rights

EEA European Environment Agency

EU European Union

FLA Fair Labor Association

GHG Greenhouse Gases

HSY Helsinki Region Environmental Services Authority IPCC Intergovernmental Panel on Climate Change ISO International Organization for Standardization

IT Information Technology

MEA Multilateral Environmental Agreement

MNCs Multinational Corporations

NECP National Energy and Climate Plan

NEEAP National Energy Efficiency Action Plans

NREAP National Renewable Energy Action Plans

OECD Organization for Economic Cooperation and Development OPEC Organization of the Petroleum Exporting Countries

PHH Pollution Heaven Hypothesis

RED Renewable Energy Directive

RES Renewable Energy Sources

RES-T (EU) Renewable Energy Sources specifically within the Transport Sector

SA Social Accountability

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SD Sustainable Development

SMES Small and or Medium Sized Enterprises

UN United Nations

UNCLOS United Nations Convention on the Law of the Sea

UNFCCC United Nations Framework Convention on Climate Change

USA United States of America

WBCSD World Business Council for Sustainable Development

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FIGURES AND TABLES

Figure 1: Climate Actions Influence on Industry Emissions Available at:

[European Commission. (2020). Climate Actions Influence on Emissions. Retrieved from https://www.europarl.europa.eu/unitedstates/en/eu-us-relations/the-eu-institutions]

Figure 2: 2018 Projections for 2020 EU RES Goals Available at:

[EAA. (2019). Share of renewable energy in gross final energy consumption in Europe.

Retrieved from https://www.eea.europa.eu/data-and-maps/indicators/renewable-gross- final-energy-consumption-4/assessment-4]

Figure 3: Global Greenhouse Gas Emissions by the Transportation Sector Available at:

[ Transport Geography, International Energy Association, IEA & IPCC (2014) Summary for Policymakers, Retrieved from, https://transportgeography.org/?page_id=15778]

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1 INTRODUCTION

1.1 Background and Importance

In a quaint Nordic city filled with colorful wooden houses, the average passerby wouldn’t expect Porvoo, Finland to be host to one of the European Union’s biofuel giants, Neste’s, biorefineries.

The city of Porvoo’s air quality would support that assumption. Neste has stated that they are committed to being carbon neutral by 2035¹. The commitment complements Finland’s ambitious carbon neutrality targets for 2035 as well as the European Union’s targets for 2050².

Furthermore, Neste plans on compensating their employees’ emissions via business flights through the company’s sustainable aviation fuel and industry partnerships³. Neste invests annually into its Porvoo and other plants’ resource efficiency, safety, sustainability, and

competitiveness. The company emphasizes safeguarding the local environment to the future for our children⁴. A massive legal-economic-environmental instrument in driving these initiatives is the phenomenon corporate social responsibility. Corporate social responsibility is the self- regulating practices and policies implemented by enterprises whose goal is to be socially

accountable to its stakeholders, legislation, and public. According to a survey on corporate social responsibility conducted by Neste, 87% of Finnish business decision-makers view sustainability as key to their company’s future⁵. According to Vice President of Sustainability at Neste, Ms.

Salla Ahonen, “many companies appear to consider sustainability a central part of their business.

Despite this, less than half (38%) of the respondents say that their company is currently engaged in sustainability-related cooperation. But concrete actions which improve sustainable business often require cooperation. We at Neste want to encourage companies to embrace a more sustainable future, in Finland as well as globally. What is great about the concept of

sustainability is that it is continuously developing… Companies should participate indifferent societal discussions⁶.” Compared to the rest of metropolitan cities across the European Union, just shy of an hour’s drive south of Porvoo, the Uusimaa⁷ area’s air quality is also considered

1 Neste, 2020.

2 Neste, 2020.

3 Neste, 2020.

4 Neste, 2020.

5 Neste, 2019.

6 Neste, 2019.

7 Uusimaa refers to the 26 municipalities of the south region of Finland.

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good or satisfactory per the Helsinki Region Environmental Services Authority (HSY)⁸. Nitrogen dioxide, ozone, and particles from traffic exhaust and street dusts undermines Helsinki’s air quality⁹. The European Environment Agency’s 2017 air quality situation indicator assessment, the main pollutants associated with road transport are nitrogen dioxide, articulate matter with a diameter of 10 μm or less (PM10) as well as particulate matter with a diameter of 2.5 μm or less (PM2.5)¹⁰. As Neste supported vis-à-vis corporate social responsibility, various ecological-legal- political solutions have been presented globally to address transportation related emissions and increasing European Union reliance on renewable energy alternatives.

“A developed country is not a place where the poor have cars, it’s where the rich ride public transportation¹¹,” a cheeky yet precise statement made by the Mayor of Bogota, Colombia, a Mr.

Enrique Peñalosa¹². During his time as mayor, Peñalosa has a legacy of promoting sustainable urbanism, a sentiment that is being mirrored across the pond in the European Union in their attempt to reduce transportation-related emissions. The sentiment brings to light many broad generalities; one can say that developed countries such as those found within the European Union have a reliable, extensive public transportation infrastructure which makes cars an unnecessary, frivolous, and taxable item. Implementation of high-quality public transportation largely leads to decreases in use of personal vehicles which in turn reduces traffic, greenhouse gases (GHG) emissions, noise pollution, amongst other environmental impacts. Despite the implementation of quality public transport, per the European Commission, transportation-related air pollution still makes up a quarter of Europe’s total GHG emissions¹³. The European

Environment Agency stated that the only time the European Union’s emissions have ever decreased from the 1990s was pre-COVID 19 in 2019; this was primarily attributed to the result of effective climate policies¹⁴. This would imply that more intense climate policies, such as the

8 City of Helsinki – Helsinki Safety, 2021.

9 City of Helsinki – Helsinki Safety, 2021.

10 EAA, 2019.

11 Kun, 2012.

12 Kun, 2012.

1313 European Commission – Energy, Climate Change, and Environment, 2014. It is relevant to note that this figure does include international aviation as well as fugitive emissions from fuels, indirect CO2 emissions, and waste management but excludes international maritime emissions.

14 EAA, 2020.

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Renewable Energy Directive I and II as well as the Fuel Quality Directive, would be successful in achieving the ambition 2030 climate and energy targets¹⁵. The European Union’s energy policy has its basis in Article 194 of the Lisbon Treaty¹⁶. Article 194 states that the Union’s energy policy is to “ensure the functioning of the energy market¹⁷, ensure security of energy supply in the Union, promote energy efficiency and energy saving and the development of new and renewable forms of energy, and [finally] promote the interconnection of energy networks”

While in theory these energy objectives are meant to set all-compassing policies which allow Member States to find ways to best ensure enacted energy policy, however in practice, the reality is more difficult. “From a policy perspective, it is clear that member sovereignty and shared governance present specific challenges to future EU policy (an issue certainly not limited to energy policy)¹⁸. Clarity in this regard is critical for coherent policy and proper messaging to energy business concerns¹⁹. Whether at the cabinet level or in the European parliament, progress will only be achieved if the global market understands the delineations of power, yet such clarity seems unlikely²⁰.” However, what is significant to note from the long-term perspective, is the lack of a gradual decline in transportation emissions compared to its peer sectors²¹.

From the plethora of environmental externalities associated with highway and surface

transportation it should come as no surprise. Environmental externality variables would include considerations of the relationships between transport and the environment, quantification of said relationships, and mitigation to alleviate transportation linked environmental externalities. The issue with the environmental externalities associated with specifically highway and surface transportation is the nature of them. Highway and surface transportation pollution is hard to trace to a direct source; even if you specify the specific model or vehicle, it poses the question, who is to blame for the pollution created? Is it the owner, the automobile manufacturer, or the oil producer? There are three main categories of environmental impact issues from transport

15 EAA, 2020.

16 Jordan, 2014.

17 OJ 26.10.2012 C326/1.

18 Jordan, 2014.

19 Jordan, 2014.

20 Jordan, 2014.

21 EAA, 2020.

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emissions: direct, indirect, and cumulative²². Direct impacts are defined as the traceable environmental degradation impacts produced by vehicles such as carbon monoxide or noise²³. Indirect environmental impacts range from secondary to tertiary transportation influences on the environment and are harder to clearly link to vehicles; this would include how poor air quality decreases community health²⁴. Cumulative impacts are the synergetic consequences of highway and surface transport activities and would include issues such as climate change²⁵. While direct impacts produce direct-source pollutants, indirect and cumulative typically produce indirect pollutants; indirect pollutants are difficult to address as they lack direct accountability to a specific actor and therefore all actors have the opportunity to dodge remediation responsibilities.

Determining mitigation strategies and implementing legislature for these traffic-related

pollutants is critical in moderating climate change impacts as well as safeguarding community and ecological health. In order to continue the current consumption rates of energy, it is detrimental for society to transition to renewables. Biomass fuels, or ethanol, are fuels derived from plant, algal, and or animal biomass; biofuels are becoming an increasingly attractive energy-source alternative as it serves as a transition from our heavy carbon-reliant society to one supported by long-term sustainable energy sources.

Biofuel technology has been around for centuries. Invented by Rudolph Diesel in 1890 an energy solution for farmers located in isolate, regions where traditional fossil fuels were not easily accessible²⁶. However, it would take decades of high oil prices and shortages, concerns of energy security, the growth of environmentalism, and advances in agricultural to make biofuels regain societal relevance by the 1980s²⁷. Arguably, biofuel is no longer the “hot topic” of renewable energy research and energy, but it is the crucial, necessary step to transitioning away from fossil fuels. In a perfect society we would all be driving electric vehicles and public transportation would be emissions-friendly and easily accessible to all. The reality is there are approximately 1.4 billion personal vehicles in existence on the road globally. Which poses the concern, what

22 Rodrique, Jean-Paul, 2020.

26 Pacific Biodiesel, 2019.

27 Pacific Biodiesel, 2019.

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can we do as policy and legal specialists to facilitate real, practical change regarding the legal sphere regarding transportation emissions regulation and climate change legislation while supporting the business industrial-societal evolution?

Where does Finland come into the discussion on biofuels in the transportation sector? Per the Finnish Ministry of Economic Affairs and Employment, “biofuels and bioliquids must fulfil the sustainability criteria set by the EU²⁸. The Act on Biofuels and Bioliquids (393/2013) lays down provisions on the sustainability criteria of the EU and the procedures to be used to verify

compliance with them²⁹”. On February 6^th, 2019, the Finnish Parliament approved a law which would progressively increase Finland’s biofuels target by 30% for 2030³⁰. What is globally significant regarding this biofuel target is that it would set a global precedent of reaching an advanced biofuel target of 10% to, again, 2030³¹. In Finland, fuel distributors are encouraged to increase sales of biofuels to reach the country’s 20% by 2020 quota. Host to biofuel giants such as ST1, Neste, UPM, and Kaidi it is arguable that this goal is feasible. Marko Janhunen, Director of Public Affairs for UPM, supports the sentiment. “We salute the decision by the Finnish

parliament and welcome the fact that many other countries, such as Sweden and Norway, are also walking the talk on climate change mitigation in the transport sector³². Transport decarbonization requires utilization of the whole toolbox - we need all financially and technologically feasible means from sustainable biofuels to electrification and engine efficiency improvements to be deployed³³.” The European Union defines corporate social responsibility as a concept which enterprises contribute to improving the social and environmental environments³⁴. Finland is one of two EU countries to have a national government corporate social responsibility committee; the other country is Spain. These committees are key in facilitating industry change to better

implement European Union biofuel legislation and ensure EU emissions objectives. Finland’s CSR committee is made up of important stakeholders such as various EU to national government

28 Ministry of Economic Affairs and Employment of Finland – Biofuels, 2021.

29 Ministry of Economic Affairs and Employment of Finland – Biofuels, 2021.

30 UPM Biofuels – Press Release, 2019.

34 COM (2001) 366 Final, p. 4 & 6.

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authorities, labor markets, civic organizations, to industry authorities. While Spain was the first European country to establish a CSR government committee, Finland’s CSR committee has had greater success in addressing emissions from vehicles. The Finnish CSR committee is granted their authority via the Government Decree 591/2008 enacted on September 4rth 2008 and amended March 3^rd 2016³⁵. The success of Finland’s CSR committee speaks for itself; a quick glance at the Real-time Air Quality Index Visual Map displays Finland’s air quality

predominantly in the “good” range, while Spain’s ranges are more within the “moderate³⁶”.

Rhetorical topoi of non-technical means of persuasion argues that “justice indeed is true and profitable, but that sham justice is not, and that consequentially the written law is not, because it does not fulfill the true purpose of law³⁷.” Debatably, written law is the final agreement of multiple stakeholders and represents their singular desires and only partially upholds true justice, thus making it sham justice. Laws are products of their environment; as time has passed and society has evolved, legislation serves as a time capsule encompassing our current majority norms and scientific knowledge. Unfortunately, the legal sphere’s greatest challenge with hard law is its reactive rather than proactive nature. Therefore, it is rational to posit that soft law is a form of law that is based on common moral and ethical understandings that are blanketed across the world that give the opportunity to countries who decisively disagree with it the opportunity to not have to follow it. However, since it is soft law, it can only be applied to a certain extent in the regulation of a country’s behavior. Corporate social responsibility is consequently a form of soft law. CSR has a complementary role to supplementing hard law gray areas as it establishes industry norms which later turn into legal and regulatory precedents.

A reader should be interested in the implementation of biofuels because they are a key steppingstone of the transition from an unsecure reliance on fossil fuels to cleaner, more

renewable, longer-term, reliable energy sources. To first identify the problem in the contexts of climate change impacts, decreases in CO2 emissions, and erratic access to fossil fuels whether it

35 Ministry of Economic Affairs and Employment of Finland – Committee on Corporate Social Responsibility, 2021.

36 The World Air Quality Index project, 2021.

37 Stanford Encyclopedia of Philosophy, 2010.

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be through fault of neighboring country or diminish resource quantities, would mean our primary actors, being the European Union (EU) have recognized that there is currently a clean, reliable energy problem for the European community. In order to combat climate change impacts and rising global temperatures, the European Union has enacted doctrine regarding the

implementation of alternative-renewable fuel sources as well as operative procedures to guide Member States. Key emissions and biofuel legislation includes the Renewable Energy Directive I, the Renewable Energy Directive II, as well as the original and amended Fuel Quality

Directive. The second step would be to establish an end goal which remediates beforementioned circumstance; following in the context of potential solutions ranging from meeting emissions reduction commitments established by multilateral agreements (MEAs) to increasing renewable energy resources by implementing biofuel subsidies at the national level, specifically within Finland. Ergo, one must understand the potential and practical legal and policy implementation- means implications.

1.2 Purpose and Research Question

The purpose of this thesis is to contribute to the legal research on biofuels in the transportation sector specifically within the Finnish energy and transportation market. “Clean fuel is being held back by three main barriers: the high cost of vehicles, a low level of consumer acceptance, and the lack of recharging and refueling stations³⁸. It is a vicious circle³⁹.” This is vitally important from a legal perspective as integrating biofuels into current traditional fossil fuel infrastructures and decreasing transportation-associated GHG emissions allows the EU to continue being a global leader in environmental policy as well as ensure the success in achieving the targets of the EU energy and climate framework. Furthermore, EU legislation is Finnish legislation. With Finland’s supplemental CSR government committee assisting small to medium enterprises to multinational corporations as well as giving a voice to their citizens, Finland is at a competitive advantage in achieving their emissions and renewable energy share targets of the Renewable Energy Directive I & II as well as the Fuel Quality Directive.

38 European Commission – Press Release, 2013.

39 European Commission – Press Release, 2013.

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The target of this master’s thesis is to gain a deeper understanding of how biofuel is regulated under EU climate and energy law especially within the scope of renewable energy sources that support the transportation sector. The legislation that I will analyze will include the EU Climate and Energy Package and more specifically the Renewable Energy Directive and the Fuel Quality Directive. The main independent contribution regarding the understanding of these pieces of EU legislation is to use Finland’s application of CSR as an example for other Member States to follow to achieve their emissions reductions and renewable energy shares integration. By evaluating how CSR has been key to Finland’s success in reaching their 2030 targets, Member States can learn to apply similar CSR applications to suit their country’s cultures of sustainability and economic growth. As such, these are my focus legislation as they specifically impact the biofuel industry, and these Directives are shaping the European Union approach to managing transportation biofuel emissions. With the rise in industry accountability and increased awareness of sustainability, the ideas of Corporate Social Responsibility have begun to be implemented by businesses globally. I will go into greater depth on the roles played by non-state actors involved in the biofuel industry specifically within the Finnish private sector, the impact of consumers influences, and the processes which the Finnish private sector take into

implementing EU transportation objectives.

The overarching aim of the thesis is to discuss how CSR faciliates stronger European Union legislation implementation by encouraging private-partnership collaboration. To achieve such an objective the following questions are also defined:

Q1 How are biofuels currently legislated under the EU 2030 climate and energy regulatory framework?

The first question will provide a comprehensive overview of the changes to previous energy and climate law being done by the 2030 Climate and Energy Policy Framework. I plan on discussing the Framework’s background, objectives, and touch on its main legal instruments. This will give a better understanding to the reader regarding the realities and limitations of the Energy Union.

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Q2 Is there any weaknesses with the current EU climate and energy framework?

There is a huge framework issue, and it is application and procedures. The EU climate and energy framework establishes targets but does not provide satisfactory guidance in equipping Member States to achieve their targets. Nor are many Member States on track to achieve their total renewable energy consumption shares. The second question focuses on better understanding how a soft law instrument such as corporate social responsibility in supporting the EU’s biofuel regulations with Member State corporations in the energy sector. The question is more introductory in nature as it lays out the legal frameworks regarding the strengths and weaknesses of the current EU climate and energy landscape.

Q3 Could the EU’s regulatory framework on biofuels be strengthened through CSR?

The third question goal is to create the foundation to how CSR is key to ensuring the EU’s 2030 renewable energy targets. The European biofuel laws which will be discussed will be Directive (EU) 2018/2001 on the promotion of the use of energy from renewable sources (RED) as well as the Fuel Quality Directive 98/70EC (FDQ). This is the main research question which the thesis will be addressing.

Q4 Why is Finland the ideal Member State CSR model and how has it made Finnish CSR actors and more importantly, producers view biofuels?

The final research question aims to make the argument that peer European Union Member States should refer to Finland’s example regarding energy consumption and production. In order to display that Finland’s CSR legal framework is optimum, I will discuss Finland’s culture of sustainability, influence of green technology, impact and sector clout of Finnish biofuel producers.

The final question is significant as it encompasses necessary social variables which are detrimental to Finland’s success in reaching renewable energy targets. The thesis will detail what Finnish biofuel producers have done to advance Finland’s reliance on renewable energy resources

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primarily in the transportation sector. The thesis will also discuss the private-public partnerships which has enabled Finland to set and ahcieve lofty emissions reducation goals.

1.3 Methodology and Thesis Structure

I plan on employing three different methodologies to adequately encompass the political-legal variances of this thesis topic. First, I plan on implementing the snowball sampling methodology for my master’s thesis. The snowball sampling method is a networking sampling method which is used to obtain a frame of content to work from⁴⁰. The researcher initially pulls keywords from their research question to conduct a preliminary search. From that opening search the researcher then discovers and evaluates papers which if then deemed as relevant, i.e. categorizing the author, the content, main ideas that then relate to your topic is noted for the author’s personal literary canon. From there the researcher use those sources from their reference lists as well as from other researchers or authors which have cited said noted papers to improve their own list of resources.

After research has been gathered, then the individual will have a list of relevant information to conduct their thesis research from. The key words I will be using to begin my research are as follows: Biofuels, Renewable Energy Direct, Fuel Quality Directive, sustainability, Finland, European Union. These sources will be the foundational premise of my thesis.

The large majority of legal research is following the direction being applied predominantly in the United States compared to the European Union; more or less is abandoning the link with the legal profession in favor of a more interdisciplinary approach⁴¹. I conducted a combination of an exploratory and evaluative legal research study for my thesis. Exploratory research being defined as the study of new paths in the field of legal research⁴². This method will further be used to determine and analyze the effect of CSR on strengthening the European Union’s biofuel legislation. “Legal creativity usually presents itself in modest expressions but is nevertheless very important⁴³… [Exploratory legal research ensures that] legal creativity responds mainly to

40 Handcock, M., & Gile, K, 2011.

41 Van Hoecke, Mark. 2013, p. vi.

42 Van Hoecke, Mark. 2013, p. iv.

43 Balin, Ernst Hirsch, 2020.

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insufficiencies that surface in doctrinal legal research⁴⁴. [Legal scholars] views this creative aspect of judicial and other legal decision-making as a ‘postmodern’ development, seemingly because of ‘topoi’ beyond deductive argumentation being included within the existing system⁴⁵.”

As corporate social responsibility has only recently taken off as a legal phenomenon in the last decade, the legal doctrine sphere is lacking. One of the key takeaways of this thesis is to expand the literature on the subject of the legal application of corporate social responsibility.

Lastly as before mentioned, the thesis will employ the exploratory legal research method extensively in addition to the evaluative research. Evaluative legal research is defined as taking into consideration whether the law works in accordance with economical, moral, or political aims as well as taking into account other influences such as ethical and social in the legal

systems⁴⁶. Following the locus classicus⁴⁷ of Hans Kelson, legal and political philosopher, I too, will explain legislation in “terms of general legal norms as analogous to natural scientific

explanation of concrete states of affairs in terms of general laws of nature⁴⁸.” Kelson’s objective was to make a functional connection between two different states of affairs⁴⁹. Similarly, the goal of my thesis is to establish and extrapolate on the interlinkages between the governance role and authority of non-state actors in the realm of legal doctrine.

The application of these three methods is to ensure that all aspects of determining if the European Union’s biofuels laws have the potential to be strengthened through corporate social responsibility is answered. Each legal methodology provides their own strengths and limitations.

For instance, the snowball method can be easily verifiable. However, the strength of the thesis argument lies only in the strength of the sources. As the snowball methods only contain sources which are deemed as suitable, it is possible that another individual who applies non-English or Finnish sources and inevitably may come to a different conclusion. When employing exploratory research, the main disadvantage is that interpretation of legal and literature sources can be

46 Van Hoecke, Mark. 2013, p. iv.

47 Latin phrase used to describe a passage considered to be the most authoritative on a particular legal subject.

48 Van Hoecke, Mark. 2013, p. 50.

49 Van Hoecke, Mark. 2013, p. 51.

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skewed by individual bias, like the snowball method. Debatably, its advantages outweigh its disadvantages as its weakness is its strength. By using qualitative data that encompasses societal sentiments and opinions, the thesis provides valuable insight into the emotional-societal aspect related to renewable energy, climate change mitigation, and application of legal doctrine. This is where the application of evaluator research comes in. Evaluative legal research focuses on assessing the effects of the process rather than the process itself. By analyzing literature regarding legal processes, the thesis will determine whether said process, in the case of the thesis, the influence of corporate social responsibility, has yielded the preferred results, i.e., strengthened European Union biofuel laws.

1.4 Thesis Outline

The thesis will address the topic of whether CSR can serve as an adequate tool to strengthen the European Union’s biofuel legislation and accordingly answer the central research question.

Therefore, the background regarding the EU’s biofuel legislation, the rise of greenhouse gas emissions and consequent need for biofuels, and why Finland is an ideal Member State model must be addressed first. Accordingly, Chapter 2 will encompass the current status of climate and energy legislation. The Chapter will also cover issues associated with the transportation sector, the scientific aspects regarding biofuels, and the associated benefits and limitations of transitioning from fossil fuels. It will also introduce the concept of corporate social responsibility as well as cover the interlinkages between sustainability development and biofuels to tie in all the non-legal aspects of the research query. Chapter 3 will delve into the relevant EU renewable energy legislation. The sub-question this Chapter will focus on answering is, is there a problem with the current EU climate and energy framework. The Chapter is highly significant as it established the link between corporate social responsibility and legal doctrine via part 8 of the preamble of the Energy Directive. The Energy Directive specified national renewable energy targets for each Member State country; it took into account the starting point and calculated the overall potential for integration of renewables for each Member State. Chapter 4 will focus on the role of corporate social responsibility in regards to being a soft law instrument. Chapter 4 is crucial to the thesis as it will answer key aspects of the main question, how can corporate social responsibility be used to strengthen the EU’s biofuel legislation to more efficiently reach targets. By understanding EU legislation regarding CSR, the reader will gain insight into the value of employing soft law

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instruments as well as the significance of working with private-public partnerships to ensure that the EU can successfully reach transportation emissions targets. Next, Chapter 5 will present Finland as a successful case study regarding CSR strengthening EU biofuel legislation. The Chapter will employ real life examples on how Finnish biofuel producers are collaborating and shaping the legal and industry sphere more sustainability through CSR company initiatives.

Finally, Chapter 6 will conclude the thesis and present further potential research questions and directions that biofuel producers can go for the reader’s consideration.

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2 TRANSPORTATION RELATED POLLUTION, BIOFUELS, AND THE LEGAL APPLICATION OF CSR

2.1 Current Status of Achievement

Figure 1: Climate Actions Influence on Industry Emissions⁵⁰

Figure 1 depicts transportation comprising 70% of total GHGs in 2014⁵¹. Since 2015, GHG emissions have decreased beyond the 20% reduction target and which makes the 2020 climate and energy targets for the EU on track.⁵² Despite emissions slightly increasing to the previous year 2014, a year marked as being exceptionally warm from the Mediterranean to Nordic Europe, the EU still achieved a GHG reduction rate of 22% below 1990 levels.⁵³ The implementation of renewable energy sources (RES) into the EU’s energy mix has steadily

increased annually.⁵⁴ In 2015, RES were at 16.7% of gross final energy consumption; at this pace it was confidently concluded that the 2020 target was attainable.⁵⁵ By 2018, the overall reliance and usage of energy from RES had steadily gotten closer to the target however a deeper review of individual Member States depicted a different story.⁵⁶ As of 2015, 27 Member States had successfully met their annual GHG emission targets while 25 Member States had met and or

50 European Commission, 2020.

51 European Commission – Energy, Climate Change, and Environment, 2014.

52 EAA, 2018.

53 EAA, 2018.

54 EAA, 2018.

55 EAA, 2018.

56 EAA, 2018.

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exceeded their projected trajectories under the Renewable Energy Directive.⁵⁷ While this is a success overall, it is disheartening as 23 Member States were below their energy efficiency trajectory.⁵⁸ “While EU legislation painted a new operating landscape for networks, assets in use today have been inherited from former integrated utility companies⁵⁹. European legislation, however, was not passed without some form of cultural and political resistance to the creation of unbundled operating models, in which networks began their own lives within separate entities⁶⁰. This process of reform led to a complete transformation of the energy policy landscape allowing the European Union to advance towards the objective of supplying 20% of the final energy consumption by renewables in 2020⁶¹.” Energy Union legislation such as the Renewable Energy Directives and the Fuel Quality Directive were not met with unanimous support through the European Union. EU Member States which promote heavily promote renewable such as

Germany, Denmark, or Finland typically find greater success in achieving renewable integration at higher levels compared to Member States such as Poland who actively resist the integration of renewable energy technologies⁶². With regards to achieving targets such EU Member States such as Austria and Sweden were at a geographical head start while others such as Hungary or

Romania faced less than favorable conditions, as well as lacked the necessary infrastructure financing and overall expertise⁶³. Consequentially, these differences and autonomy have led to divergent national energy security interests and policy strategies; these differences unfortunately influence the way Member States cooperate and integrate energy infrastructure⁶⁴. What makes the divergent paths in Energy policy all the sensitive is that it is upon the West-East Axis⁶⁵.

Countries which make up the East section of the divergent path includes Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovakia, Hungary, Slovenia, Croatia, Romania, Bulgaria,

57 EAA, 2018.

58 EAA, 2018.

59 Faure-Schuyer, Aurélie., Pye, Steve, 2017.

62 de la Esperanza Mata Pérez – Scholten - Smith Stegen, 2017, p. 1.

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and Luxemburg⁶⁶. Their main energy supplier is Russia with their traditional fossil fuels⁶⁷. With these countries hosting large workforces based in the fossil fuel industries it makes sense as to why they are less inclined to switch to renewables⁶⁸. However, the Czech Republic, Poland, Slovakia, and Hungary have been more open to coordinating their negotiations with the

European Union’s energy directives and frameworks but believe that the 2030 climate targets are unfeasible, unrealistic, and incompatible with their national competencies⁶⁹. Countries which view the Energy Union as a tool to fight climate change and generally support renewable energy as a business tool include Finland, Sweden, Denmark, Germany, Austria, the Netherlands, and Belgium⁷⁰. Many of these countries are motivated by environmental and economic interests to promote renewables; this is further justified via their high shares in European and global

sustainable technology initiatives and patents⁷¹. As such, “renewable energy is perceived as win- win in the West, and win-lose in the East⁷². These different energy priorities and concerns translate into different energy strategies vis-à-vis the Energy Union⁷³. As a result, [West] cluster countries receive the EC’s ambitious renewable energy goals with open arms while [East] cluster countries prefer better gas interconnection to European markets and resist shifting from

traditional power sources to renewables in a short timeframe⁷⁴.” The legal basis of the EU’s energy policy is derived from Article 194 of the Treaty of the Functioning of the European Union⁷⁵. Directive 2009/28/EC also known as the original Renewable Energy Directive was ratified and adopted via codecision on April 23^rd 2009⁷⁶. It established a mandatory 20% share of RES for EU energy consumption by 2020⁷⁷. It also stated that all Member States were required to ensure that a minimum of 10% of transport fuels came from RES by 2020 as well⁷⁸.

75 European Parliament – Fact Sheets on the European Union. Renewable: Renewable Energy, 2020.

EU Biofuel Legislation & CSR: Finland