CHAPTER 3 Our Environment Economic and industrial environment

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The situation in the European refining industry remains difficult, due to the following factors:

The fall in demand for petroleum products.

Increased competitiveness and ex- ports from refineries in Russia, the Middle East and the United States, reducing dependence on the Euro- pean market.

The existence of refining overca- pacity in Europe, leading to the ra- tionalisation of refineries.

Regulatory changes aimed at producing more sustainable fuels (biofuels).

Strict environmental regulations, in terms of both air emissions and Energy and Climate Policy.

REFINING

CURRENT SITUATION

2016-2020 OUTLOOK In order to balance the market, between 2016 and 2020 Europe s re- fining capacity (1.6 Mbd) is expected be reduced.

From a regulatory viewpoint, the re- quirement to improve sustainability in production processes and fuels pro- duced, and to reduce pollution in urban

areas, seems to point towards a lower demand for traditional fuels, particu- larly diesel, and towards an increase in biofuels.

For 2020, the mandatory content of biofuels is expected to rise from 5% to 8.5%.