Mandatory German biofuels target set for 2007

27 October 2006 15:23  [Source: ICIS news]

LONDON (ICIS news)--Mandatory use of biofuels in gasoline will come into effect on 1 January 2007 in Germany, the government said.

 

The announcement came on Wednesday and has prompted some contrasting opinions from the industry.

 

The mandatory usage of biofuels in gasoline was set at 1.2%, down from the original proposals at 2%. This percentage was based on the total energy content, the government said.

 

Some see this as a negative impact on ethyl tertiary butyl ether (ETBE) producers with approximate estimates of consumption dropping by 400,000 tonnes to 700,000 tonnes/year in 2007.

 

Given that the tax subsidies on the use of biofuels will be withdrawn when the mandatory levels become legislation, some refiners say they will only cover the absolute minimum of 1.2% and source alternative, cheaper, blending components such as methyl tertiary butyl ether (MTBE).

 

In contrast, some see the announcement as positive as it gives the industry time to prepare the local infrastructure and production for the increased usage of ethanol, which was currently not sufficient to meet the original 2% target.

 

It was also noted that now the announcement has been made, players can go ahead and book 2007 contracts, which they were holding back on in anticipation of the news.

 

Although the mandatory use was 1.2% from 2007, this might increase to 2% in 2008, 2.8% in 2009 and then 3.6% from 2010 to 2015, the government said.     

 

ETBE is currently priced at a premium to MTBE of plus $360-415/tonne, depending on the source. 

 

MTBE has traded between $504-536/tonne free on board (FOB) Amsterdam/Rotterdam (AR) this week. 

By: Jane Massingham
+44 20 8652 3214

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