Biofuels makers fear German delay on EU mandate

02 April 2008 14:11  [Source: ICIS news]

By Charles Shaw

 

LONDON (ICIS news)--Europe’s biofuels industry will suffer if Wednesday’s announcement by the German government that it may delay a planned 5% increase in bioethanol blending comes to fruition, industry players said on Wednesday.

  

“This is a great pity for European producers,” said one German trader. “They had hoped for more demand. Now it looks like we could be in the same [blending] position in 2012 as we are in today.”

 

The 2009 biofuel blending target of 10%, set by the EU, could harm engines of an estimated 3.12m, mostly older, vehicles, said Environment Minister Sigmar Gabriel.

 

“We will not put the new regulation into force as long as we have no clear figures,” said Gabriel, in an interview with the newspaper Stuttgarter Zeitung. “And we will not put it into force when the figure exceeds 1m cars.”  

 

However, in a provisional report, the German Association of Car Manufacturers said increased blending would affect just 375,000 cars.

 

“It is all very unclear at the moment,” said a UK-based ethanol supplier.

 

“But it does not look good. The worst thing is that this [delay] could spread to other countries which have an equal, or even higher, number of old cars. Clearly this would be devastating for all those who had banked on the blending mandate being strictly imposed,” the seller added. 

 

The news comes as another blow to European producers, who have suffered over the past year due to inhibitive feedstock costs, forcing most to reduce or even halt production.

 

“We will have to wait and see what further reports indicate regarding the number of cars this could affect. Today there seems to be a wide discrepancy,” said a German producer.

 

Spot fuel ethanol prices in Europe have been under some downward pressure of late, while most tanks in Rotterdam remain full.

 

“Prices could well come down further now,” said the German trader.

 

“People already have plenty in their tanks. Why would they want to buy ethanol today when it looks like prices are set to decrease?” the source added.

 

For more on biofuels see Simon Robinson’s Big Biofuels Blog

By: Charles Shaw
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