German biodiesel market awaits sustainability rules

12 November 2008 14:29  [Source: ICIS news]

LONDON (ICIS news)--The German biodiesel market is in turmoil as ongoing legislative uncertainty makes trading impossible, sources reported on Wednesday.

“We are not in the market at the moment, due to operational and administrative issues arising from the legislation problems,” said a German biodiesel trader.

“It is not possible to place blended products in the German market for the next year as no-one knows what the outcome of the EU climate vote will be, and if the German government will be convinced or if they will adopt their own sustainability requirements.”

These comments were in reaction to the decision of the German parliament on 22 October that soy and palm-derived biodiesel would no longer count towards biofuel quotas pending proof of sustainability.

Summer-grade biodiesel includes larger amounts of soy and palm-derived biodiesel due to the relative cold filter plugging points (cfpp) of the products.

Rapeseed oil methyl ester (ROME), which has a low cfpp of around -12, is the most expensive grade of biodiesel in Europe.

Buyers will therefore switch between blends, using fatty acid methyl ester (FAME) 0 in the summer. This uses a mixture of mainly soy and palm oil and is priced significantly cheaper than products with a lower cfpp point.

However, under the proposed German legislation, FAME 0 may no longer be eligible for tax breaks or to count towards biofuel targets. The sustainability requirements have not yet been defined by the government.

The sustainability requirements were to be in line with those agreed by the EU in the upcoming climate change vote scheduled for 3-4 December, but market participants in Germany are now voicing concerns that it may want more stringent sustainability proofs.

“If the EU decisions are not good for Germany, and not good for German rapeseed farmers, then it is possible that the government will change their mind again,” said the source.

“Although usually you have to comply with EU legislation, the national government may try to handle it in a different way.”

For now, the market is in deadlock, and European biodiesel trading overall is suffering with very little trading on any product.

Germany is the largest biodiesel market in Europe.

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By: Rachel Howat
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