CHOREN insolvency bid casts doubt on state biofuels projects support

31 August 2011 18:34  [Source: ICIS news]

LONDON (ICIS)--The insolvency of German biofuels firm CHOREN has raised concerns about the way the government is supporting and monitoring such biofuels projects, industry sources said on Wednesday.

CHOREN, which has received German government support, filed for insolvency last month.

Claus Sauter, CEO of German bioethanol producer VERBIO and a former head of biofuels trade group Verband der Deutschen Biokraftstoffindustrie, said government officials should focus on the long-term viability of such projects, but they should not allow themselves to be impressed by “big name companies” participating in such ventures.

CHOREN’s partners at one time included German car manufacturers Daimler and Volkswagen and Anglo-Dutch oil giant Royal Dutch Shell. Shell exited CHOREN in 2009. CHOREN displays Daimler prominently as a partner on its website.

A report by German state television, which cited a number of sources, alleged that CHOREN may have misled government officials about feedstock costs and its technology to gain support.

In particular, CHOREN is alleged to have underestimated the price for wood, the feedstock for its biofuels plant at Freiberg in Saxony state, according to Armin Vetter, an expert at the Thuringia state agricultural institute.

Cornelia Wolber, a spokeswoman for Shell in Germany, would not comment on Shell’s specific reasons for exiting CHOREN. However, Wolber said as part of a permanent review process, Shell had decided that its other biofuels joint ventures were better aligned to its targets, prompting it to sell its shares in CHOREN.

A CHOREN media official declined to comment and referred inquiries to the company’s preliminary insolvency administrator, lawyer Bruno Kubler.

A spokesman for Kubler told ICIS the administrator would take “appropriate action” if the allegations raised in the television report turned out to be correct.

However, the administrator has no indication that the allegations may be correct.

Also, CHOREN is under new management, while the allegations, “from what we know”, concern activities from before the new management took over, he said.

The main focus of the insolvency administrator’s work is to look for a strategic investor for CHOREN to secure jobs and continue working on the company’s technology, the spokesman added.

A source close to CHOREN, who declined to be named, told ICIS that the television report lacked substance and appeared to have been initiated by competitors.

CHOREN’s project was designed as a demonstration, not for commercial production, the source said.

Also, the subsidies the company received were linked to job creation and open to all companies, not only CHOREN, he said.

CHOREN has had a relatively high profile in Germany’s biofuel sector. In 2008, Chancellor Angela Merkel attended a plant opening at Freiberg.

Check out Doris de Guzman’s Green Chemicals blog for views on sustainability issues

By: Stefan Baumgarten
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