Food versus fuel brings legislative uncertainty for biofuels industry

06 November 2012 14:03  [Source: ICIS news]

MUNICH (ICIS)--This year has been “a rollercoaster ride for biofuels producers” because of potential legislative changes caused by the resurgence of the food versus fuel debate, a senior industry analyst said on Tuesday.

As a result of the severe drought over the summer, the food versus food debate has been amplified in the US, with calls to waive the ethanol blending mandate to free-up more corn for food, said Christoph Berg, managing director of commodities analysts FO Licht.

Berg does not believe a waiver is the answer, adding that ethanol will still be blended with gasoline despite a waiver, as it is a cheap fuel.

The food versus fuel debate has also resulted in new legislative proposals being published in Europe.

By 2020, EU legislation stipulates that 10% of biofuels should be used in transport fuels.

However, in October, the European Commission published new biofuels proposals which would limit the contribution of food crop-based biofuels to this target at 5%.

“The food versus fuel debate is back with a vengeance and brings a dangerous element to biofuels policy,” Berg said at the FO Licht World Ethanol and Biofuels conference.

Although Berg believes there will still be an ethanol industry in 2022 despite these new legislative proposals, he says growth will diminish, while political risks increase.

By: Sarah Trinder
+44 20 8652 3214

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