German biodiesel industry recommends policy changes

By Susanne Retka Schill | November 20, 2009
Posted December 9, 2009

The newest proposal from the German government doesn't go far enough to revitalize the biodiesel market industry leaders argued at the seventh biofuels conference held in early December in Berlin. The German BioEnergy Association (BBE) and the German Union for Promoting Oil Seeds and Protein Plants (UFOP) cosponsored the annual industry conference that attracted more than 450 stakeholders in the biofuel sector from 30 countries.

After a significant decline of the German biofuels market share in transportation from 7.1 percent in 2007 to 5.9 percent in 2008, the recently elected German government had promised a revitalization of the biofuels market in its draft "Law for accelerated growth." The proposal would freeze the tax on B100 and straight vegetable oils for fuel at the current rate for the next three years instead of the phasing in of full fuel taxes on biofuels as scheduled.

Helmut Lamp, BBE president, pointed the government's own report on biofuels development released in September concluded the economic production of biodiesel and pure plant oil for fuel is not feasible with the current tax rate of 18 cents per liter. "How should then a freezing of this tax rate for the next three years contribute to a revitalization of the biofuel markets?" he asked. A reduction in fuel taxes to no more than 10 cents per liter is needed.

The biofuels industry also recommended the German government withdraw the planned reduction of the biofuel blending mandate for 2015 from 8 percent to 6.25 percent, saying that the mandate reduction should not be implemented now since the new German ruling coalition has announced it would introduce E10 and consider allowing pure biodiesel or ethanol to meet mandate obligations. "Also, concerns about the impact of increased biofuel production on food prices have proven to be outdated in view of the developments of commodity prices of the last months," the BBE said.

The German organizations said they welcomed the Federal Agency for Agriculture (BLE) as the governing body for the implementation of the biofuels sustainability regulations, although they said the new rules and guidelines are urgently needed. The new regulations and the certification system as well as certifiers are unlikely to be in place by the July 2010 implementation date for sustainability, they pointed out. They urged 2010 biofuel production not be penalized since farmers and biofuel producers won't have the needed information to securely plan for compliance.

"Minimum requirements on sustainable feedstock production are urgently needed as it is clear that world energy demand will increase significantly while our fossil resources will decline at the same time," said Klaus Kliem, president of UFOP. "But still the implementation of these requirements within the biofuel sustainability ordinance has proven to be quite problematic in practice. The administrative presets have been underestimated in their broad impact not only by the civil servants at the EU Commission, but also by the German government." Kliem suggested the implementation of sustainability regulations be postponed until practical solutions have been developed.
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