Germany’s BBK claims biodiesel industry is being dismantled

Feb 21, 2008 01:00 AM

Three German biodiesel production plants were recently sold to the United States and Canada and more are up for sale after biodiesel sales collapsed, a German renewable fuels industry leader said.
"I estimate that 30 % of Germany's biodiesel plants are now up for sale," said Peter Schrum, president of the German renewable fuels industry association BBK. "Germany's biodiesel industry is currently being dismantled and sold abroad," he said.

The country's 5 mm tons biodiesel industry is only producing at about 10 % of capacity largely because a biofuels tax increase on Jan 1 has sharply cut sales, he said. Although the European Union wants to increase biofuel use to stop global warming, Germany has started taxing biodiesel as the government said it cannot afford to lose the large tax revenue from fossil diesel.
"The tax means that biodiesel is now more expensive than fossil diesel," said Schrum. "As biodiesel has 8 % less energy content, this means no-one is buying biodiesel."

He said that trucking companies have turned their backs on biodiesel.
"The market for biodiesel at petrol stations is dead. The industry is basically producing a small amount for blending."
To reduce the impact of biodiesel taxes, Germany introduced compulsory blending of biodiesel with fossil diesel at oil refineries in January 2007.

The BBK says the 4.8 % biodiesel blended content in fossil diesel would create demand for about 1.5 mm tons of biodiesel annually. But a high proportion of the biodiesel used for blending is coming from the United States and is being sold cheaply in Europe with the help of US subsidies.
Under a scheme dubbed "splash and dash", biodiesel can be imported into the US blended with a small volume of mineral diesel to gain the subsidy and then re-exported to the European Union to be re-sold at low prices.

Schrum said the decline of Germany's biodiesel industry could also create serious problems for the country's animal feeds sector. German biodiesel is largely made from rapeseed oil and huge volumes of high-protein rapeseed meal, a key animal feed, are produced as a by-product.
"If oil is not produced for biodiesel then protein feed will not be produced either," he said. "This requirement will have to be met by more expensive imports, probably of soy meal."

He estimated 60 % of German feed meal production was generated as a by-product of biodiesel production.
"This will have to be replaced by more expensive imports in coming months as the biodiesel industry closes," he said. "Large volumes of German rapeseed will also have to be sold abroad."

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