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PARIS, France, July 12, 2006 (Refocus Weekly)
The European Union produced 3.9 million tons of
biofuel last year, an increase of 65.8% over 2004.
The biofuels industry includes biodiesel and bioethanol, and the
former continues to be the biofuel of choice on the continent,
representing 81.5% of total production, says the latest market
barometer prepared by Observ’ER. The bioethanol sector also
performed very well, with production growing 70.5% between 2004 and
2005.
Germany is the largest producer of biodiesel at 1.7 million tons
last year, an increase of 61% over 2004, followed by France at
492,000 tons with a 41% increase. Italy (396,000), Czech Republic
(133,000), Poland (100,000), Austria (85,000), Slovakia (78,000),
Spain (73,000), Denmark (71,000) and Britain (51,000 tons) complete
the top ten countries in the EU.
Spain was the leading country for ethanol production last year at
240,000 tons, followed by Sweden at 130,160, Germany 120,000, France
99,780, Poland 68,000, Finland 36,800, Hungary 11,840, Lithuania
6,296, Netherlands 5,971 and the Czech Republic at 1,120 tons. The
EU total of 721,927 tons includes ethanol production from wine
alcohol sold by European Commission.
The biodiesel in the EU “has undergone very rapid growth with an
28.2% annual production increase since 2000,” and production
capacities estimated at 6,069,000 tons for this year, an increase of
43.5% over 2005 “ensuring the bases needed for continually
increasing production.”
Germany represents 52.4% of the continent’s biodiesel production,
and this “spectacular growth in Germany’s market can be explained by
very favourable legislation that provides a total tax exemption for
biofuels, whether they be pure or mixed,” the report notes.
Beginning this August, Germany will re-introduce a tax on biodiesel
used in pure form and another tax on biodiesel that is mixed in
refineries.
“French production, which has continually decreased since 2001 (the
year when France was the leading European producer), finally revived
and got a boost in 2005 with a 41.1% increase in production,” it
explains. France has established an ambitious biofuel plan running
until 2015 and the country plans to reach European Directive goals
by 2008 and a 7% rate for 2010 and 10% in 2015.
Bioethanol accounting is “less precise” than that of the biodiesel
sector, and there are differences between data from the two producer
unions and figures announced by governments. Another difficulty
consists in determining the share of bioethanol produced from wine
alcohol at the different national levels.
The European Commission buys wine alcohol to be transformed into
bioethanol, and the alcohol can be produced in one country,
transformed into bioethanol in another country and then sold again
on the market in a third country. The report estimates EU bioethanol
production at 720,927 tons, up 70.5% over 2004.
“Three years after the adoption of the biofuels directive, we are
forced to note that the EU is far from achieving its 2005 target (2%
biofuels),” the report concludes. “The promotion of fuel ethanol is
dependent on de-taxation schemes aimed at offsetting the price
difference with conventional gasoline. However, fuel is heavily
taxed in most EU member states which means revenue losses are
significant hence not sustainable.”
“Ethanol producers need a self-running market with long-term
visibility and a 2-3 year perspective based on yearly-tailored
fiscal budget does not offer that,” it explains. “Given the amount
of gasoline taxes, we need a sustainable budget-neutral system to
secure long-term visibility objectives. Internalising the external
benefits of fuel ethanol is the greatest help of all which could
solve the problem.”
Barometer is prepared by Observ’ER in the scope of the EurObserv’ER
project which groups Observ’ER, Eurec Agency, Erec, Eufores,
Institut Jozef Stefan and Systèmes Solaires, with the participation
of EC BREC and with the financial support of Ademe and DG Tren.
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