Positive Environment News

No "Biofuel Bubble" in France Says Diester Industrie

Date: 26-Apr-07
Country: FRANCE
Author: Sybille de La Hamaide

German biodiesel sales have plunged 40 to 50 percent since the start of the year after the government began taxing the "green fuel" saying it could not afford to lose the large tax revenue from fossil diesel.

The move sparked an outcry at a time when the European Union wants to increase biofuel use to stop global warming.

"In Germany the market grew too fast. But France went slower and consumption here is rising the way it was expected and organised," Diester Industrie President Philippe Tillous-Borde told Reuters in an interview.

Made from plants, bioethanol and biodiesel emit fewer greenhouse gases than fossil fuels and have been hailed as an answer to both climate change and energy insecurity.

Germany started selling biofuel without taxes and around 2000 plants were built at top speed throughout the country. But the new tax lead to a plunge in sales and over-capacity.

"The Germans will likely consume around 1.6/1.7 million tonnes of biodiesel this year. But they have built plants with a total capacity of more than 3.5 million tonnes," Tillous-Borde said, adding that some would likely have to shut down.

The German renewable fuels industry association BBK said last week that unless action was taken quickly many German biodiesel makers would face bankruptcy.

France, the second biggest EU producer of biodiesel after Germany, has set a goal for biofuels to account for 5.75 percent of calorific value of fall fuels sold in the country by the end of next year, seven percent in 2010 and over 10 percent in 2020.

"In France the market is expanding slower. There is no biofuel bubble," he said referring to the internal market which collapsed after growing too fast.

Total capacity in France was expected to rise to 2.13 million tonnes by the end of the year, 2.3 million by end 2008 and three million tonnes in 2010.

In tandem, sales were set to rise at approximately the same speed, at 2.2 million tonnes in 2008, 2.5/2.6 million in 2009 and three million tonnes by the end of the decade, he said.

Diester Industrie, which was created by French oilseed growers less than 15 years ago, plans to reach a capacity of around 1.8 million tonnes by the end of 2007 and two million tonnes by end-2008, Tillous-Borde said.

The company is ahead on its plant-building schedule with two of its new 250,000-tonnes plants, in Cappelle-la-Grande and Bassens, ready by November instead of next year, he said.


On the commodities front, Tillous-Borde said he believed European biodiesel makers would not need to import a larger share of oilseed oil than they already do to meet the rise in demand for the "green fuel" planned after 2015.

However, if France or the European Union was to raise their existing biofuel usage targets beyond 10 percent of all fuels, producers would have to sharply boost imports, he said.

Sixty-five percent of the oilseed oil needed to make biodiesel comes from French rapeseed, 15 to 20 percent from French sunseed and the rest is made of imported soybean oil or palm oil, Tillous-Borde said.

"For Diester Industrie there will be no problem reaching a blending target of 10 percent biodiesel with the oil available in Europe, even with a rise in diesel consumption," he said.

"After that we may have to turn to other markets."

"The oilseed market is consolidated with zero import duties, so it's normal to see imports," he said.

This zero-duty market would also prevent European oilseed prices, which have been supported by the development of the biodiesel market since early 2005, going through the roof.

"I don't expect rapeseed prices to explode. Demand will stay solid but offers will follow," Tillous-Borde said.

In France alone he expected the rapeseed area to rise to 1.75 million hectares by 2010, from 1.56 million in 2007 and 1.4 million in 2006. In sunseed he saw sowings rising up to 700,000 hectares by the end of the dec

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