The future of the European biodiesel industry is in doubt as the EU moves to remove financial incentives for fuel companies to use biodiesel.
The EU has moved to limit the production of biofuels from food crops, and to end all public subsidies to the industry after 2020.
The legislation will shortly be proposed by the European Commission for approval by EU governments and lawmakers.
It will include measures to protect existing investments until 2020 — but drew a warning from the EU’s largest biodiesel producer that it threatens an industry that supports 50,000 jobs.
The U-turn comes just three years after the EU made biofuels a central plank of its policy to promote renewable energies in transport, added Jean-Philippe Puig, CEO of Sofiproteol.
If approved, the legislation is likely to exclude biodiesel made from rapeseed, soybeans and palm oil from making up more than 5% of energy consumed by the EU’s transport sector.
However, the new rules could boost European consumption of ethanol, which currently accounts for just over 20% of the EU biofuel market, compared with biodiesel’s 78% share.
But with diesel cars accounting for about 60% of Europe’s fleet and rising, it is unlikely that increased ethanol consumption will completely offset a likely decline in biodiesel consumption (of which about 80% comes from rapeseed oil).
The move represents an abrupt change of direction in the EU, after the 2009 Renewable Energy Directive had aimed for 10% of the bloc’s transport fuel to come from renewable sources — effectively representing a subsidy for the biofuel industry.
Cutting this target in half will be a big challenge for companies not able to switch their focus to advanced biofuels.
The EU wants new second-generation biofuels made from crop residues, waste, algae or woody material to take up the slack.
It is moving against biofuels due to fears that increasing demand for them prompts farmers to cut down forests, or take over other areas to grow extra fuel crops, thus negating any greenhouse gas emission savings for biofuel.
A German biofuels industry association said the changes would be a bitter blow, especially for bioethanol and biodiesel producers targeting the transport sector.