The European biofuels industry is to stagnate next year, according to a report from the US Department of Agriculture’s bureau in The Hague, unless import tariffs are relaxed.<\/p>\n
The bureau noted that the EU has “effectively separated itself from the international market”.<\/p>\n
Anti-dumping legislation means it is rarely cost-effective to import biofuels, but EU product is rarely competitive in international markets, meaning that the EU biofuel industry only produces enough fuel to meet flat domestic demand.<\/p>\n
Closed market<\/strong><\/p>\n Current EU biofuel use is restricted by the low rate of blending. Only 5% blends of biofuels with conventional fuels have been widely introduced, effectively capping total biofuel use.<\/p>\n Consumers are resistant to higher blend rates, as there is not currently a strong price incentive to adopt them, and drivers are wary about the effect of biofuels of the lifespan of their engines.<\/p>\n The USDA notes that adoption of higher blend rates “is hampered by the low fossil fuel prices and insufficient government incentives” and notes that a liberalisation of imports would be likely to lower prices and encourage adoption.<\/p>\n European member states have implemented legislation to force fuel suppliers to increase the rate of biofuel blending, toward a target of 20% biofuel use in road fuel by 2020.<\/p>\n However the so called “double counting” legislation, which means that sustainable biofuels count double toward blending targets, mean that fuel suppliers can meet these targets by changing feedstock, without increasing overall blend rate.<\/p>\n Currently biodiesel from used cooking oil is the most cost effective means of achieving this.<\/p>\n Low demand<\/strong><\/p>\n The static state of biofuel blending, as well as low fuel demand from a subdued European economy, is keeping overall biofuel demand low.<\/p>\n Total road fuel demand was seen remaining behind its 2012 high until at least 2016.<\/p>\n 2016 fuel ethanol use was also seen at 5.25bn litres, down from 5.32bn litres in 2014, and a high of 5.70bn litres in 2011.<\/p>\n Biodiesel use is seen falling in 2015, to 13.06bn litres, from 13.10bn litres in 2014, before recovering to 13.09bn litres in 2015.<\/p>\n