German Biodiesel Sales Strong as Oil Prices Rise
Date: 19-Aug-05
Country: GERMANY
Author: Michael Hogan
"Biodiesel demand has significantly increased in the past few months as oil prices rose so high," said Karin Retzlaff, of the association of German biodiesel producers VDB.
There are no official sales statistics. "We have the impression sales are growing especially in the trucking sector which is facing the double impact of Germany's new road toll and higher diesel prices," Retzlaff said.
"Trucking companies are under very heavy cost pressure and are looking for quick methods of saving money."
Biodiesel is 15 to 20 euro cents cheaper than conventional diesel, largely because of special tax breaks granted by Germany's government to help the industry. The price difference has risen by about five euro cents in past months as conventional fuel prices rose but biodiesel remained unchanged.
German consumption this year was likely to rise to around 1.5 million tonnes against 1.1 million tonnes in 2004 and only 720,000 tonnes in 2003, association chairman Arnd von Wissel estimated.
Overall consumption was difficult to estimate as strong demand was sucking in imports from neighbouring countries and could be higher.
"If you are running fleets of thousands of trucks, savings of millions can be made with biodiesel," von Wissel said.
Farmers have also been turning to biodiesel following the loss of special tax breaks for agricultural diesel.
But it is difficult for the German public to buy the fuel.
Many car manufacturers have technical doubts about the fuel, so it is not sold in petrol stations run by the multinational oil companies. Biodiesel blocks some exhaust dust filters, can break pipes and pumps while it can freeze in Germany's very cold winters.
The industry finds the technical objections exaggerated. "But this does mean that private car consumption of biodiesel from petrol pumps will be limited," Retzlaff said.
However, millions of motorists are already using biodiesel without knowing it. Since early 2004, Germany has permitted oil companies to mix biodiesel with conventional fuels up to a maximum five percent biodiesel content.
About half of German biodiesel is for blending with conventional diesel, von Wissel estimated. Again no precise figures are available.
MORE EXPANSION PLANNED
German production capacity was likely to rise to around two million tonnes annually in early 2006 against 1.2 million tonnes at the start of 2005, von Wissel said. The sector was currently working at full capacity.
Most production plants are owned by agricultural cooperatives seeking new markets for rapeseed, and other small companies.
But global agribusiness giants are also undertaking major biodiesel projects in Germany. US group Cargill recently announced construction of a production plant in Mainz in central Germany to be operational in 2006.
Archer Daniels Midland Co. of the US is doubling biodiesel production capacity at its Oelmuhle Hamburg plant by the end of 2005.
