GERMANY: Biodiesel sector on verge of collapse

By just-auto.com editorial team | 13 June 2007

Representatives of the German biodiesel industry have warned that the sector is on the verge of collapse.

According to the German press agency the biodiesel industry's trade association has asked the government for support in the form of tax incentives as it struggles to be competitive operating at less than 50% of capacity.

"This market can only be meaningful if there's a dynamic taxation system as there is with mineral oil," said association vice-president Moritz Gaede. The association has written to german chancellor (head of state), Angela Merkel to ask for support.

From this year biofuel will be compulsorily mixed with diesel at a rate of 4.4%, but the German government office for freight transport has warned that biodiesel is becoming increasingly unattractive for transport firms. Pure biofuels need to be taxed relative to market price to be competitive compared to regular fuels, argues one politician in support of the industry sector.

More than 150,000 people are employed in biodiesel production, trade and distribution. The industry estimates it helped avoid 8m tonnes of CO2 emissions in 2006.