Germany raises biofuel ambitions but UFOP urges caution

Germany’s future greenhouse gas (GHG) reduction quotas for road transport are set to rise more sharply than previously planned, following a vote in the Bundestag, according to the Union for the Promotion of Oil and Protein Crops (UFOP).

Lawmakers also agreed to ease the cap on crop‑based biofuels, lifting it from 4.4% to 5.8% in the medium term. The move accompanies earlier legislative changes, including the end of double‑counting for advanced biofuels, stricter supply‑chain controls and a narrower feedstock list.

UFOP notes that the broader policy environment for crop‑based biofuels has improved at EU level, while Germany’s Agriculture Ministry has proposed a tax exemption for agricultural biofuels. Yet the organisation warns against over‑optimism. “The GHG quota levels and the proposed tax exemption will not prompt a sharp increase in crops like rapeseed, but help stabilise the market,” it told S&P Global Energy.

A key concern is the existing “ticket bank” of surplus GHG‑quota certificates, which will return to the market in 2027. Their re‑entry could offset short‑term demand growth, especially as surplus use is suspended for 2025 and 2026. UFOP also highlights competition from electric vehicles, other biofuels with higher GHG efficiency such as used cooking oil, and the potential impact of E20 petrol on biodiesel demand.

Germany’s FAME capacity stands at around four million tonnes, with 3.6 million produced and 2025 demand at 2.2 million tonnes. While exports remain important, growers prefer the domestic market. However, rapeseed expansion is limited by crop rotation rules. UFOP concludes that growers can expect satisfactory — but not excessive — returns.