Europe’s largest biodiesel maker sees positive outlook – at least in the short term

Avril, Europe’s largest biodiesel producer, says a rebound in oil prices since early 2016 has improved the industry outlook. However, the company also warned that an EU proposal to cap crop-based ‘first generation’ biofuels could harm the biodiesel sector in the long term, according to Reuters.

Following a steep drop in orders, the French company said in April 2016 that it would temporarily cut output at its five biodiesel plants in France. The company had projected sales of 928,000 tonnes if market conditions remained unchanged, down from 1.5 million tonnes in 2015.

The company told Reuters that in the end only three out of its five plants had been hit by temporary halts in production, due to the rebound in oil prices. Avril's final French output of biodiesel, mainly made from rapeseed, reached 1.33 million tonnes in 2016. The company has forecast a similar level of output for 2017.

"If oil prices remain at around $50 a barrel, we hope that (biodiesel) prices will be at a level allowing us to sell a little more," Jean-Philippe Puig, chief executive of the farmer-owned group, told Reuters.

"We have the capacity, we have the commodity, we have a market."

Puig also raised concerns about the long term impact of the European Commission’s proposed cap on crop-based biofuels’ share of transport fuels, which is set to progressively decrease from a 7% target in 2020 to 3.8% by 2030.

"We, industrials, look far ahead. 2020 is not far off. Will we start moving towards 3.8 percent or will we be able to maintain 7 percent or even higher? It changes everything," Puig told Reuters.