SPEAKER INTERVIEW: Proposed German emission reduction obligation provides support for rapeseed biofuels

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The German government has proposed new legislation where biofuels will compete with other low carbon pathways to comply with increasing emission reduction quotas.
Biofuels producers fear this could come at the expense of their product demands as electric vehicle (EV) penetration is expected to grow.
However, Stratas Advisors do not share this outlook.
The organisation said that even if ambitious EV, low power and green hydrogen targets are met, biofuel consumption would still need to grow in order to comply with the mandate.
Cornelius Claeys, Stratas Advisors’ senior analyst biofuels, said: “Because the GHG reduction quota only increases every other year while non-biofuel compliance pathways grow each year, biofuel demand looks set to be higher in even years and lower in odd years.
“Technical blending limits in the FAME segment mean most if the yearly variation will be observed in HVO and ethanol demand.”
Under the proposal, GHG reduction obligations for transport fuels will increase from 6% currently to 22% by 2030.
Any savings reached through road electricity can be counted three times. Green hydrogen in refineries or advanced biofuels above a minimum threshold counts double.
The 1.2% cap towards the target for upstream emission reductions is maintained, while other caps are introduced for crop-based biofuels and products from UCO/animal fats (Annex IX of RED II).
The penalty for non-compliance increases from €19/GJ currently to €45/GJ in 2022, which translates to 682/tonne of CO2e for advanced biofuels.
If EVs or renewable electricity grow above a minimum threshold, the obligation is adjusted upwards – with a two-year lag. The mandate for aviation can only be met through e-fuels.
“Our research indicated that the current German proposal does not risk displacing rapeseed-based biofuels. A high total obligation coupled with hefty non-complaince fines and safeguard mechanisms for higher-than-expected credits from road electricity provide a solid regulatory framework for continued demand,” concluded Claeys.
Mr Cornelius Claeys will be speaking at this year’s Biofuels International Conference in Brussels 19-20 October. For more information go to https://biofuels-news.com/conference/.