Biodiesel industry says cost constraints may lead to non-sustainable fuel imports
Mon 19 February 2007
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The British biodiesel industry has told the Treasury that rising feedstock prices and the fall in the price of crude oil since last year have put the industry under serious pressure. Industrial representatives said that the 20p/litre fuel duty reduction for biofuels is not sufficient to bridge the cost difference between biodiesel and conventional diesel.
The Financial Times reports that biodiesel is expected to account for more than half of the biofuel delivered under the Renewable Transport Fuel Obligation over the next few years and that companies have invested in enough capacity to provide almost half of the UK's requirement of biodiesel from next year.
UK biodiesel producers say that they had expected to be raising production around now, ready for the introduction in April 2008 of the RTFO, which requires oil companies to include a rising share of renewable fuel in their supplies, up to 5 per cent in 2010-11. Instead, however, producers say they are postponing expansion plans and running plants below capacity because the tax rebate is now too low to make biodiesel production viable at current prices.
If UK producers can not supply fuel to meet the RTFO requirements, the industry argues it is more likely that oil companies will need to source biodiesel internationally on the spot market, raising the risk that supplies will come from non-sustainable sources.
In a separate story, ICIS news reports that increases in Europe’s biodiesel production could outstrip the available supply of vegetable oil feedstock in the coming years.
Fred Doll, the managing director of Doll Shipping Consultancy speaking at the ICIS World Baseoils Conference said that the EU’s biodiesel capacity was estimated to have grown to 5.4m tonnes in 2006 from 3.9 tonnes in 2002. He said that vegetable oil demand was also rising in the food industry due to a change in diets, and an extra 8-9m tonnes/year would be required worldwide between 2007 and 2008, up from an average 5m tonnes/year growth in demand between 2001 and 2005.
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