Earlier this week (17th July) the European Biodiesel Board (EBB) announced biodiesel production statistics for the year 2006-07. The figures, said the EBB, confirm a strong growth in the EU, but that legislative and fair trade improvements are urgently needed to confirm expansion. The figures released this week show the overall biodiesel production in EU has increased from 3,2 million tonnes in 2005 to nearly 4,9 million tonnes in 2006. This represents a 54% yearly growth for EU biodiesel production, which follows a 65% record high growth in the previous year 2005. As a result the EU biodiesel production has more than doubled in the last two years raising from 1,9 million in 2004 to the 4,9 million production of 2006, marking a further acceleration in the continuous expansion of the European biodiesel sector. In 2002, 2003 and 2004 in fact biodiesel production rose by a relatively lower 30-35% rate.

EU 2005 and 2006 biodiesel production estimates

In terms of industrial capacities the EU biodiesel industry is ready to reach the 2010 EU target and will certainly be ready, well in advance, to fulfil the 10% biofuels targets endorsed by EU heads of State last March, however in the EU biodiesel is still strongly hindered by the lack of appropriate markets measures able to create a real market for biodiesel in Member States. As a result the important increasing biodiesel industrial capacity risks to remain very largely unemployed and production may start stagnating if not declining already as from this year 2007, if urgent action is not taken. This would be a paradox, taking into account that such industrial capacity has been developed in order to respond to the ambitious EU biodiesel targets, which EU authorities have even the intention to double in the longer term, as recently announced3.

This paradox needs to be avoided: the EU cannot on the one hand ask the biodiesel industry to undertake a long walk to reach very high levels of production in the long run and on the other hand leave this same industry alone to cross a legislative and standards desert over the next two years. Urgent legislative and standardisation4 provisions need to be adopted in many Member States and by the CEN in order to create a real market for the biodiesel quantities that will be needed in order to fulfil the 2010 and the 2020 targets:

- Member States legislations and new EU law need to create the real conditions in order to sell biodiesel in the various countries: real conditions means not just only “theoretical” targets or mandates with no practical impact, as sofar occurred in Italy, Spain, Poland, an many other countries, but efficient legislations enabling the biodiesel capacities already present in these countries to produce and sell the high quality product that they are able to deliver,

- to this scope the biodiesel incorporation rate in EN 590 diesel (with no labelling) needs to be increased quickly from the present 5% to 10% and then again to a 15% biodiesel in diesel rate by 2015 if we are seriously aiming at a 10%5 minimum target in all Member States in 2020

- in this sense EBB urges the CEN to accelerate its work in order to amend the European diesel standard EN590 to include a 10% biodiesel incorporation (the work is lagging behind because of the strong opposition of some vehicle manufacturers) and to start adapting technology and norms to incorporate 15% biodiesel by 2015; if conservatism and inertial logics will continue to prevail in the CEN this could be achieved by way of legislation introducing once for all these percentages of biodiesel (10% in 2010 and 15% in 2015) under the EU definition of diesel fuel (i.e. with no separate labelling6) detailed by the fuel quality Directive 98/70 currently under revision.

At European level biodiesel makes up precisely 80% of EU biofuels production (bioethanol production in 2006 was 1,2 million tonnes) and is very likely to carry on being the biofuel most demanded in order to fill future ambitious EU targets. EU fuel markets are experiencing increasing diesel deficits and gasoline surpluses – we imported 24 million tonnes of diesel from Russia already in 2005 and the same year we exported 19 million tonnes of gasoline to the US. In 2006 and 2007 this trend is being amplified by the general dieselisation of EU vehicles. Biodiesel and diesel substitutes demand as a “security of supply” demand will be the main driver for future EU fuel distribution and markets.

With its strong diesel demand, at international level the European Union continues to excel as “biodiesel land”: the EU is the worldwide leader in biodiesel production, both in terms of biodiesel capacities and production. In 2006 we produced 77% of biodiesel produced world-wide. In the US, the world’s second largest biodiesel producer, production amounted to around 250 million gallons in 2006 (Approx. 836,000 tonnes).

The international context is however perturbed by the continuing negative effects of “B99” US export subsidy which is disrupting the EU biodiesel markets. Through the B99 unfair scheme US producers can access EU markets with a competitive advantage of roughly 200€/m³ when compared to EU producers and are able to sell US originated biodiesel at the same or even at a lower price than the cost of EU industry’s raw materials. After having alerted EU authorities about urgent action to be taken at WTO level against such scheme7, EBB is now preparing a countervailing duty complaint to be introduced against this international trade violation. Mostly due to the negative impact of B99 exports EU biodiesel production is expected to stagnate in the year 2007, in spite of the 50-60% growth of the last two years and in spite EU production capacities have reached more than 10 million tonnes in 2007.

Finally it is worth underlining that major EU Agricultural organisations (Copa-Cogeca, EOA, UFOP)8 have recently officially indicated that the very largest part of future biodiesel demand, even in the perspective of 2020 targets, can be produced from EU originated raw materials thanks to the very important surfaces’ and yield potential growth for oilseeds in the EU.

Biodiesel is a product derived from agricultural sources such as vegetable oils (mostly rapeseed oils, sunflowerseeds oil, etc.), or other raw materials (used frying oils, animal fats) which can either be mixed with conventional fuels or used in a pure form. It performs efficiently as both a transport fuel and heating oil and represents a concrete solution to tackle climate change and promote sustainable development in the EU. The European Biodiesel Board, also known as EBB, is a non-profit organisation established in January 1997. EBB represents the voice of the EU biodiesel industry. It gathers 55 companies and associations and aims to promote the use of biodiesel in the European Union. EBB member companies account for around 80% of EU biodiesel production.

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