Growth slowing in EU biofuels market

Aug. 3, 2011 at 6:46 AM
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PARIS, Aug. 3 (UPI) -- Europe's appetite for biofuels increased but slackened its pace of growth in 2010, the third consecutive year the growth rate has declined, French analysts said this week.

In its annual report released Monday, the Paris renewable energy group Eurobserver said growth in the use of renewable fuels in the European Union last year was 1.7 million tons of oil equivalent -- down 1 million tons from 2009's rate of increase.

The EU's total biofuels market in 2010 has been estimated at $28.2 billion, comprising 102 million barrels of oil equivalent.

Eurobserver's annual Biofuels Barometer pointed to a 13.6 percent growth in the EU's consumption of bioethanol, biodiesel, vegetable oil and biogas last year.

But that was a significant slowdown in consumption from the two previous years. EU countries saw growth rates of 28.9 percent in 2009 and 42.8 percent in 2008.

A clear pattern of deceleration in growth is continuing, the group said.

"In 2010 biofuel continued to gnaw away at petrol and diesel consumption in the European Union," the report said. "However its pace backs the assertion that EU biofuel consumption growth slackened off."

Eurobserver attributed "this faltering biofuel consumption" to major European biofuel consumers. They "now want this market growth to ease up" because they believe it's not warranted in the wake of the EU's "less ambitious" mid-term biofuels consumption goals introduced in 2009.

The 2009 European Directive for the promotion of energy from renewable sources fixed a mandatory 10 percent target for renewable energy in transport by 2020. It in effect reduced mid-term mandatory increases in renewable fuel use from 2009-13.

The slowdown means it will be up to countries that haven't met biofuel goals to do better if European growth is to continue, the analysts said.

Meanwhile, the British market analysis firm Datamonitor agreed with that assessment, forecasting a continued deceleration in the biofuels market in its latest Biofuel Consumption in Europe report.

It predicted an annual growth rate of 12.8 percent for the 2010-15 period, which would serve to expand to biofuels market to $51.6 billion by the end of 2015.

But, it noted, those growth figures doesn't compare favorably to the 29.9 percent rate from 2006-10.

Some are pointing fingers at regulatory criteria in the EU directive mandating sustainability in biofuel production as a contributing factor in the slowing growth rate.

Under the criteria, biofuel producers need to verify that production chains comply with sustainability principles as well as meet greenhouse gas emission standards.

The directive instructs producers are tasked with auditing the biofuel production chain and using approved methods for monitoring, waste disposal and land use, as well as other requirements.

Eurobserver said this has helped to create "a foot-dragging scenario" in most countries, whose governments are seeking more certainty on how these certification procedures will be implemented "before embarking on additional efforts to incorporate biofuel."

Ethanol led the way in the European biofuel consumption growth, at 26.1 percent between in 2010, outpacing that of biodiesel consumption at 11.1 percent.

The gradual introduction of E10 fuel in a several EU countries helped drive those figures, the renewables Barometer report indicated.

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