Biodiesel Use to Decline in EU

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December 20, 2021

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by Sean Pratt (Western Producer) There is a good news/bad news scenario emerging for canola oil in the European Union’s biodiesel sector, according to a Rabobank report. The bad news is that diesel demand is expected to fall with the increased adoption of electric and hydrogen vehicles.

The electric share of new car registrations in the EU is expected to surge to 65 percent by 2030, up from 1.6 percent in 2019. Hydrogen vehicles would account for another 13 percent.

That is a lot of new cars that won’t be burning biodiesel and renewable diesel. However, the vast majority of older vehicles still rely on gasoline and diesel fuel.

Rabobank is forecasting a four percent reduction in EU biodiesel demand by 2025. It will shrink a lot further by 2030 and beyond to the point where some production plants will be forced to shut down in the 2040 through 2045 period.

An estimated 59 percent of EU biodiesel feedstock is imported, such as soybean oil from South America and the United States and palm oil from Indonesia and Malaysia.

“The rest (41 percent) is produced domestically in the EU, with the biggest share going to rapeseed oil,” stated the report authored by Maria Alfonso, senior grains and oilseeds analyst with Rabobank.

Some of that EU rapeseed oil is made from imported Canadian canola, so an overall reduction in biodiesel demand would hurt sales.

The good news for Canadian canola growers is that palm oil is being completely phased out of the EU’s biodiesel sector between 2023 and 2030.

That is why Rabobank is forecasting a six percent increase in rapeseed/canola oil use in 2025 over 2020 levels despite the overall reduction in biodiesel demand.

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Voth (Brian Voth, president of IntelliFARM) is skeptical of these types of outlooks because a lot can change between now and then.

In addition, he doesn’t think the EU has the infrastructure to support that drastic a shift in the vehicle fleet. READ MORE

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