UFOP Rejects Reduction of the Cap for Biofuels from Cultivated Biomass

Business News/Analysis European Union (EU)Feedstocks Field/Orchard/Plantation Crops/Residues Germany Marketing/Market Forces and Sales Opinions Policy Sustainability

May 09, 2022

Print This Article Share it With Friends

(Union for the Promotion of Oil and Protein Plants) The GHG Quota Act regulates market balancing -- The Federal Environment Ministry's initiative to reduce the so-called cap on biofuels from cultivated biomass has met with incomprehension. The UFOP rejects the idea. UFOP emphatically rejects any change to the existing regulation. Behind the utilisation of rapeseed oil for biodiesel is a production and processing structure that has grown over decades and is now closely networked with other branches of industry, including the food industry.

UFOP underlines the importance of the rapeseed meal produced during rapeseed processing. In this country, about 9 million tonnes of rapeseed are processed annually into about 4 million tonnes of rapeseed oil, of which about 0.85 million tonnes are used for edible purposes. The rapeseed meal produced during processing corresponds to an avoided cultivation area of about 2 million hectares of soy in other regions of the world. Rapeseed meal replaces soy meal in dairy cattle feed and is the basis for the "without genetic engineering" label. Federal Environment Minister Lemke must explain how this demand for GMO-free soy is to be met in the future. Additional cultivation areas are needed for this cultivation. The change in the cap thus triggers relocation effects to third countries. Nothing is gained, says the UFOP, probably the opposite will happen.

For the UFOP, a change in the cap is also incomprehensible because the national limit of 4.4 % of final energy consumption was set below the maximum cap of 7 % possible under EU law anyway. This compromise reached in the context of the amendment of the GHG Quota Act must not be tampered with, the UFOP demands. The association also points to the strict and constantly tightened requirements for proof of sustainability and greenhouse gas reduction throughout the entire production chain, which could serve as a model for the food production sector.

The UFOP emphasises the importance of biofuels from cultivated biomass in the overall range of renewable fuels from residual and waste materials. So far, these are the only noticeable contribution to climate protection in transport. The UFOP notes that e-mobility has so far only made a manageable contribution to climate protection because the energy mix is still dominated by fossil fuels. Nevertheless, the purchase of vehicles is subsidised to an amount equivalent to three times the per capita income in Pakistan. Nevertheless, the contribution of e-mobility is currently important in order to reduce dependence on fossil imports from Russia.

UFOP recommends that Federal Minister Steffi Lemke take a closer look at the Greenhouse Gas (GHG) Quota Act. The law, for which the Federal Environment Ministry is responsible and which has attracted international attention, has triggered a competition for efficiency. This is because the companies obliged to reduce GHG emissions are interested in achieving the best possible price-performance ratio with regard to GHG reduction. This efficiency competition, which is unique in climate policy, has reduced the quantity required to meet quotas. For example, the share of biodiesel from rapeseed oil in the biofuel mix has practically halved since 2014 compared to 2020. The payment to be made in the event of non-fulfilment of the quota (penalty) is preferably paid if the biofuel is more expensive in relation to this. This is currently the case due to the price increase on the agricultural commodity markets. The UFOP states that legal intervention is therefore not necessary because the existing legal regulations balance out the market. READ MORE

German proposals to cut crop-biofuel usage raises concerns (Biofuels International)

Germany reported considering biofuel reduction (Western Producer)

Food vs. fuel: Reducing biofuel to boost food production could mitigate hunger crisis (Food Ingredients First)

Excerpt from Western Producer: “Agriculture land is limited worldwide and we urgently need it for food as the war in Ukraine dramatically demonstrates,” Germany’s environment minister Steffi Lemke recently told a German newspaper.

The European Union was Canada’s fourth largest canola market in 2021 and second biggest in 2020. Imported Canadian canola is used as a biodiesel feedstock in the EU.

Germany is the top biodiesel consumer in the EU, followed by France and Sweden, so talk of reduced biodiesel production in that country is worrisome.

However, it isn’t raising any eyebrows at the Canola Council of Canada just yet.

“I haven’t heard from anybody about the anticipation of reduced demand from Europe,” said council president Jim Everson.

He acknowledged that record high vegetable oil prices seem to be reigniting the age-old food versus fuel debate but there are other things on the minds of politicians these days as well.

“Energy security and greenhouse gas reductions are also major public policy issues,” said Everson.

“Canola is a low-carbon, sustainably grown renewable fuel feedstock that helps reduce GHG emissions.”

He said energy security is particularly front and centre in the EU, which is looking at ways to reduce its reliance on Russian energy.

But at the same time, there are growing calls from non-governmental organizations to quell food price inflation by any means necessary.

About 14 percent of global vegetable oil production was used to make biodiesel in the 2017-19 period, according to the OECD. That is helping drive up food costs around the world.

The Canadian Foodgrains Bank and many other non-government organizations (NGOs) are sounding the alarm.

“The world is moving rapidly towards some of the most catastrophic food crises in the 21st century,” the Foodgrains Bank said in a recent news release.

According to the 2021 Global Report on Food Crises, 193 million people in 53 countries are acutely food insecure, up from 40 million in 2020.

More than half a million people in Yemen, Madagascar, Ethiopia, South Sudan and Somalia will likely soon die of starvation.

“As food prices are skyrocketing, people who didn’t have enough money to buy food before are accessing even less now,” Foodgrains Bank executive director Andy Harrington said in a news release.

And it isn’t only NGOs that are concerned. The Malaysian Palm Oil Board recently advised countries around the world to slow the use of edible oil as a biofuel feedstock to ensure adequate supply of vegetable oil for food use.

Yet the amount of vegetable oil being diverted to the biofuel sector is set to grow as the renewable diesel industry is poised for phenomenal growth in the United States and elsewhere.

The U.S. Department of Agriculture estimates 12 billion pounds of U.S. soy oil will be used for biofuel production in 2022-23, up from 10.7 billion lb. this year and 8.85 billion lb. in 2020-21.

Canola is close to being fully approved as a feedstock for the U.S. renewable diesel industry.

Canada’s proposed clean fuel standard is also expected to dramatically increase demand for canola-based biodiesel and renewable diesel.

But other markets are heading in the opposite direction. Norway, Sweden and Finland have reduced their blending mandates in response to surging food prices, according to Argus Media.

Brazil recently dropped its biodiesel mandate to 10 percent for 2022, down from what was supposed to be 14 percent starting in March. READ MORE