Report examines European biofuels market

By Erin Voegele
Web exclusive posted August 8, 2008 at 9:26 a.m. CST

A report released August 6, titled "The European Biofuels Challenge: Developments in European Union Policy and Industry Drivers," examines the potential for second generation biofuels in the European Union market. The report was written by Urmila Doraswami, a freelance journalist with a master's degree in microbiology from Bangalore University in India.

According to the report, quality as opposed to quantity will be the most important factor when considering potential feedstocks. The author also theorizes that a high premium will be placed on carbon savings and sustainability credentials, making second generation biofuels an attractive investment.

Doraswami estimates that subsidies to non-sustainable products will cease, while biofuel products with the most sustainable certification and standards will be able to sell at a premium.

The author also points out that the European Parliament's environmental committee, which was in favor of lowering the EU's goal of requiring 10 percent of transportation fuel to be derived from renewable sources by 2020, in July voted 36 to 0 in favor of amending the existing targets. However, the report goes on to explain that underlying market drivers, such as carbon dioxide level concerns, energy security and agricultural support will continue to help the biofuels industry.

According to the report, Europe has been identified by analysts as the destination market for biodiesel because the European biofuels market can't supply the quantity of fuel needed once the Biofuels Directive, which requires 10 percent of transportation fuel to be biobased, comes into effect.

Doraswami also said European countries are developing sustainability standards for biomass. According to the report, without proof of environmental benefits, including the reduction of green house gas emissions, it's possible that subsidies could be withdrawn. It's predicted that these standards will soon become law, and that mandates will replace incentives. The author theorizes that discounts to non-sustainable products will cease and only sustainable biofuel will be able to meet the mandates and be eligible for tax exemptions and subsidies, with the future market placing a premium on carbon and sustainability credentials.

The full report is available for free at