German government, oil lobby clash on biofuel use target

Reuters News
Posted: Aug 30, 2011 1:19 PM
German government, oil lobby clash on biofuel use target

HAMBURG (Reuters) - Germany's government and its oil industry association on Tuesday disagreed about whether the country can reach its 2011 biofuel use quotas as sales of a new gasoline blend with a higher biofuel content remain sluggish.

The German government this year raised the maximum permitted level of bioethanol blended in gasoline to 10 percent from 5 percent previously as part of Germany's program to protect the environment by cutting CO2 emissions.

German oil industry association MWV said only 10 percent of German gasoline sales were of the higher blend gasoline, called E10.

An environment ministry statement said Germany's 2011 compulsory biofuel use level is 6.25 percent, the same as 2010 before the new E10 fuel was introduced.

"Currently the sales share of E10 of 10 percent of the total gasoline volume is not enough to fulfill the quota we have been given," the MWV said. "E10 would have to make up almost the entire gasoline sales to achieve this."

Sales of the new blend have been low since introduction. Oil companies which fail to meet their biofuel blending quotas under Germany's environmental protection program can be fined.

This would create additional costs for the oil industry, the association said.

"That these costs must be considered in the calculation of gasoline prices, is an economic necessity," the MWV said. "The hard competition for customers will be decisive about whether all additional costs can be covered by the price."

The ministry took issue with the MWV.

"There are no signs that the level will not be fulfilled this year in contrast to other years," the ministry said in a statement.

Oil companies have a wide range of other fuels to meet the blending quotas including E5 gasoline with 5 percent biofuel content, diesel blends with 7 percent biodiesel content or 100 percent biodiesel, the ministry said.

Calculations of German annual biofuel usage are made in September, it said.

"It is therefore unacceptable and lacking in any justification to threaten to pass on possible fines to consumers or to already start doing this," the ministry said.

The oil industry also has volumes of over-fulfilled quotas from last year which it can also use this year, the ministry said.

"The ministry remains in discussions with the industry and with consumer associations to exchange experience and to make it clear that there are many possibilities to offer biofuels which fulfill the quota requirements."

Germany's transport minister said in April the new E10 fuel blend must stay on sale despite the hostile reaction and blamed oil companies for failing to explain the new fuel to motorists.

(Reporting by Michael Hogan; editing by Keiron Henderson)