November 20, 2002

Germany:   Rapeseed Production Insufficient for Expanding Biodiesel Industry

Germany will not have the ability to provide enough domestically produced rapeseed to supply its expanding biodiesel industry.  Increases in oilseed or vegetable oil imports, and/or corresponding decreases in exports will be needed.

Rapeseed Methyl Ester Benefits from Tax Exemption

A report released by the U.S. Agricultural Minister Counselor in Berlin (FAS) (pdf) (Word Perfect) in October provided an overview of the biodiesel industry.  The industry is for the most part focused on producing just one kind of biodiesel, rapeseed methyl ester, which can be produced from the oil of domestically produced rapeseed.  The report concluded that biodiesel is not competitive with petrodiesel on its own, but is being made competitive with a tax exemption on motor fuels. Producing biodiesel is expensive, €around 530 € (euros) per 1000 liters.  Producing petrodiesel costs much less, about 225 € per 1000 liters.  German mineral oil and ecological taxes amount to 439.7 € per 1000 liters, and result in a cost of 665 € per 1000 liters for petrodiesel before distribution and marketing Biodiesel is exempt from these two taxes in Germany.  A 16-percent value added tax is added at the retail level for both petro and biodiesel.

A survey of fuel prices in the Berlin area showed fossil diesel with an average retail price of 803  € per 1000 liters and biodiesel at 733  € per 1000 liters.  Taking the differences gives petrodiesel a return of 27 € per 1000 liters before distribution and marketing compared to 102  € for biodiesel.

German Biodiesel Industry Expanding Rapidly

Perhaps this apparent difference in returns explains why capacity for the production of biodiesel has increased dramatically over the past years.  From 1995 to 2001, capacity increased five fold from 110,000 metric tons per year to 533,000 tons and is forecast to reach close to 1 million tons in January 2003.  Approximately one ton of vegetable oil is consumed to produce one ton of biodiesel.

Germany Unable to Produce Enough Rapeseed for Biofuel Proposal

In November 2001, the EU Commission proposed an action plan to promote the use of biofuels.  The proposal is motivated by environmental concerns and is intended to help the EU reach the Kyoto goal of reducing CO₂ emissions.  The plan calls for replacing at least 5.75 percent of fossil fuels as of 2010 with biofuels, such as biodiesel, bioethanol, biomethanol, and bio-oils.  Member states would be free to determine whether they want to comply with the goals by using pure biofuels or blends.  The proposal does not mandate which renewable fuel would be used, but it is widely believed that biodiesel would be more than half of the supply, while ethanol would be most of the remainder.

The report issued by FAS/Germany indicates that it would be difficult for Germany to meet the goal totally with biodiesel made only from domestically produced rapeseed.  By 2010, an estimated 2.6 million hectares of rapeseed would be needed to produce 3.4 million tons of biodiesel to satisfy the 5.75 percent goal.  This year, Germany harvested an estimated 1.3 million hectares of rapeseed.  Realistically, total German rapeseed area faces its natural limit at about 1.5 million hectares because of field phytosanitary (crop-rotational) reasons.  Rapeseed oil is popular as a food, and the current area used for “food” use is about 900,000 hectares.   This leaves 600,000 hectares potentially available, which could produce 800,000 tons of rapeseed oil and 800,000 tons of rapeseed methyl ester.  This will not be sufficient to satisfy industry needs by the end of this year.

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For more information, contact Paul Provance
with the Production Estimates and Crop Assessment Division, at (202) 720-0881