Germany Brakes Bio-diesel Boom

In January of this year, biodiesel lost its tax-free status in Deutschland. In the first year of the phase-in plan to raise taxes on biodiesel equal to the €0.45/liter on traditional diesel, biodiesel costs rocketed €0.09/liter. In the face of over-capacity and trying to compete to build market share against the established fuels, the budding biodiesel industry is struggling to maintain its balance. Stocks have plunged and trucking companies which switched to the renewable fuel are opting for the traditional diesel, which at a few cents more per liter delivers more miles/€ than the slightly less energy rich plant-based variant.

With Angela Merkel, German Chancellor, spearheading the EU's bold energy plan, the end of tax-relief for bio-diesel manufacturers seems contradictory. But Berlin is hearing the producer's cries. Germany's Environment Minister Sigmar Gabriel has acknowledged that the tax is having undesirable consequences and has promised action after the legislators return from the summer pause. The opposition party, SPD, has proposed a package which will re-examine the tax every year and which has a clause raising the legally required percentage of biodiesel in every liter of standard diesel sold from 5% to 7%. This will help to stabilize the current over-capacity and ensure a market for the biodiesel, a small offset for the uncertainties that an annual review of the tax situation introduces to business planning.
German beer lovers may yet also raise a voice in the debate over biofuels, which are blamed for raising food (and drink) prices by diverting agricultural land. Hey, SPD, why not throw in some incentives for the further development of enzyme processes which can make renewable fuels from the waste biomass left over after we harvest the edibles?

Via ::Spiegel

Tags: Biodiesel | Germany | Taxes

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