Hundreds of German biodiesel makers “on the brink of bankruptcy” as 32 cent-per-gallon biodiesel tax hike takes effect

In Germany, die Welt reported that hundreds of German biodiesel makers are on the brink of bankruptcy due to increased German taxes on biofuels. The report said that the largest biofuels companies, Verbio AG, Petrotec AG and Biopetrol AG, would survive by cutting back production to service the German B5 mandate, but that the market for B100 has collapsed due to price hikes.

The government raised the biodiesel tax by 60 percent on January 1 to $0.80 per gallon, up $32 cents per gallon.

Recently, the president of the Federal Association of Organic Fuels, Peter Schrum, accused the Finance Minister of trying to “crush us”, as tension erupts between supporters of the biofuels industry among Christian Democrats are pitted against anti-biofuels CD’s and the Social Democratic Party.

Under previous tax laws, German biofuels production increased from 200,000 tonnes to 3.4 million tonnes in 2007. But the imposition of excise taxes on biofuels has made biodiesel non-competitive with conventional diesel, threatening the viability of the German biodiesel industry.

Earlier this month, the German government presented its long-range biofuels strategy, saying that they had brokered agreement between the auto, oil and farm sectors who are backing the plan.

Environment Minister Sigmar Gabriel announced that Germany who set a target of 10 percent of its fuel needs coming from biofuels by 2010, reaching 20 percent by 2020 through the introduction of next-generation biofuels.

Agriculture Minister Horst Seehofer said that discussion was still underway on a proposed tax increase on biofuels that will take effect in January. The previous tax increase in January 2007 reduced the German biodiesel industry to producing at 20 percent of capacity as it could not compete with foreign imports.

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