The Top 10 Biofuels Stories of 2008: #5, EU mandate and subsidies collapse

Partly as a result of negative publicity regarding biofuels, the European Union watered down its 2020 biofuels conversion goals, while Germany began to remove tax credits that aided its domestic biodiesel industry. The biofuel tax increases, aimed at ultimately creating tax parity between biofuels and conventional fuels, rendered the domestic German biodiesel industry unable to compete with subsidized biodiesel from South American and the US.  27 percent of German capacity shut down altogether, while 36 percent ran at less than 50 percent of capacity.

In 2009, the German federal government said that it would reduce the mandated blend of biodiesel for 2009 from 6.25 percent to 5.25 percent, but said that it would reduce by three cents the fuel excise tax increase scheduled for next year. The 21 cent per liter tax hike will be reduced to 18 cents.

Meanwhile, the European Union flirted with doing away with a 10 percent biofuels target and 2008-2020 conversion schedule. The EU ultimately agreed to confirm the targets as a renewable energy conversion, but 30 percent of the target would be met by electric cars or trains, with the remainder to come from biofuels. The EU also said it would develop regulations by 2010 to limit the impact of indirect land-use change, while biofuels developed from non-food sources will receive preferred treatment under the agreement. The agreement will need to be ratified by the European Parliament and all 27 EU members.

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