The European Landscape for Biofuels in the Transport Sector

Biofuels are experiencing strong growth across Europe. As a result the manufacturers and retailers of biodiesel and bioethanol, as well as other industry stakeholders, need to be aware of the varying penetration rates within member states. This brief assesses the fiscal, economic and market based factors that are encouraging the use of biofuels across six major European markets.



Report Highlights
Alongside support from the EU, Germany and Sweden have long been proponents of biofuels at a national level. In order to promote biofuels use, their respective governments offer an array of incentives, many of which are being adopted by other member states. Examples include reductions on fuel duty, free car parking and exemptions on road charges. France and Germany have the largest production capacity for biofuels in Europe, whilst biofuels consumption and the associated supply network is most significant in Germany and Sweden. Unlike Germany, Sweden produces a relatively small amount of biofuels at 123,000 tonnes per annum, making it heavily reliant on imports to satisfy demand. The high level of importance placed on environmental issues by European consumers is likely to be a key driver for biofuels over the next few years; a Datamonitor survey revealed that over half of consumers in all of the major European countries, apart from Italy, agreed that "it is important to buy socially responsible products".


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CATALYST 1
SUMMARY 1
ANALYSIS 2
Alongside support from the EU, governments in Germany and Sweden have long been strong proponents of biofuels 2
The EU's Biofuels Directive has been the principal supranational driver for the uptake of biodiesel and bioethanol 2
The EU's Energy Crop Premium has helped spur the cultivation of crops for the production of biofuels 3
Strong political support for the use of biofuels has led to the highest uptake in Sweden and Germany 4
Germany's socialist/green coalition was a key factor in making it Europe's largest consumer of biofuels 4
Multi-faceted support for the use of biofuels in Sweden has led to high penetration 5
Political commitment and partnerships with agriculture have made France a leading consumer of biofuels 6
Poor implementation of targets for biofuels in Spain and Italy has led to limited uptake 8
The UK government's scepticism of biofuels has restrained consumption 9
In member states obligations on fuel retailers to sell biofuels will be a significant market driver going forward 10
In member states obligations on fuel retailers to sell biofuels will be a significant market driver going forward 10
The biofuels market in Germany has been aided by a strong production base, filling station network and vehicle availability 11
The capacity to produce biofuels is strongest in France and Germany 11
Germany has the largest production base for biofuels in Europe, but is having to reduce output 11
Sweden's high level of biofuels utilization is heavily reliant on imports 12
In France, enthusiasm from agriculture and industry has created a strong production base for biofuels 12
The UK's production base is small and is suffering from overcapacity 13
Italy and Spain are significant producers of biofuels despite limited consumption at the national level 14
The retail network for high blended biofuels is strongest in Germany and Sweden 16
Ethanol is widely blended into regular fuels in Sweden 16
Availability of biofuels in France and Germany is amongst the highest in Europe 17
The network for biofuels is set to grow rapidly in Spain and Italy 17
Biodiesel and bioethanol are only available at a minority of UK service stations 19
Swedish car manufacturers are the most enthusiastic supporters of biofuels 20
Swedish and French car manufacturers have been the most supportive of biofuels 20
German car manufacturers have shown mixed enthusiasm for biofuels 21
Tax rebates and increasing environmental concern have been key in boosting demand for biofuels in Germany and Sweden 22
The adoption of biofuels has been most successful in countries with generous fiscal incentives such as Sweden 22
Users of biofuels in Sweden, Italy and Spain benefit from the highest levels of tax relief 22
Consumers in Germany, the UK and France benefit from partial tax rebates on biofuels 23
The high level of importance placed on environmental issues in Germany and Sweden have influenced biofuel sales 24
APPENDIX 25
Definitions 25
Sources 25
Further reading 25
Ask the analyst 25
Datamonitor consulting 25
Disclaimer 26

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Figure 1: Germany put 0.65% of its non-fallow farmland under the Energy Crop premium scheme in 2004 3
Figure 2: Germany consumed more than 2,000 million litres of biodiesel in 2005 4
Figure 3: 98% of the biofuel used in Sweden in 2005 was bioethanol 6
Figure 4: France consumes almost equal amounts of biodiesel and bioethanol 7
Figure 5: The UK only used 120 million litres of biofuel in 2005 9
Figure 6: Biofuel obligations 10
Figure 7: Germany's biodiesel production grew by over 60% between 2004 and 2005 11
Figure 8: Sweden produced 122,000 tonnes of bioethanol in 2005 12
Figure 9: France produced 492,000 tonnes of biodiesel in 2005 13
Figure 10: The UK produced 51,000 tonnes of biodiesel in 2005 14
Figure 11: OKQ8 has 214 sites retailing E85 in Sweden 16
Figure 12: Total UK has 331 sites retailing biodiesel in the UK 19
Figure 13: Saab, Volvo and Citroen are strong supporters of biofuels 20
Figure 14: Selected German car brands have demonstrated enthusiasm for biofuels 21
Figure 15: Opting for green energy is one behavioural aspect of rising environmental attitudes 24

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