New Market Opportunities for EU Biodiesel Producers in Spain

on Jun 4, 2012

Recently, Reuters reported that European producers of biodiesel would have the opportunity to increase their sales in Spain, which happens to be one of the largest biodiesel consumers in the European Union.The country passed a much-debated government decree which will effectively exclude imports from non-European countries such as Argentina, which thus far has been one of the main suppliers on the Spanish biofuel market.

At the end of April 2012, Spain revised an incentive programme to exclude biofuels produced outside the EU from meeting government requirements for using renewable fuel. More precisely, only EU-produced biodiesel could be used to comply with a legal minimum of seven percent which has to be blended with mineral diesel used in motor fuel. There is no actual ban on importing or using the product in question, and yet, if the product cannot be used for minimum blending, petroleum operators most probably will not be interested in buying it. This in turn will spur demand for EU-produced biofuels compliant with the new requirements of the Spanish government.

As noted in the Reuters article, quoting the estimation of industry group APPA Biocarburantes, approximately 90 percent of the biofuels consumed in Spain last year came from either Argentina or Indonesia, with the remaining 10 percent supplied mostly by European producers. Considering that the amount of biofuels consumed in Spain last year was 1.2 million tonnes, European biodiesel producers will have the opportunity of selling an additional 1 million tonnes a year on the Spanish market.

Even though the Spanish decision was adopted just a few days after Argentina nationalised YPF SA (YPFD), a local unit of the Spanish energy company Repsol YPF SA (REP), Reuters notes that the decree had been drafted months earlier with the purpose of boosting local biodiesel plants.Over the last few years, the Spanish biofuel industryhas been working at 14 percent of its capacity, mostly on account of competition from imports.!m[](/uploads/story/38/thumbs/biofuel_art_inline.png)

Even though the purpose of the decision seems to be boosting the Spanish biofuel industry in particular, it is also likely to benefit EU-based biofuel producers in general. Biodiesel plants in the EU will be able to apply for a registration with the Spanish Ministry of Industry, Energy and Tourism for complying with the blending requirements.The APPA Biocarburantes President Manuel Bustos points out that since supplies will have to take place in Spain, plants based either in Spain itself or in neighbouring countries will most likely have a competitive advantage over plants located in other EU Member States.

The Spanish biofuel industry on the other hand will have to deal with the issue of raw materials, since currently the country grows few oil seeds. Most likely, the country will have to increase the imports of raw materials or, in other words, Spain might actually replace the finished product imports with imports of raw materials. Alternatively, the country could consider the further developing of energy crops such as rapeseed.
In any case, the Spanish decision will result in increased domestic biofuel production and is also likely to boost the sales of EU biodiesel producers in Spain.


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