Biofuels At What Cost? Mandating ethanol and biodiesel consumption in Germany

Anna Rauch, Michael Thöne

For the Global Subsidies Initiative (GSI) / July 2010 / Study, FiFo, International Institute for Sustainable Development (IISD) Geneva

Abstract
Biofuels—both ethanol and biodiesel—benefit from high levels of financial support in almost all European Union Member States. This report aims at quantifying all support measures provided in the European Union. It is one of several studies undertaken for or by the Global Subsidies Initiative (GSI) examining subsidies and support measures in various countries. This report in particular focuses on the years since 2007 and represents an update of the 2007 report on biofuel support measures in the EU, carried out by Kutas et al. (2007). In order to stimulate the use of renewable energies, to reduce CO2 emissions and to secure an energy supply that is environmentally friendly, the EU made the promotion and promulgation of biofuels a strategic objective. Identifying and measuring the various subsidies is a complex challenge. Often appropriate data are not available, either because Member States do not report on their measures or because official statistical data—for example on trade volumes—are not sufficient. As a result, most quantities in this report are underestimates. Despite these drawbacks, we believe that the report provides a useful overview on overall support and trends over the last two to three years. In 2008, total transfers in support of biofuels associated with policies of the EU and the Member States amounted to €3.01 billion. This is a significant decrease compared with the total support of € 3.7 billion in 2006 as presented in Kutas et al. (2007). The decline in support per litre consumed since 2006 is even more striking. In 2006 the support per litre consumed of ethanol was €0.74 and of biodiesel, €0.50, whereas it was €0.24 and €0.22 per litre in 2008, respectively. Despite the sharp decrease in the support per litre, it is notable that there seems to be a convergence of the support intensities of biodiesel and ethanol. In 2006 per litre support of ethanol was yet much higher than that of biodiesel.