Report discusses future of European ethanol industry

By Erin Voegele | July 25, 2014

The European Union has filed its annual biofuels report with the USDA Foreign Agricultural Service’s Global Agricultural Information Network, reporting that the European Commission aims to reach an agreement on future biofuel policy by October.

The report notes the EU Energy Council reached a political agreement on biofuels policy in mid-June that would cap conventional biofuels at 7 percent. The agreement would also support a transition to second- and third-generation biofuels. According to the report, the council aims to reach an agreement with the European Commission and parliament in October.

Regarding biofuel imports, the report notes that although the European Commission imposed anti-dumping duties on U.S. ethanol, 400 million liters (105.67 million gallons) of ethanol was imported through zero duty quotas, mainly used by Guatemala, Peru and Pakistan.

The report also specifies that the expansion of European ethanol demand is dwindling, and is not forecast to reach the record of use set in 2011. The drop in demand is attributed to lower transportation use, adjusted blending mandates and blending of double-counted biofuels. “The only possibility for expanding the market is a wider introduction of higher blends such as E10 in combination with a significant reduction of biofuel prices. A future cap on food based biofuels will further limit the consumption and production of biofuels in the EU,” state the authors in the report.

Although advanced biofuel production benefits from support programs in the EU, the report indicates European deployment is lagging behind the U.S. Political uncertainty is described as the main obstacle to investments and commercialization in the advanced biofuel sector.

The report shows that 5.19 billion liters of fuel ethanol was produced in the EU last year, with production expected to increase to 5.25 billion liters list year and 5.31 billion liters next year. Imports for 2013 measured 945 million liters, down from 1.18 billion liters in 2012 and 1.64 billion liters in 2011. This year, imports are expected to drop to 830 million liters, before climbing to 855 million liters in 2015.

The EU consumed an estimated 6.52 billion liters of ethanol last year, down from 6.63 billion liters in 2012 and 6.65 billion liters in 2011. Consumption is expected to increase to 6.59 billion liters this year and 6.65 billion liters next year.

Production capacity in 2013 was approximately 8.48 billion liters last year, up from 8.47 billion liters the prior year. Capacity is expected to hold steady at 8.48 billion liters this year and next year. An estimated 61 percent of capacity was in use last year, with use expected to increase to 62 percent this year and 63 percent in 2015.

Distillers grain production was 3.13 million tons last year, increasing to a forecast 3.2 million tons this year and 3.46 million tons next year. Corn oil production is also increasing, from 165,000 tons last year to 167,000 tons this year and 169,000 tons next year.

An estimated 11.43 million tons of sugar beets are expected to be used to produce ethanol this year, with wheat and corn feedstocks measuring 3.06 million tons and 5.78 million tons respectively. Approximately 610,000 tons of barley and 780,000 tons of rye will also go to ethanol production this year.

France remains the EU’s top ethanol producer, with 1.18 billion liters expected to be produced this year. Benelux ranks second with 1 billion liters followed by Germany with 850 million liters.

A full copy of the report can be downloaded from the USDA FAS GAIN website.