France increased its biofuels imports
France continues to play a major role in the biofuels industry, with approximately 20 percent of the EU’s production and consumption. Nevertheless, production declined in 2010, and has continued to drop since, as indicated in the recently published annual report of the Ministry of Ecology and Sustainable Development France’s Energy Balance - 2011.
In 2011, total biofuels production dropped by 16 percent to 2.5 million metric tons (MT); including 1.8 million MT biodiesel (20 percent deterioration) and 668,000 MT bioethanol (8 percent drop). In 2011, reduced policy incentives for consumption (see section below) and lower prices for non-food uses relative to food uses hampered biofuels production. Most notably, market prices for vegetable oils have been significantly higher in MY 2011/12 than in the previous marketing year, making it more profitable for farmers to sell oilseeds to the food industry rather than to the biodiesel industry. This economic factor had a major impact on biofuels production, which mainly consists of biodiesel sourced from rapeseed oil.
On the other hand, as seen in GAIN report FR9089 Incentives and Plant Breeding Breakthroughs to Reduce Soy Imports dated February 3, 2012, the development of the biodiesel industry impacted dependence on imported animal feed. While soybean meal (all imported) consumption has remained relatively stable at 4 million MT annually over the past 25 years, use of rapeseed meal has increased from minor levels to more than 2 million MT annually, all domestically sourced as a by-product of the domestic biodiesel industry. As a result, France currently ranks above average in being protein-independent for the feed sector among EU Member States. In these conditions, one can predict that rapeseed-based biodiesel production, although on the decline, is likely to remain a major category of biofuels produced.
Total domestic consumption of biofuels remained relatively stagnant. In 2011, the total blending rate was 7.2 percent, including 7.07 percent for biodiesel into diesel and 5.16 percent for bioethanol into gasoline. Vegetable oils (mainly rapeseed oil) involved remain the leading feedstock used to process biodiesel, but quantities involved declined by 17 percent. At the same time, quantities of animal fats and recycled oils used to process biodiesel were almost six-fold, increasing from 70,000 MT in 2010 to 405,000 MT in 2011. For its part, bioethanol consumption increased 16 percent more ethanol and 14 percent less Ethyl Tertio Butyl Ester (ETBE) than in 2010. E10 continued to be consumed increasingly, accounting for 17 percent of the total volumes of gasoline consumed in 2011.
The downturn of France’s first-generation biofuels consumption can be explained by reduced domestic and European incentives. The most influential incentive set in favor of biofuel consumption consists of an environmental tax imposed on blenders when the annual target blending is not reached. Annual blending targets set by the Government of France increased from 1.2 percent in 2005 to 7 percent in 2010, but are now stagnant. In addition, the petroleum tax rebate that biofuels have benefitted has significantly declined and is likely to disappear. For biodiesel, the tax rebate declined from 33 Euros per hectoliter (€/hl) in 2004 to 8 €/hl in 2011, while for bioethanol it declined from 37 €/hl to 14 €/hl.
Further, the French Agricultural Minister announced in September 2012 that a plan that would put a “gradual end to public support for first generation-biofuels starting from 2014 and terminating December 31, 2015,” as part of his national action plan to address high feedstock prices. Since 2011, the implementation of the Renewable Energy Directive (RED) has favored animal fats and recycled oils at the expense of vegetable oils as feedstocks for second-generation biofuels, not competing with food production. The RED imposes biofuels to meet strict sustainability criteria in order to be taken into account as renewable energy, limiting both domestically-produced biofuels and imported biofuels and biofuel feedstocks (such as oilseeds and vegetable oil) to those documenting a green house gas emission reduction of at least 35 percent compared to fossil fuels, among others.
In France, second-generation biofuels receive double credit when calculating the quantity of renewable energy consumed for transportation, for which the RED set a compulsory objective of 10 percent by 2020. The leading producer of vegetable oil-based biodiesel, Sofiprotéol, recently shared its concerns with the press about the economic impact of European Commission’s intention to reduce the share of renewables in transportation from 10 to 5 percent by 2020 (announced at the European Energy Minister Council on September 17). According to Sofiprotéol, such a decision would reduce France’s biodiesel production by 30 percent and would partially endanger the 12,000 direct jobs and 10,600 indirect jobs this industry currently covers.
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