Europe's shifting ethanol landscape

By Brian Warshaw in Fontaines, Burgundy, France | April 08, 2008
Web exclusive posted April 16, 2008 at 4:04 p.m. CST

France has displaced Germany and Spain rising to the top of the European Union ethanol-production table in 2007, reported eBIO, the European Bioethanol Association in Brussels, Belgium.

While overall European ethanol growth slowed, French production nearly doubled to 153 million gallons (578 million liters) while Germany's output fell 9 percent and Spain's dropped 12 percent.

Throughout Europe, ethanol production grew 11 percent in 2007 - but at a fraction of the pace when compared to 2004 and 2005 when annual production growth topped 70 percent.

Belgium-based eBIO attributed the slow growth in Europe to high feedstock prices and historically low prices of finished ethanol in third-party countries. Cereal prices, as a proportion of production inputs, pushed overall costs to a level that made it no longer profitable to produce.

As a result, eBIO said in a statement April 8 that a number of companies decided either to suspend operations, delay construction or scrap some projects outright. Producers who have temporarily closed or delayed facilities include Abengoa in Spain, Verbio in Germany, and Agrana in Austria.

Total European Union production in 2007 was 468 million gallons (1.8 billion liters) - one-third below estimated consumption of 713 million gallons (2.7 billion liters). It was offset by imports from Brazil. Importers were Sweden, the United Kingdom, the Netherlands and to a smaller extent Denmark and Germany.

In comparison, according to the Renewable Fuels Association, U.S. production in 2007 was 6.5 billion gallons and demand was 6.8 billion gallons.

In 2007, Slovakia and the United Kingdom started large-scale ethanol enterprises, processing 8 million gallons (30 million liters) and 5 million gallons (20 million liters), respectively. The total number of countries producing fuel ethanol has risen to 13, excluding Finland, which last processed the fuel in 2005. Swedish production fell by half to 18 million gallons (70 million liters).

The change in France's standing goes back to 2003, when it ceded the number one position to Spain. In response, then-industry minister Franois Loos and Dominique Bussereau, minister for agriculture, met with biofuel companies to discuss a doubling of production. As a result, the ministers authorized production of an additional 120 million gallons (380,000 tons) of ethanol to be allocated among 11 producers.

Subsequently, the government authorized six more ethanol plants in 2006, with the goal of biofuels industry retaking the number one position by 2008 - a task it has fulfilled, two years ahead of the European Union's requirement for biofuel to represent 5.75 percent of the market.