Biodiesel producers brace for slower demand as diesel car sales plunge

UK sales of new diesel cars will likely plunge further this year as environmental concerns, emissions testing scandals and uncertainty about future regulation will give biofuels producers plenty to think about in 2018.

Sales of diesel cars in the UK, the EU’s second-biggest auto sales market, fell 17% in 2017, according to figures published on Friday by the UK Society of Motor Manufacturers and Traders (SMMT).

Year-on-year sales of diesel cars in December tumbled 31%, following the announcement in November by the UK government that it would slap higher taxes on some UK diesel models in the wake of growing concerns about the fuel’s role in causing chronic air pollution.

The attractiveness of diesel cars in the UK had already taken a pasting in 2017 amid further revelations that manufacturers had rigged emissions tests, a scandal that first came to light in 2015 when German auto giant VW was exposed by US EPA investigators.

The prospect that demand will fall for diesels in other EU countries this year will resonate with producers of biodiesel, who based many of their investment decisions on the expectation that cars using the fuel would continue to take market share from petrol models.

The UK government last year said that it expected biofuel demand to rise from 2.2 billion litres currently to just under 3.5 billion litres by 2032, with biodiesel expected to account for the overwhelming majority of the increase.

Forecasts quoted in Automotive News Europe suggest that market share for diesel will fall to 40% this year in the EU from 50% in 2018.