Germany’s biofuels industry braces for court ruling on diesel car bans

Germany’s biodiesel industry is waiting with baited breath for a court decision that could give municipal governments a mandate to ban or restrict diesel vehicles, an outcome that may hasten the shift towards petrol cars and impact the country’s renewable fuel targets. 

On February 22 a federal court in Germany will rule on whether Stuttgart – where automotive firms Daimler AG, Porsche and Bosch all have their headquarters – will have to take measures to ban diesel cars from the city in a bid to reduce emissions of nitrogen oxide, which is blamed for causing serious illness.

If the federal court rules in favour of environmental campaigners, many other German municipalities could have to follow suit and require diesel cars to meet the EU’s Euro 6 standard on emissions without scandalised ‘defeat devices’ — or be banned from using the cities’ roads.

Diesel cars’ market share fell to 38.8% last year from 45.9% in 2016, while the share of gasoline was 57.7%, up from 52.1%, a shift that partly reflected the prospect of city-wide bans, said Dorothee Saar, a campaigner with German Environmental Aid.

The NGO has lodged court cases in 19 German cities seeking bans of diesel cars, which, if successful, could speed up the rate by which drivers are switching from diesel cars, pointed out Fritz Vorholz of think tank Agora Verkehrswende.

“This would lower the demand for diesel in the years to come,” he added.

But experts said the rate of the fall will depend on the extent to which cities impose curbs in diesel cars (depending on weather, for example.  and whether manufacturers bow to pressure and pay for costly retrofits, or introduce new models that can clearly demonstrate, in real world conditions, that they are much less polluting than older diesel models.

Germany’s carmakers say the newest diesel cars are much less polluting than their predecessors and can help Germany cut CO2 levels compared with petrol models.

Directives

According to the US Department of Agriculture’s most recent GAIN report, Germany’s bioethanol consumption was expected to increase by 4% percent in 2017 as a result of the adjustment of Germany’s the greenhouse gas (GHG) reduction mandate from 3.5% to 4%, while consumption of biodiesel/hydrogenated vegetable oil was expected to rise 7%.

Germany is also a major exporter of biofuels, mainly to Denmark, Netherlands Poland and UK.

A clear shift to petrol would require producers of bioethanol, which is added to gasoline, to increase output at a time that the EU is contemplating tougher new curbs on the share of crop-based biofuels.

A vote in the European Parliament last week backed a 12% target for the use of renewable fuels as a share of overall transport fuels, but this overall target implies a much smaller threshold for bioethanol producers, which source much of their feedstock from corn, wheat and soy.

Shift to petrol

Germany’s biofuels lobbies reckon that because the 2030 renewables fuels target will be shared between advanced biofuels and electric vehicles, the share of crop-based biofuels could be hammered down to 2% from the 7% proposed at the European Council.  

If the sharp fall in diesel sales in Germany and Europe as a whole continues, suppliers of biodiesel will have to contemplate a much slower growth in demand for their products than they had envisaged when their plants started production, many of which went into operation over a decade ago.

Slower demand for biodiesel in the EU, much of which can use advanced biofuels such as used cooking oil, will make it more difficult for Germany to raise the share of non crop-based biofuels required under EU legislation.  

Freight 

However, in Germany at least, the biodiesel sector can look to forecast growth in road freight as compensation for the demand that is likely to be lost from cars.

At a biofuels conference in Berlin this week, delegates heard that Germany’s volume of road freight is likely to grow by 38% between now and 2030, and many of these vehicles are likely to be using diesel for much of the next decade, as alternative automotive technologies such as batteries and fuel cells are less suited to large trucks.     

With Germany’s federal government apparently unwilling to compel its powerful auto lobby to pay more than token costs of fixing the diesel emissions disaster, observers say the EU’s largest economy will have to consider how to cut the environmental impact of another one of its major industries – freight.