Biodiesel consumption in the EU could fall by 2M tonnes this year as drivers stay home due to novel coronavirus (COVID-19) travel restrictions, FO Licht said in a 3 April report.
coronavirus (COVID-19) travel restrictions, FO Licht said in a 3 April report.
The EU consumed around 16M tonnes of biodiesel last year, including 13.M tonnes of fatty acid methyl esters (FAME) and 2.5M tonnes of hydrotreated vegetable oils (HVO).
Disregarding COVID-19, demand hade been set to rise by 12% to 17.8M tonnes this year, comprising 3.5M tonnes of HVO and 14.3M tonnes of FAME, mostly due to higher quotas.
Current projections taking into account COVID-19 translated into a 2M tonne demand loss this year but it would be FAME from vegetable oils that would suffer the most from this, FO Licht said.
This was because refiners preferred to blend HVO over FAME due to technical reasons (energy content, physical and chemical characteristics) and a higher blending limit. EU production capacity for HVO rose last year so almost 3.5M tonnes could be available for the market in 2020.
There was also a strong preference for waste-based biodiesel (FAME and HVO), following double counting provisions (DC) in the EU’s Renewable Energy Directive (RED); its advantageous greenhouse gas (GHG) emissions; and the fact that the market share of crop-based biodiesel was capped in the RED and in member state legislations.
“Last but not least, high quotas in some member states make the use of DC biofuel necessary.”
EU-wide DC biodiesel production in 2020 was earlier projected at almost 6M tonnes, more than 3M tonnes from used cooking oil (UCO), while several 100,000 tonnes of UCO methyl ester were set to be imported, FO Licht said.
The waste segment would suffer from the coronavirus lockdown due to UCO collection problems and falling supplies from shut restaurants. Imports - mainly from China – were also likely decline.
“Nevertheless, DC biodiesel remains a highly sought product and the EU market can absorb a lot.”
The EU had also built up biodiesel stocks in recent years, with tariff changes in 2018 and 2019 lifting imports to above 3M tonnes/year.
“These stocks will weigh on the market and may cut output once more,” FO Licht said. “We therefore see an 8% reduction in EU biodiesel output to 13.7M tonnes in 2020, with FAME hitting a six-year low of less than 10M tonnes.”
The FO Licht report said the EU ethanol market would mostly likely be harder hit than biodiesel as petrol-powered cars would bear the brunt of the coronavirus slow-down in overall demand for transportation fuels. Fuel ethanol consumption this year was forecast to fall by around 12% to 4.43M m3, and had led to some producers shutting down plants.
“All in all, more than one billion litres of capacity is currently either off-line or in the process of being shut down.”
However, some European producers were confident that a large part of the losses seen in the fuel market could be compensated for by increased sales to the disinfectants sector during the months of the COVID-19 crisis.