Antwerp | Reuters –– European oil refiners urged the European Union on Monday to review laws calling for increased biodiesel content in road fuel because the cost of such renewables will counter the recent plunge in crude prices and weigh on the refining sector.
“Governments should not inflict extra burden on the public by increasing the component of biodiesel that is so expensive and is heading to be twice as expensive as diesel,” Eni executive Alessandro Bordoni told the Platts annual middle distillates conference in Antwerp.
“They (governments) will have to add other measures to make sure that the impact is not too negative,” Eni’s vice-president for gasoline, middle and heavy distillate trading said.
Prices of biodiesel, produced from feedstock such as palm oil and animal fat, have fallen from around $1,000 a tonne in recent months to closer to $800 a tonne (all figures US$). The price of benchmark European diesel barges has halved to around $480 a tonne since last June, tracking the collapse in crude oil prices.
The EU’s Renewable Energy Directive calls for a 10 per cent renewable energy content by 2020, up from a limit of seven per cent in most European countries today. France recently increased its own limit on food-based biofuels in transport fuel to eight per cent.
Refineries have benefited from the recent decline in crude oil but biodiesel blending requirements have meant profit margins have been put under pressure by the cost of renewables.
“Biodiesel is a burden on refining margins,” said Stefan Forte, director of supply chain management at Croatian refiner INA.
— Reporting for Reuters by Ron Bousso in Antwerp, Belgium.