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Fresh European fuel consumption data indicates slumping fuel prices are having a strong stimulative effect on European as well as US motor fuels demand. But Germany’s shift to a carbon saving rather than volumetric mandate since the start of this year is having a mixed impact on German biofuels demand, with percentage growth in bioethanol admixtures greatly outstripping the sleepier biodiesel and HVO markets despite strong diesel demand growth.Germany

Overall German diesel consumption jumped 10.6% in June YoY to 3.17mn t, with French data for July showing a 3.1% YoY surge in diesel consumption. German monthly biodiesel and HVO blending posting a much more modest 1.9% gain however to hit just below 191,000t for the month. Ethanol blend consumption meanwhile jumped 8.8% to hit 90,000t, despite June gasoline consumption remaining essentially flat against year-ago levels at 1.55mn t.

Sellers’ headline GHG savings for both biodiesel and ethanol have been creeping higher since the mandated shifted at the start of this year, reflecting their efforts to capture higher prices for cleaner fuel. While percentage advertised biodiesel GHG savings for product made from virgin vegetable oil are edging towards the upper-50s, ethanol suppliers are nudging ahead, with most domestic product averaging between 58-65% GHG savings relative to gasoline.

Brazilian sugar cane ethanol imports into Europe are scoring 71% GHG savings. With anything boasting over a 70% carbon cut able to capture an additional €1.50/m³ in price for every incremental percentage point of carbon saving, Brazilian ethanol’s more efficient GHG profile will allow exporters to offset some of their mountainous export disadvantage into Europe thanks to the EU’s long-standing €192/m³ tariff wall. One Scandinavian based supplier of grain ethanol meanwhile is advertising percentage carbon savings into the 90s thanks to its adjacent combined heat and power plant.

Germany’s growing consumption of gasoline containing a 10% ethanol admixture meanwhile has helped ethanol producers grow their market share free of the blendwall constraints of the dominant E5 blend. Unit sales of E10 rose 2% in 2014 YoY, lifting Super E10’s share of the gasoline market to 15.2% from 15% in 2013 as sales of 5% gasoline/ethanol blends dropped. Sales of oxygenate enhancer ETBE however slumped in June by 22% to just over 10,000t, offsetting a small portion of the gain in ethanol blend sales.

MS — 26 August 2015

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