Weak oil and imports turn EU biofuel boom to gloom

PARIS (Reuters) – European euphoria over biofuel has ended after slumping oil prices and cheap imports battered the sector last year, while the credit crisis has made the outlook even gloomier.

Producers say the fall in oil prices at a far quicker pace than agricultural costs has endangered the sector by slashing margins, although conditions differ between countries depending on the amount and means of government aid.

Many companies across the European Union have abandoned or halted biofuel projects and more damage will occur if oil prices do not rise significantly in 2009 and the bloc does not manage to protect its market, producers and analysts said.

“If conditions remain as they are now, it’s going to be a tricky year,” said Philippe Tillous-Borde, chairman of France’s Diester Industrie, which controls 30 percent of the 27-member bloc’s biodiesel market.

Reuters