Tax hike would force German biodiesel closures

Germany’s crisis-hit biodiesel industry faces further closures if the government goes ahead with plans to further raise biofuel taxes, a biofuels industry leader said on Wednesday.
Germany’s government plans to increase taxes on biodiesel in January 2009 to 21 euro cents a litre, from 15 cents, in the next stage of its programme to raise taxes on green fuels to the same level as fossil fuels.

“Some biodiesel producers will not survive the impact of even higher taxes and it must be expected that there will be more plant closures,” Johannes Lackmann, chief executive of the German biofuels industry association VDB told Reuters.
“The German biodiesel industry is in a crisis.”

Lackmann said the industry is already working substantially under capacity mainly because tax increases on green fuels in January this year largely removed the price advantage of biodiesel over fossil diesel at petrol pumps.

Germany’s five million tonnes annual capacity biodiesel industry, Europe’s largest, has seen a series of plant shutdowns this year.

Among the most prominent was in May, when leading producer Campa AG, operator of a 150,000-tonnes-per-year capacity plant, declared insolvency.

“Many producers are currently working at capacities well below commercial break-even levels,” he said. “This cannot continue indefinitely. A further tax rise could be the end for some in the industry.”

The industry will intensively lobby the country’s government to drop the coming tax rise.

Guardian