Spain implements biodiesel quota

Apr. 24, 2012, Perpignan, France – Spanish biodiesel producers have 30
days from April 21st to apply for government approval to supply the
country's biofuels mandate, after the government voted on April 20th to
effectively block imports.

The Spanish government revived its dormant plan to introduce a biodiesel production quota system late last week in retaliation against Buenos Aires' nationalisation of Argentina-based oil and gas producer YPF, in which Spanish oil firm Repsol-YPF had held a controlling stake. The new system will restrict mandated biodiesel sales of up to 5mn t/yr (102,000 b/d) in Spain to government-approved EU-based plants. Producers will be judged on a series of criteria including emissions levels, public subsidies received over the last 10 years, compliance with Spanish technical standards and whether the plants are part of a larger complex. Quotas will be awarded to individual plants.

The government can extend the 30-day application period for certification for another 30 days, if it receives requests for permits totalling less than 4mn t/yr of capacity. The law does not stipulate a definite date for the implementation of the new system, but it confirms that Spanish targets for the incorporation of biodiesel in to the country's fuel mix will remain unchanged. To monitor the effects of the new accord the energy ministry said it will instruct the country's energy regulator CNE to produce a quarterly report tracking the cost and production of biodiesel in Spain and comparing it with other EU member states.

In moves likely to favour domestic producers, the ministry will also take into account how much direct investment in production operators have made in the last three years, the amount of biodiesel currently being produced at each facility and its destination.

The quota will apply to 5mn t/yr of capacity, well over Spain's current 4.59mn t/yr of installed capacity.

The new system will initially remain in place for two years, with the Spanish state able to extend it for another two years if it chooses. The quota law also allows the government to intervene in the market “for an unlimited duration if the price of biodiesel or functioning of the market is not deemed adequate”.

The introduction of the quota comes as Spanish producers face a double burden of structural overcapacity and a steep rise in Argentinian and Indonesian imports over the last four years. Spanish biodiesel production dropped by half between 2010 and 2011 to 647,000t, as imports from Argentina accounted for 719,000t and imports from Indonesia provided 325,000t.

With the vast majority of Spain's biodiesel plants having been out of action for many months, producers will now have to rush to hire staff, find financial backing against the current backdrop of financial austerity and secure imported feedstocks to make up for a shortage of domestic availability.

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