Germany Cancels Plans to Introduce E10 in 2009

3 April 2008

by Rafael Seidl

German environment minister Sigmar Gabriel has canceled plans to raise the mandatory ethanol content of all Euro91 and Euro95 gasoline grade fuel sold in the country from the current 5% to 10% in 2009.

Meanwhile, the German oil industry is withdrawing Euro91 from the market as global demand has driven its wholesale prices level with those of the higher-octane Euro95 product. Owners of vehicles whose fuel systems were not designed for E10 compatibility would have to fill up on premium Euro98 instead, which currently costs ~12% more at the pump but yields only ~6% more miles per gallon (thanks to energy density, not octane rating).

Gabriel had previously indicated the E10 introduction would be canceled if the total number of legacy vehicles whose fuel systems are incompatible with it exceeds one million. The German industry association VDA had earlier insisted its contribution to the total would be well below 375,000 vehicles (excluding motorcycles and oldtimers), an estimate that has held.

However, the association of international vehicle importers VDIK has now reported that more than a million legacy vehicles from foreign manufacturers are affected. German drivers’ association ADAC pessimistically estimates the total could be as high as three million vehicles.

The cancellation comes at a time when criticism of first-generation biofuels is on the rise throughout Europe. On the one hand, it has dawned on city dwellers that farm interests are using biofuels as a means to shift subsidies from food production to non-food agriculturals, rather than phase them out. On the other, rising food prices have been linked to biofuels demand. Moreover, the portion that cannot be met by domestic producers has to be imported from e.g. Brazil and Malaysia, where it has been linked to clear-cutting of virgin rainforests, with significant knock-on effects on net GHG benefits (this applies primarily to biodiesel).

Unfortunately, as is so often the case, imprecise reporting by the mainstream media in Germany often fails to differentiate between the food-based first-generation technology currently in use and second-generation solutions that rely on cellulose and/or algae for their feedstock (incl. biomethane). As a result, it will now become that much harder for these benign and valuable emerging technologies to find a market in Germany and by extension, in the EU. Already, commentators are suggesting we refer to them as “agrofuels” instead.

The growing blanket opposition to all things labeled “biofuel” will also make it very difficult for the EU to require high blend compatibility for all vehicles starting at some future date. Such a measure would be relatively cheap and represent an insurance policy for politicians, giving them the option of permitting—or mandating—higher blend levels if and when affordable and sustainable production methods should materialize. As this episode in Germany clearly illustrates, the vehicle fleet needs to be prepared for such a change many years ahead of time. After all, consumers pay insurance premiums for all sorts of things, why would they refuse to do so when it comes to the energy supply for their personal transportation?

Note that the FFV loophole in CAFE did achieve such an insurance policy for part of the US fleet, but only at the expense of reduced actual fleet average fuel economy. Moreover, E85 compatibility has always been voluntary, as has selling ethanol-gasoline fuel blends—except in areas with particularly poor air quality, such as California. The political force behind E85 has long been the corn ethanol lobby in the Midwest, against resistance from the oil industry. However it may be spun today, it was not in fact the result of a coherent energy policy designed to reduce dependence on oil and fuel imports. For these reasons, the FFV model may prove of limited value in convincing Germans they should spend $50-100 extra on their new car “just in case”, especially at the present juncture.

Instead, expect a resumption of the stale discussion on a general speed limit in Germany. This is a highly emotional subject in the country, akin to Americans’ right to bear arms. Moreover, the idea that consumers would choose smaller engines as a result is not borne out by the US experience, where even regular mid-size sedans feature 200+ hp in spite of relatively low general speed limits.

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