Report: France Hitting Biofuels Targets, But Likely to Back Off 2010 Goals

18 August 2008

France, the second largest biofuel producer in Europe, consumed 1.15 million metric tons of biodiesel and 420,000 metric tons of bioethanol in 2007, representing 3.5% of French fuel consumption, according to a Global Agriculture Information Network (GAIN) report by the US Department of Agriculture Foreign Agricultural Service.

Beginning in 2005, the government of France set targeted levels of biofuels incorporation in transportation fuel, in energy value, of 3.5% in 2007 rising to 7% in 2010. In terms of volume, that translates to 3.8% and 5.3% of biodiesel and bioethanol respectively in 2007, rising to 7.6% and 10.7% respectively in 2010.

To motivate fuel blending companies to reach these objectives, for fuel sold in France, each company receives favorable tax treatment on a limited quantity of biofuel blended at the targeted incorporation rate. Companies must pay an environmental tax for failure to reach the targeted incorporation rate.

However, the USDA report notes, the current French administration is significantly less supportive of biofuels than its predecessor. A review of the energy and ecological balance of biofuels requested of the French Environment Agency (ADEME) in the fall of 2007 has yet to be released. The French Minister of Environment recently retreated from an ambitious 10% biofuels incorporation target by 2015 but supported second-generation biofuels.

In France there are two main second-generation programs underway:

• The “Futurol” pilot project explores enzymatic hydrolysis on cellulosic biomass (mainly straw and wood products). It is based in the Champagne region in the “Industrie Agro Ressources” (IAR) technological cluster, and is co-funded by local authorities, public research centers, and financial organizations. Futurol’s total budget is €80 million (US$118 million).

• A consortium is currently being formed which will focus its research on thermoconversion, transforming biomass (mainly wood products) into gas by high-temperature gasification, then reducing the gas into gas oil by the Fischer-Tropsch process. More details on the co-funding of this program is expected to be public in the near future.

Biofuels resource demands are increasingly blamed in France as the primary cause of rising food prices, with little attention paid to other factors, such as reduced supply following short harvests, high demand from emerging markets, speculation, and high energy prices. In light of the public and political concern over the environmental and economic benefits of biofuels in the context of high world food prices, the government will likely withdraw its 10 percent incorporation rate target for 2015 and will not introduce any new production incentives.

—France Bio-Fuels Update 2008

Resources

• France Bio-Fuels Update 2008, GAIN Report Number: FR8012