German Biofuel Industry Collapsing Under New Taxes
Not everyone wants to save the planet. This is a sad, but true fact. Yet everyone who lives and works within a capitalist economy loves saving money. So it’s good for the planet that, in many cases, saving money and green initiatives go hand in hand by providing an increased economic benefit while lessening environmental impact. Many of these benefits come directly from the government, such as tax exemption status or tax credits for using alternative fuels in vehicles.
And as the German biofuel industry is showing us, taking away those economic benefits can lead to the utter collapse of what looked like a maturing faucet of biofuel.
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Germany is a leading producer of biofuel in Europe. Or maybe it is better to say they were. Since repealing the tax exempt status for biofuels, demand for biofuels has fallen by half. Germany started taxing biofuels to the tune of 9 cents per liter (about 35 centers per gallon) back in January of 2008. Taxes have increased in 2009 to 15 cents per liter, and will go as high as 45 cents per liter in 2012…or about $1.71 per gallon. Ouch.
At its peak, Germany was producing anywhere from 800 million to 1 billion gallons of biofuel annually. Now though, some experts think that many German biofuel plants might be packed up and shipped overseas as demand for biofuel plummets. Germany made the move because they estimated that by not taxing biofuel, they were missing out in $3 billion in tax revenue. At one time, biofuels made up over 7% of all fuel sales in the country; that share has since fallen to 5%, and will probably go even lower.
I’m no economist, but it feels like Germany pretty much murdered its own biofuel industry before it had a chance to mature. From 2000 to 2006, biofuel sales increased 17 fold. Now, there seems to be no bottom. Germany isn’t alone though; Norway is moving in the same direction, proposing to eliminate their tax exemption status for biofuels too. Oh well, maybe America will benefit when these biofuel plants start popping up over here. Or not. Like I said, I’m no economist.
Sources: Green Car Congress | Biodiesel Magazine
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November 27th, 2009 at 3:12 pm
Yet another example of taxes killing an economic engine. Business don’t pay taxes. Never have, never will, they just pass the cost onto the consumer, hence a hidden tax.
November 27th, 2009 at 5:11 pm
Sometimes I feel like I’ve entered the World of Alice in Wonderland. We have an author who still thinks biodiesel made from soy, palm, and canola is a good thing for the environment:
http://biodiversivist.blogspot.com/2009/10/transgressing-identified-and-quantified.html
November 27th, 2009 at 7:14 pm
It is a crime to make bio-fuels from food. It should be, anyway.
When a sustainable way to make bio-fuel from non-agricultural land and water without any need for fossil fuel inputs is invented I’ll take some interest. Until then – why don’t the bio-fuel crowd just go to a poor country and kill the people instead of diverting food to run gas guzzlers ?
November 28th, 2009 at 10:12 am
Mamoru has it correct. Business taxes are just a sneaky way to impose more taxes on the wage earners of the society. But the worst part is that these taxes are just part of the cost of sales and must be marked up accordingly. They are not just passed on. They are increased.
Russ and evnow are years out of date on the sources of bio-fuel. A great part of it is now sourced from not only non-food plants but is grown where food will not grow.
November 28th, 2009 at 12:35 pm
This is good news and lets hope the whole dam* bio-fuel market buckles.Bio fuel is only just slightly less polluting than regular petroleum.Its fossil fuel intensive to make and has helped no one while hurting Mother Earth.
November 29th, 2009 at 3:59 pm
the right kind of biofuels will not need a drop fossil fuel. And agi waste is best feed stock.
November 30th, 2009 at 4:43 am
Most biofuels are not environmentally sound at all, and cause food prices to go up. Another issue is that biofuels delay the inevitable shift from liquid fuels to the alternatives (electric cars, light rail, trains, bikes, etc). The market will sort out how much liquid fuels will be left for planes and trucks, much of which is wasted anyway (trucking live animals across Europe for killing, again across Europe for packaging, again across Europe for selling).
So, killing the biofools industry is good news.