The German Minister of Economic Affairs, Robert Habeck wants to give the production of biogas and other sustainable biofuels a new boost. He wants to merge the current fragmented subsidy flows for sustainable biofuels and transform them into a more effective system. In a multi-year perspective, there will have to be cutbacks.
The announcement for a restart with biogas and biofuel comes amid concerns about the future of the German biogas industry, particularly due to the current threat of bankruptcy of a major biogas supplier and other problems in the sector.
Biomass energy comes from plants, including crops such as corn and rapeseed, but also from waste and residues from agriculture and forestry. Biogas and vegetable oil can be produced from this organic material.
Between 2004 and 2011 there was a significant growth in the use of biomass in electricity generation, partly because there was a substantial subsidy for the initiation of innovative sustainable energy. For many of these local gas companies the subsidies will soon expire and the demand for follow-up subsidies is high.
A major German biogas company is currently on the verge of bankruptcy due to disappointing sales figures. The company has struggled to sell its energy at competitive prices in recent years, partly due to the recent decline in demand for biofuels.
This decline was mainly caused by a fraud involving cheap biodiesel from China. These Chinese companies flooded the European market with cheap biodiesel, which depressed prices in the European Union and seriously weakened the competitive position of other producers. This has now been stopped.
The problems in the German energy sector are further complicated by recent discoveries of a large-scale subsidy fraud involving forged starting certificates for biogas plants. The scandal has led to outrage within the industry and raises questions about the effectiveness of the current supervisory mechanism.
A recent survey among German farmers recently showed that interest in biogas production is declining because it is unclear whether the European subsidy scheme will be extended. In Denmark, biogas production still seems to be a good thing: two new power stations are being built in the rural municipality of Tondern. Austria also seems to be opting for a step forward instead of the emergency brake.
Although Minister Habeck (Greens) has been clear in his support for biogas and other forms of bioenergy, he denied rumours that the German government plans to subsidise electricity production from wood-fired power plants again. Environmental organisations argue that planting trees and then cutting them down to use as fuel for power plants is not sustainable.
Others, such as former EU Commissioner Frans Timmermans, still find burning wood (=pellets) for electricity generation more climate-friendly than burning fossil fuels such as gas or coal. This is also the position of EU. In the Netherlands (so far) the policy is that no new subsidies are awarded to biomass, but that previously promised subsidies (for the coming 10 to 15 years) remain in place.