Biofuels: Between green climate policy and market realities

_ Yuri Kofner, Economist, MIWI Institute. Munich, May 6, 2024.

In Germany, the consumption of biodiesel reached a remarkable mark of 25 TWh in 2023.[1] However, the numbers reveal a dependence on imports, which make up over 57 percent of total consumption.[2] The majority comes from China. The first four months of the year alone testify to an import of over 6 TWh of Chinese biodiesel – almost half of the total annual import.[3]

Now, German biodiesel producers are facing a flood of Chinese biodiesel made from palm oil, leading to market saturation. This situation is due to the green climate policy of the then CSU/CDU-led federal government. In 2021, the greenhouse gas reduction quota (THG quota) for fuels in the transport sector was increased to 25 percent by 2030,[4] far above the EU requirement of 14 percent. With a current quota of 8 percent in 2023 and a planned increase to 9.25 percent in 2024, oil companies are under pressure to meet the demand for biofuels.[5]

At the same time, the European Commission, led by CDU member Ursula von der Leyen, decided that from 2023 biofuels made from fresh palm oil will no longer be considered “climate neutral”.[6] This has led to a reclassification of Chinese products, where biodiesel made from fresh palm oil is falsely labeled as biodiesel made from old cooking fat palm oil. This practice is illegal, but hardly detectable, as control audits in China are not allowed and subsequent laboratory testing is hardly possible.

The financial incentives for this reclassification are enormous, with profit margins of up to over 500 euros per ton, leading to profits in the hundreds of millions of euros. German biofuel manufacturers suffer from this unfair competition and see their existence threatened.[7]

A completely different approach is therefore necessary. Instead of futilely trying to prove Chinese labeling fraud and initiating trade policy retaliation measures, the climate narrative behind the biofuel quota must be completely rejected. The THG legislation and the associated Fuel Emissions Trading Act (BEHG), which caused a tax burden of 10.7 billion euros in 2023, must be abolished in their entirety.

Instead, the THG law could be transformed into a “domestic fuel law” to promote domestic production of biofuels and thus make Germany more energy independent, without considering the climate narrative. Under such a protectionist regulatory framework, it would be irrelevant whether the imported biodiesel is made from fresh or old palm oil. Only the origin – domestic or foreign – would play a role.

The biofuel economy in Germany and Bavaria generates annual economic impulses of 6.6 billion euros and employs about 22,000 people, many of them in structurally weak rural regions. In 2022, around 3.4 million tons of biodiesel, 715,000 tons of bioethanol and 24,552 tons of biomethane were produced in 36 biofuel plants.[8] The technical biomass potential in Germany is just under 400 TWh per year.


[1] Umweltbundesamt. (2024). Beitrag von Biodiesel am Kraftstoffverbrauch in Deutschland in den Jahren 2003 bis 2023 (in Gigawattstunden). URL:

[2] Deter P. (2024). Biodieselausfuhren auf Rekordniveau. URL:

[3] VDB (2023). Biokraftstoffindustrie in Deutschland und Europa auf der Kippe. URL:

[4] Deutscher Bundestag (2021). Treibhausgasminderungs­quote beschlossen. URL:

[5] Generalzolldirektion (2024). Höhe der Treibhausgasquote. URL:

[6] DW (2023). EU lawmakers adopt ban on goods linked to deforestation. URL:

[7] Kempmann A., Naber N. (2024). Biodiesel-Skandal bleibt offenbar folgenlos. NDR. URL:,fakebiodiesel104.html

[8] Biokraftstoffverband (2023). Politikinformation Biokraftstoffe. URL:


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