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RR RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD
DE RUEHRL #0428 0951523
ZNR UUUUU ZZH
R 041523Z APR 08
FM AMEMBASSY BERLIN
TO RUEHC/SECSTATE WASHDC 0841
INFO RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE

UNCLAS BERLIN 000428 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: SENV KGHG ENRG EUN GM
SUBJECT: ENVIRONMENT MINISTRY DECISION ON BIOETHANOL WILL 
HAVE NEGLIGIBLE EFFECT ON BIOFUEL INDUSTRY 
 
REF: A. BERLIN 316 
     ¶B. 07 BERLIN 2177 
 
 ¶1.  On April 4, German media reported on Environment 
Minister Sigmar Gabriel's decision to abandon a planned 
increase in the unlabeled blending mandate for bioethanol in 
gasoline from five percent to ten percent.  However, 
according to Embassy contacts in leading biofuel industry 
groups, not a single journalist understood this issue clearly 
and no article got the facts right.  In contrast to media 
claims, the adverse effect of this decision on the German 
biofuel industry is negligible. 
 
¶2.    The proposed legislative amendment to the Fuel Quality 
Ordinance would increase the unlabeled blending limit of 
bioethanol in gasoline from 5 percent (E5) to 10 percent 
(E10) and for biodiesel in diesel fuel from 5 percent (B5) to 
7 percent (B7).  Biofuels may be blended above those limits 
only if they are labeled as such to make consumers aware of 
the fact; since not all vehicles are compatible with higher 
biofuel blending limits, their owners would be forced to buy 
more expensive premium gasoline.  The planned increase in the 
blending mandate was based on a series of roundtable 
discussions held between the German Environment Ministry 
(BMU), Agriculture Ministry (BMELV) and representatives from 
the automobile, mineral oils and biofuel industries (REF A). 
However, in calculating the number of vehicles that would be 
incompatible with an increase to E10, the BMU received input 
only from domestic automobile manufacturers represented by 
the German Association of the Automotive Industry (VDA).  As 
a result, BMU grossly underestimated the number of foreign 
vehicles that would be impacted by a change to E10.  Only 
after the German Automobile Club (ADAC) and the German 
Association of Foreign Auto Manufacturers (VDIK) weighed in 
with new figures did BMU acknowledge that the number of 
impacted car owners would be in excess of 3 million (as 
opposed to their previous estimate of 375,000). Not wishing 
to make so many individuals bear an increased financial 
burden, BMU officially abandoned the planned unlabeled 
blending limit increase for E10 on April 4. 
 
¶3.  Experts believe this action will have a negligible 
adverse effect on the German domestic biofuel industry.  The 
industry consists primarily of biodiesel producers with only 
a small number of bioethanol producers.  In a conversation 
with ECONOFF on April 4, Dr. Norbert Heim of biofuel lobby 
group UFOP said almost no bioethanol is currently being 
produced in Germany.  This opinion was confirmed by Karin 
Retzlaff of another lobby group, VDB, who noted that almost 
all bioethanol in Germany comes from imports.  The BMU's 
decision on E10 will not affect in any way the parallel 
planned increase from B5 to B7.  Therefore Heim said that 
biofuel producers have "no problem" with the BMU's decision 
since it only applies to bioethanol in gasoline and not to 
biodiesel.  Retzlaff said on April 4 that she expects the 
increase to B7 to become law shortly. 
 
¶4.  COMMENT: The BMU's decision places more pressure on the 
German automobile industry.  The current EU Energy and 
Climate Package released on January 23 proposes stricter 
emissions limits of about 120 grams of carbon dioxide per 
kilometer for a fleet of vehicles.  Originally, Gabriel had 
denounced this proposal as discrimination against the German 
auto industry.  Gabriel was roundly criticized by the press 
for his defense of automobile manufacturers, which damaged 
his image and credibility as Environment Minister.  Gabriel 
subsequently received complaints from auto manufacturers 
about the proposed increase to E10.  Media and industry 
insiders speculate that, because VDIK rejected BMU's 
invitation to a biofuels road map discussion in 2006, Gabriel 
likely felt unfairly burned by their criticism of the final 
road map.  As a result, Gabriel is reportedly no longer 
willing to defend the industry.  German automobile 
manufacturers had been counting on the increased use of 
biofuels to help them meet any lower EU emissions 
requirements.  In his remarks Gabriel said that automakers 
will now have to bear the responsibility for finding other 
means to reduce auto emissions themselves.  END COMMENT. 
TIMKEN JR