VZCZCXYZ0011
RR RUEHWEB

DE RUEHRL #1385/01 2841601
ZNR UUUUU ZZH
R 101601Z OCT 08
FM AMEMBASSY BERLIN
TO RUEHC/SECSTATE WASHDC 2346
INFO RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC 0081
RHMFIUU/DEPT OF ENERGY WASHINGTON DC

UNCLAS BERLIN 001385 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAGR ENRG EU EUN SENV TPHY TRGY
SUBJECT:  GERMANY MOVING QUICKLY FORWARD ON BIOFUELS 
 
USDA for OSEC for Dorr, Faulkner, Keenum; FAS for Yost, CJackson, 
RSschwartz, DYoung, DSalmon 
 
¶1.  (SBU) Summary:  U.S. Department of Energy's (DOE) Principal 
Deputy Assistant Secretary (PDAS) John Mizroch and U.S. Department 
of Agriculture's (USDA) Deputy Under Secretary (DUS) Douglas 
Faulkner represented the U.S. in July 2008 bilateral discussions on 
biofuels with German officials representing the Ministry of 
Environment (BMU), Ministry of Food, Agriculture, and Consumer 
Protection (BMELV), Ministry of Transportation (BMVBS), and the 
Research and Education Ministry (BMBF).   GHG reduction is the 
primary aim of German biofuels research, but they are constrained in 
their stock of raw materials.  NGOs pressure is one factor in their 
effort to develop sustainability criteria, as is the concern about 
the input competition between food and fuel production.  The 
discussions explored potential areas in which the two countries 
could collaborate on biofuels.  Germany expressed a strong interest 
in continuing the dialogue and conducting a return visit to the U.S. 
later in 2008.  End Summary. 
 
Reducing Greenhouse Gases the Object 
of Biofuels German Work 
------------------------------------ 
 
¶2.  (U) PDAS Mizroch and DUS Faulkner presented the U.S. energy 
strategy for transport fuels and vehicle efficiency and the 
political framework conditions for promoting the use of biofuels in 
the U.S.  They also reviewed the U.S. priorities in the Energy 
Independence and Security Act of 2007 (EISA).  They emphasized the 
Administration's commitment to furthering biofuel use as a means of 
increasing energy security and independence, as well as fighting 
climate change. 
 
¶3.  (SBU) In Germany, reducing greenhouse gas (GHG) emissions is the 
primary motivation for advancing biofuels.  Wolfgang Hahn, Director 
General of Road Transport in BMVBS, acknowledged however, that 
Germany does not have enough raw materials to produce enough 
first-generation biofuels to meet its biofuel goals and will not 
have significant quantities of second generation biofuels before 
¶2020.  (Comment:  The German Government supports the production of 
agricultural crops for biofuels and has a number of incentives in 
place that support the industry.  In December 2007, the German 
Government adopted the EU goals for the production and use of 
biofuels into its own national policy program for renewable fuels 
and committed itself to achieving the goal of a 10 percent biofuels 
blending rate by 2020.  End Comment). 
 
¶4.  (SBU) In the discussion of the current German system, Thomas 
Weber, Desk Officer in the Air Pollution Office of the BMU said that 
Germany is looking at reforming its current quota system (mandate) 
for biofuels.  The mandate is currently measured in terms of energy 
content, but after 2015, BMU wants to measure the mandate in terms 
of GHG reduction potential. 
 
Concerns about Biofuel Competition with Food 
-------------------------------------------- 
 
¶5.  (SBU) Clemens Neumann, Director General for Renewable Resources 
in BMELV added that due to the lack of domestically-produced feed 
stocks, "Germany must therefore import biofuels and give the public 
the impression that they are produced in a sustainable way."  The 
German government is under pressure from non-governmental 
organizations (NGOs) to ensure that biofuels use does not harm the 
environment or compete with food production.  German officials 
conceded that Germany received criticism alleging that its biofuels 
mandates were driving high commodity prices.  To address this, they 
expressed a strong interest in learning about the research done in 
the U.S. that showed biofuels mandates were a small factor in 
driving higher food and gasoline prices. 
 
¶6.  (SBU) Jan-Hendrik Stapp, Desk Officer at BMELV, stated that 
German farmers also support the implementation of sustainability 
criteria (SC) because it evens the playing field and subjects 
competing countries to the same environmental standards they face, 
thereby eliminating their production cost advantages. 
 
Sustainability Criteria:  Countering NGO Campaigns 
--------------------------------------------- ----- 
 
¶7.  (SBU) In December 2007, Germany proposed SC that must be met in 
order for a biofuel to count against the German biofuels mandate or 
to receive tax benefits.  Germany also submitted this proposal to 
the EU for approval.  These criteria were proposed in an effort to 
counter NGO campaigns.  Under the proposal, production and import of 
biofuels or feed stocks that do not meet the criteria will still be 
possible, but they would not receive any tax benefits.  The EU put 
the German proposal on hold until the end of 2008 in order to 
develop its own sustainability criteria.  The major criteria for 
both the German and the EU proposal include GHG savings and a 
prohibition of feedstock production on "high value" land (e.g., rain 
forests, nature conservation areas, or land with high carbon stock). 
 (Comment:  While these criteria are aimed at reducing GHG 
emissions, they could also pose a trade barrier, depending on the 
formulation of the criteria.  End Comment). 
 
¶8.  (SBU) DUS Faulkner presented the U.S. approach regarding 
sustainable production of biofuels.  He stated that the U.S. has a 
much broader view of sustainability which does not reduce 
sustainability to GHG savings but also encompasses economic 
sustainability.  He added that the U.S. believes in voluntary, 
rather than mandatory sustainability standards.  In response, 
Neumann asked whether the United States could support the 
establishment of an international certification system for biofuels. 
 He stated that BMELV already supports a pilot program to set up a 
certification scheme, which upon completion, should be able to 
certify compliance with the proposed standards as well as establish 
a "meta" or umbrella system for harmonizing different certification 
schemes.  To ensure that eventually the proposed certification 
scheme could and would be applied globally, Germany is seeking 
participants from the U.S.  DUS Faulkner stressed the U.S. opinion 
that any international work on standards should be undertaken within 
the framework of the Global Bioenergy Partnership (GBEP).  (Comment: 
 The system developed in the pilot program does not set any 
criteria, but functions as a tool to make sure the rules and 
requirements of a given system are actually being observed.  In 
addition, the system would help to make different systems comparable 
and compatible, thus reducing the need to seek additional audits. 
End Comment). 
 
Opportunities for Cooperative Research 
-------------------------------------- 
 
¶9.  (U) PDAS Mizroch and DUS Faulkner presented an overview of 
research and development (R&D) activities in the field of biofuels 
in the U.S.  These focused on bio-chemical and thermo-chemical 
conversion of biomass into biofuel and other biomass-based products. 
 They provided background on the funding lines and introduced the 
Germans to the concept of the Biomass Research Board and the three 
biomass research centers. 
 
¶10.  (SBU) On the German side, R&D activities on biofuels are 
divided among various ministries and agencies.  Although the BMU is 
not the primary research sponsor for biofuels, it is responsible for 
coordinating biofuels policies and research amongst the various 
ministries because of the role it plays in combating climate change. 
 Germany supports biomass research for a range of uses that are not 
always specific to biofuels, including for electricity production 
and home heating.  The BMU allocates some of its profits from the 
Emissions Trading System to general climate protection research.  In 
2008, 2-3 million Euro were targeted to develop the German Biomass 
Research Center in Leipzig (with the assistance of BMELV and 
BMVBS). 
 
¶11.  (SBU) BMBF does not have any biofuels-specific research 
projects, but instead focuses on bioenergy and plant research in 
general.  According to Christian Mueller, the Assistant Director for 
Nutrition and Renewable Resources in BMBF, the ministry has 
allocated 50 million Euro for bioenergy over a 4-5 year period. 
Mueller is interested in doing joint workshops and sharing 
information among scientists.  He specifically mentioned an interest 
in working on plant genotyping and phenotyping. 
 
¶12.  (SBU) BMELV is another major sponsor of biofuels research.  The 
Agency for Renewable Resources (FNR) within BMELV receives an 
estimated 17.5 million Euro annually, specifically for biofuels 
research.  Ronny Winkelman, FNR Project Manager expressed interest 
in a fact-finding trip the U.S and collaborating on research, 
particularly on pyrolysis. 
 
¶13.  (SBU) Stefan Woehrl, Head of the Environmental Department of 
the German Association of the Automotive Industry (VDA) said 
Biomass-to-Liquid (BTL) has the largest GHG emissions reduction 
potential, with 90 percent.  In April, Chancellor Merkel visited the 
CHOREN commercial-scale BTL plant in Freiberg to mark the completion 
of the plant's building phase.  Woehrl said that cellulosic ethanol 
has a GHG emissions reduction potential of 89 percent. 
 
German Interest in Information Exchange 
------------------------------ 
 
¶14. (SBU) Uwe Lahl, Director General for Emissions Control at BMU 
and Neumann both expressed interest in learning more about the 
biofuels agreements the United States has with China, India, Brazil 
and Sweden.  In addition, Lahl sought information about the 
compatibility of U.S. vehicles with the bioethanol fuel blend (E10). 
 In early 2008, the German Government tried to implement a similar 
E10 blending policy.  Foreign manufacturers, however, claimed that 
the proposed E10 mandate could have damaged up to 3 million vehicles 
due to the fuels' corrosive nature.  Consequently, the government 
abandoned its proposed policy and left it with a public relations 
fiasco.  The news surprised the U.S. Delegation given that similar 
vehicles in the U.S. had been using E10 for some time.  Lahl stated 
that they could not share the auto manufacturers' data because of 
proprietary reasons, but he welcomed any information the United 
States could share on the matter. 
 
B99:  A Trade Query 
------------------ 
 
¶15.  (SBU) Although trade issues were not on the original agenda, 
German officials did bring up the B99 (blend of 99 percent biodiesel 
and 1 percent diesel) trade issue at the end of the meetings. 
German officials contended that the U.S. exported 700,000 metric 
tons of subsidized biodiesel to the EU in 2007.  They claimed that 
the subsidized imports were hurting German producers and maintained 
that the policy was not in the interest of U.S. taxpayers because it 
subsidized foreign companies that were exporting the biofuels.  PDAS 
Mizroch responded that the U.S. was aware of the issue and noted 
that they were not the appropriate interlocutors to discuss the 
matter, but rather an issue that needed to be addressed by the U.S. 
Trade Representative's Office.  Nonetheless, the U.S. delegation 
indicated that not all the biodiesel being exported from the United 
States consisted of imported fuels.  DUS Faulkner stressed that the 
U.S. Government was aware of the issue and it was cooperating with 
the EU to address the complaint filed by the European Biodiesel 
Board (EBB). 
 
Next Steps 
---------- 
 
¶16.  (SBU) Both sides agreed on the following potential areas of 
cooperation:  1) exchanges of scientists, and 2) discussions 
addressing the issue of higher food prices.  The German delegation 
proposed to exchange lists of research programs that are currently 
undertaken in both countries, with a view of facilitating an 
increased person-to-person cooperation between German and U.S. 
scientists.  In addition, the German delegation expressed strong 
interest in a follow-up meeting in the U.S. in the fall of 2008. 
 
¶17.  (SBU) COMMENT:  The meetings served as a good start for 
bilateral discussion on biofuels.  A member of the BMELV delegation 
commented after the meeting that he was pleased to see that there 
was a common understanding about the importance of biofuels as well 
as their accompanying problems. 
 
KOENIG