Fuel ethanol consumption in Europe in the first half of 2014 was low and the sector lacked the political support to meet Europe's renewable energy targets, Manuel Sanchez-Ortega, CEO of Spain-based ethanol producer Abengoa, said Wednesday.
In an earnings call with analysts, Sanchez-Ortega said the European market had been "weak" in the first half and denounced a "lack of definitive political support" from the EU despite "ambitious" targets for the development of renewable energy.
He did not disclose Abengoa's fuel ethanol sales or production figures in Europe for the period. The company said it generated EBITDA of Eur84 million in its biofuels segment in the first half, up from Eur41 million in the same period last year. The figure includes revenues from operations in Brazil, US and Europe.
Negotiations for reforming the EU's biofuels policy have been ongoing for over 18 months. In June, EU member states reached an agreement to set at 7% the limit for crop-based biofuels that can count towards the bloc's 2020 goal, up from 6% initially proposed by the EU parliament. The EU wants to meet 10% of its energy demand in the transport sector with renewable fuels by 2020.
Originally, the entirety of this target could have been be met with biofuels such as fuel ethanol, but Brussels decided to cap the use of food-based biofuels due to looming concerns about their environmental benefits and food inflation.
A move to start negotiations on the renewable energy package failed to secure enough votes at its first reading in the EU parliament last year.
Blending economics for ethanol throughout the first half of 2014 have been strong in Europe, with the discount that spot ethanol holds against gasoline Eurobob hitting a four-year peak at $180.61/cu m on July 8, according to Platts data, the widest discount since Platts began assessing Eurobob in July 2009.
Despite this, ethanol producers across Europe have reported weakened demand, with consumers in Germany electing lower-rate blends over the more competitively priced higher blends of E10.
