Strategic Reponses to the EU Biofuels Market for Fuel Retailers

Published by: Datamonitor

Published: Oct. 2, 2008 - 28 Pages

Table of Contents

DATAMONITOR VIEW

CATALYST

SUMMARY

SOURCES

ANALYSIS

Currently, fuel retailers' biofuels strategies vary greatly by market depending on the drivers in place

The varying environment for biofuels means that fuel retailers have only chosen to offer E85 on a large scale in Sweden

The introduction of legislation in many Western European markets has placed a legal obligation on fuel retailers to sell biofuels

In some Eastern European markets fuel retailers have to accept that they will soon be obliged to blend in biofuels

Due to the controversies surrounding biofuels companies have acted defensively to defend their public image

From a production perspective, European producers are suffering from overcapacity

Datamonitor has concluded that there are five key factors driving the consumption of biofuels

Going forward, the factors driving the consumption of biofuels will vary depending on the scenario

Going forward, an optimistic scenario would mean that all of the political and economic drivers for the consumption of biofuels are at optimal levels

In a medium-optimistic scenario, some of the political and economic drivers for the consumption of biofuels are in place

In a pessimistic scenario, few or none of the main drivers are in place to encourage the consumption of biofuels

Datamonitor also segments EU biofuels markets into 'established', 'developing' and 'nascent' markets

Depending on the scenario, it will be worth fuel retailers selling high blends of biofuels in 'established' markets

In the best case scenario, biofuels would represent almost 12% of all road fuel sold in Germany

German fuel retailers should continue to focus on low blends

Whatever the scenario, Sweden will remain the leading market for E85

In an optimistic scenario, all fuel retailers would offer E85 at their service stations in Sweden

In a best case scenario, bioethanol will be introduced into the Austrian biofuels mix

OMV, the leading fuel retailer in Austria, is likely to invest in further E85 stations if the conditions for biofuel sales are optimal

'Developing' markets may also see significant increases in demand for biofuels

In a best case scenario, sales of B30 will become increasingly popular in France

Even in a best case scenario, fuel retailers in France will continue to focus on low blends of biofuels

In a best case scenario the consumption of biofuels in the Netherlands will have grown four-fold by 2015

A change in the Dutch taxation regime would encourage many fuel retailers to convert pumps to E85

Even in a best case scenario, consumption of biofuels in 'nascent' markets will remain limited

Notwithstanding the scenario, strong blends of biofuels are unlikely to become popular in the UK

Going forward, supermarkets are likely to remain the principal proponents of biofuels in the UK

Even in a best case scenario, Spain is not predicted to reach its biofuels targets

Notwithstanding the scenario, fuel retailers in Spain are likely to continue to count on low blends to make up their biofuels quota

Italy is predicted to remain the laggard of the large European markets, notwithstanding the scenario

The large national players such as Agip and Erg Petroli are unlikely to ever sell strong blends of biofuels in Italy

APPENDIX

Further reading

Datamonitor The European Landscape for Biofuels in the Transport Sector May 2007 BFEN0253

Datamonitor The Political and Environmental Landscape for Biofuels in the EU Transport Sector August 2008 BFEN0356

Datamonitor Demand and Supply-side Dynamics in the EU Biofuels market August 2008 BFEN0357

Ask the analyst

Datamonitor consulting

Disclaimer

List of Figures

Figure 1: Germany is the only market where E85 can compete with regular unleaded on price

Figure 2: Austria, France, the Netherlands, Slovakia and Finland have placed a legal obligation on fuel retailers to incorporate 5.75% biofuels by 2010

Figure 3: Most Eastern European States have introduced a blending obligation or have voiced an intention to do so

Figure 4: Germany, Italy and the UK have the largest amounts of idle biodiesel production capacity

Figure 5: There are five main factors driving the consumption of biofuels

Figure 6: In any given scenario, B5 is set to represent the vast majority of all biofuel sales

Figure 7: In an optimistic scenario, E85 is forecast to account for 26% of all biofuel sales in Sweden

Figure 8: In an optimistic scenario, B5 will continue to dominate the dominate the Austrian biofuels market

Figure 9: In an optimistic scenario, biofuels are predicted to account for 8.5% of total road fuel consumption by 2015

Figure 10: It is predicted that in an optimistic scenario biofuels will represent 8% of all road fuel sold in the Netherlands in 2015

Figure 11: It is predicted that in an optimistic scenario biofuels will represent 5.5% of all road fuel sold in the UK in 2015

Figure 12: In Spain it is predicted that in a best case scenario biofuels will account for 7.6% of all road fuel sold in 2015

Figure 13: In Italy It is predicted that in a best case scenario biofuels will account for 6.5% of all road fuel sold in 2015

Abstract

• The main trends driving biofuels consumption, how these vary between markets, and how fuel retailers have adopted their strategies accordingly.
• An understanding of the five main drivers for biofuels and analysis of how different scenarios could impacts these drivers between 2008 and 2015.
• Three biofuels consumption forecasts to 2015 for eight European markets, based on pessimistic, medium-optimistic and optimistic scenarios

• Understand the strategies that fuel retailers have adopted to respond the current trends for biofuels in a variety of different markets.
• Gain insight into the factors driving the consumption of biofuels and how they vary under optimistic, medium-optimistic and pessimistic scenarios.
• Support investment decisions by understanding where biofuels usage will be highest and which types of biofuels will be the most popular.

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