German cabinet approves draft biofuels law, food-based ingredient use to continue

HAMBURG, Dec ‌10 (Reuters) - Germany's cabinet approved a draft biofuels law on Wednesday, which ‍will allow ‌continued use of food and animal feed as biofuel ingredients, the environment ⁠ministry said in a statement.

Germany’s programme ‌to cut greenhouse gases includes blending biofuels, such as biodiesel and bioethanol, with fossil fuels to reduce emissions from road vehicles. Oil companies have greenhouse gas reduction targets, which ⁠they can partly fulfil with biodiesel often made from rapeseed oil or waste vegetable oils, and ​bioethanol often produced from grains or sugar.

Germany’s previous ‌coalition government, which included the Greens ⁠party and which lost power after the general election in February, had planned to phase out the use of food and animal feed ingredients. Wednesday's ​statement from the environment ministry, however, said the use of food and feed ingredients will continue at current permitted levels. 

The use of palm oil, though, will not be permitted to count towards emissions reduction from 2027 because ​of ‍fears about environmental damage in ​some world regions from its production, the ministry said.

The draft is also putting the European Union's Renewable Energy Directive into German law for transport, electricity and heating sectors. It has been delayed several times and the full text was published on Wednesday. It must now be approved by parliament.

The law would ⁠also restrict the practice of double-counting some biofuel ingredients. Double-counting of biofuel ingredients refers to a regulatory mechanism where ​certain advanced or waste-based biofuels are credited twice toward compliance targets.

German oilseed traders said the new draft law was expected to support prices.

“There is overall relief that food and feed based ingredients will continue ‌to be used while the end of double-counting will also be positive,” one German rapeseed trader said.

(Reporting by Michael Hogan in Hamburg, Editing by Tomasz Janowski)