‘Bio-energy’ is complex market, including energy derived from any kind of biomass, including biodegradables like plants, waste, agricultural by-products, forests, wood, straw, manure, or municipal waste. The various sectors of this particular type of energy –which is encouraged by a combination of tax breaks and subsidies, and, for bio-electricity, a feed-in tariff – have not fared equally well of late. While bio-heat and bio-electricity were booming last year, the market for pure biogenetic fuel for transportation suffered a breakdown in 2009.
In what could be seen as a warning for what happens when an incentive mechanism overcorrects, a tax exemption for biodiesel was rescinded in 2008. The new taxes made bio-diesel prohibitively expensive, and as a result the 1.8 million tonnes of pure bio-diesel sold at the pump in 2007 dropped to 240,000 tonnes by 2009. “Due to the financial crisis,” said Thomas Seigmund, speaker for the German BioEnergy Association, “there was no political will. Big producers will survive, but small and medium scale installations in remote locations are being broken down and sold to the US.”
Currently, the bio-fuel industry is looking into ways to change the situation, either by having the tax break reinstated or taking measures like extending tax exemptions on biofuel used in the agricultural sector to public transport vehicles. “It would be an environmentally reasonable thing to do,” said Siegmund. “I have a feeling we’ll revitalise the biofuel market.”
Bioenergy accounted for 6.6 percent of German energy consumption in 2008. Hydropower accounted for just over three percent of electricity consumption, but is seen as a relatively ‘old’ power source, with less potential for growth than other renewable sectors in Germany.