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Delays to subsidies postpone Polish biofuels boomReuters News WARSAW, June 26 (Reuters) — Poland's expected biodiesel boom will be on hold until next year despite a record rapeseed crop because of delays to subsidies for farmers and a cut in tax incentives for biofuels producers, sector analysts say. Poland wants to encourage investment in biofuels to diversify energy sources away from Russia, counter rising oil prices and boost farm incomes as well as to limit carbon emissions. The National Biofuels Chamber forecasts that Poland's annual biodiesel production capacity could surge to some 800,000 tonnes in 2008 from the current 280,000 tonnes and rise by 500,000 tonnes each year after that. The government has proposed subsidies for farmers to make biofuels more profitable, counterbalancing a cut in tax relief for producers that was made under EU pressure in January. But the industry said the new subsidies would come too late to have an impact this year. «The process of legislation is not finished yet and we are about to harvest rapeseed soon,» said Aleksander Rosiewicz, finance director of Elstar Oils, which has delayed the start of its 100,000-tonne per year biodiesel plant. Although farmers are expected to harvest a record crop of up to 2 million tonnes of rapeseed, they will need to sell at a higher price than is comfortable for biofuels producers because the farm subsidies have yet to start. Once legislation is passed, Poland will give farmers 176 zlotys ($62.54) for each hectare of rapeseed grown and the European Union will provide another 45 euros ($60.57) for each hectare used in biofuels. That works out at a subsidy of about 115 zlotys per tonne, compared to a current price for farmers of 1,030 zlotys per tonne. LOW RETURN «Farmers will sell their crops (this year), but their return will be low compared to what it could have been,» Tadeusz Zakrzewski, President of the Polish Biofuels Chamber said. «If the government manages to get the European Commission to ratify its plans, mechanisms will be put in motion and all plants can start producing biodiesel,» Zakrzewski said. Two Polish companies have stopped construction of new biofuels plants altogether, waiting for better conditions next year, industry sources said. Polish investment in new biodiesel plants is estimated at up to 1 billion zlotys ($360 million). Biodiesel, extracted from crops such as rapeseed, and ethanol, from sugar and maize, are used to power vehicles and seen as a way to limit the carbon emissions from the fossil fuels that many scientists blame for global warming. Biodiesel will provide about 90 percent of Poland's biofuels. Despite this year's difficulties, many farmers are interested in shifting to rapeseed and companies are seeking long-term suppliers. If the Polish market cannot absorb this year's rapeseed harvest, then farmers will look to export. The farm ministry, pushing for the return of tax incentives, is more pessimistic than biofuels producers on prospects for the industry. It doubts Poland will reach a non-binding EU target to have biofuels use at 3.45 percent of all fuels in 2008 and 5.75 percent by 2010. «We won't reach the target unless we go back to the previous excise tax reduction or introduce other incentives which would raise interest in the production of biofuels,» Farm Minister Andrzej Lepper said.
Date: 26.06.2007 Comments:Leave your comment
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If you want to get read, this is how you sohuld write., 20.07.2011 06:14:55