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ENERGY & ENVIRONMENT - LEGISLATION AND MOTIVATION NEEDED TO SPREAD THEM

Biofuels are coming

BIOFUELS are becoming increasingly popular across Europe and it seems it will not take long until they reach Slovakia as well. Although Slovakia already has biocomponent and biofuel producers you will not find biofuels at the filling stations yet, because the state still lacks the legislation to define the parameters and conditions of the biofuel market.
The Slovak refinery Slovnaft began producing biodiesel, its first biofuel, last year. Currently, all biodiesel produced is exported. Slovnaft is now preparing to launch the production of biogasoline.
Slovnaft's main supplier of biocomponent for its biogasoline is a Slovak company Enviral, which produces bioethanol. The company, located in Leopoldov, won the tender to be a biocomponent supplier for the whole group of MOL, to which Slovnaft belongs. As a consequence, Enviral has already decided to extend its production capacities. The overall investments should reach about Sk3 billion (€80 million) and the project should be completed by 2007.

It will take a while till Slovaks can fill their gas tanks with biofuels.
photo: TASR

BIOFUELS are becoming increasingly popular across Europe and it seems it will not take long until they reach Slovakia as well. Although Slovakia already has biocomponent and biofuel producers you will not find biofuels at the filling stations yet, because the state still lacks the legislation to define the parameters and conditions of the biofuel market.

The Slovak refinery Slovnaft began producing biodiesel, its first biofuel, last year. Currently, all biodiesel produced is exported. Slovnaft is now preparing to launch the production of biogasoline.

Slovnaft's main supplier of biocomponent for its biogasoline is a Slovak company Enviral, which produces bioethanol. The company, located in Leopoldov, won the tender to be a biocomponent supplier for the whole group of MOL, to which Slovnaft belongs. As a consequence, Enviral has already decided to extend its production capacities. The overall investments should reach about Sk3 billion (€80 million) and the project should be completed by 2007.

Although Slovnaft already exports biodiesel, the list of companies supplying Slovnaft with biocomponents of diesel is still not closed. Slovnaft announced a tender for biocomponent supplier in February of this year.

Slovnaft declares it would be willing to sell the biofuels on the Slovak market if there were not legislative barriers.

"Slovnaft is ready to bring motor fuels with biocomponents onto the Slovak market. However, the market is still waiting for cabinet regulation to be approved. The regulation should implement the national Programme of Biofuels that was approved last December. The date and other parameters [of launching the biofuels on the Slovak market] depends on the approval of the cabinet regulation," Kristína Félová, the director of corporation communications of Slovnaft told The Slovak Spectator.

The Economy Ministry is still working on this task and the regulation is being prepared, said the ministry's communications department.

Apart from the lack of legislation, Slovnaft mentioned another drawback of spreading the biofuels among ordinary consumers, which is the possible higher price compared to fossil fuels.

"We have to emphasize that the price of biocomponents produced by agricultural companies is significantly higher than the price of the same volume of fossil fuel," Félová added.

Furthermore, the price of biocomponents considerably increased over the last six months, and the price hike was greater than that for fossil fuels. The reason is that the EU countries are trying to fulfil the EU directive on biofuels. The demand for biocomponents is growing and this is pushing up the prices.

According to the EU directive, every member country must adopt legislation that requires motor fuels to include biocomponents. The directive says that by the end of 2005, biofuels were supposed to share 2 percent of the overall fuel production. According to law, this figure should rise to 5.75 percent by 2010. So far, only Austria, Germany and Spain have fulfilled these EU requirements, mainly thanks to their policy of biofuel state support.

As a result, Austria and Germany, are able to buy a significant part of methylester (MERO) biocomponent supplies from countries in the vicinity.

Slovnaft thinks the situation in Austria and Germany shows that biocomponent consumption will be growing due to increased demand, and under certain circumstances this could result in a shortage of biocomponent supplies.

The company thus sees a problem in securing the needed volume of biocomponents for the Slovak market. It will be crucial to check the real production capacities of biocomponents with regard to setting Slovakia's goals in the field of biofuels.

The state and EU biofuel policy is not enough to bring biofuels to filling stations and gas tanks. Considering the higher price of biocomponents, customers need to be motivated to buy these fuels, Félová pointed out.

For this reason, many countries have introduced a system of tax differentiation to support biofuels produced from renewable energy sources that are environmental friendlier.

"Slovnaft is in favour of tax differentiation to motivate consumers to buy fuels with biocomponents. Biofuels would be taxed at a lower excise tax rate than fossil fuels. It means the customer would not have to pay more for such fuels. Such a system is successful in various European countries such as Austria.

"Such a tax system is simple and at the same time it encourages producers to introduce high-quality fuels on the market with low content of sulphur and with as high content of biocomponents as possible, and it motivates consumers to buy such fuels," Félová said.

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