Biofuel market in Bulgaria

IndustrySouth-East European INDUSTRIAL Мarket - issue 1/2008

Rapid development of biofuel refineries building

Millions are invested in biofuel production

In parallel with wind and solar energy production, in the recent years in Bulgaria it is to establish a real new branch, covering biofuel refineries building. Getting prepared to the new engagements connected with joining of Bulgaria to the European Union, a lot of investors started to invest millions in the building of biofuel production installations. And nowadays, when according to the producers-members of the new branch, there are about 15 refineries with bigger production capacity, and another 10 installations are in a building process. On the other hand, again according to the companies in the field, the smaller as capacity installations for biodiesel production are hundreds. There is still no official information for the total amount of the entire production capacity in the country. Some of the producers said that if the already built facilities use 100% of their working capacity and if all of the mineral fuel sales network acts based on the legislative requirements, the aims will overreach seriously.

The total amount of biofuel installations is about few hundreds.

What are the reasons for the investors’ interest?

The reasons for the investors’ interest in refineries are complex. First of all, according to the representatives of this business, one of the reasons is the accepted since the beginning of the year requirement 5% of overall quantity of fuel sold to the transport sector to be formed by biofuel. This requirement corresponds with the European policy of fighting the Global Worming and climate changes.

There is also an impact on the market of biofuel and its investments interest, connected with the indicative aim of 10% minimum share of the biofuel in the entire consumption of liquid fuel for all EU countries up to year 2020. Another reason for the biofuel market development is the optimistic look of the legislative framework, facilitating the usage of renewable and alternative energy sources in Bulgaria, and synchronized (of course) with the EU strategic aims. And the last but not the least – prices of the petrol jumping to the next new peek.

5% of overall quantity of sold fuel to the transport sector in Bulgaria will be formed by biofuel.

10% will be the minimum share of the biofuel in the entire consumption of liquid fuel for all EU countries up to year 2020.

What is behind the pink image of this optimistic data?

According to the Chairman of the National Association of biofuel and renewable energy sources of Bulgaria - Mr. Dimitar Zamfirov, currently (8 February 2008) the built facilities in fact are not operating. The reasons, by his opinion, are totally economic. Among them are the last changes in the legislative framework, saying that the mixture of mineral fuel and biofuel has to pay excise taxes of 3%, which could not compensate the requirement of reaching 5% biofuel share. In the picture it could also be seen the clear market reasons, connected with the natural competition between the mineral fuel and biofuel providers and the fact that the petrol station owners are the mineral fuel producers. If going deeply in the problem, for sure it will be mentioned the price of the different source materials used in Bulgaria for the production of biofuel – as high oleic types of sunflower and rapeseed, and the need of cultivate of special energy plants.

Without commenting the price generation of the biofuel as this is not the subject of the article, let’s have a look at few objective facts. In Bulgaria as in other countries of European Union, the production and the usage of biofuel as ecological equivalent to the mineral fuel have its supporters, and its opponents. It is clear for everybody that with the nowadays price of low oleic types of sunflower the biodiesel price couldn’t be competitive. So, to be stimulated in its development the biofuel market needs targeted and supported by the government policy, stimulating the yielding of special energy cultures, including high oleic types of sunflower, rapeseed, etc.

The biofuel market in Bulgaria is facing serious economical problems, says producers.

According to many of the market analyzers, this could be done very precisely, because the not carefully controlled stimulation of biofuel market could impact negatively to very important agricultural sectors. On the other hand, it might not be forget or speculate with the fact that like every other industrial sector the biofuel refineries are a source of the environment pollution. This also could not be counted as hard-to-solve problem as there are technical solutions, compatible to the most severe European requirements, says companies working in the field and the refinery equipment providers.

When it comes to biofuel, normailly it means biodiesel as alternative of the diesel and bioethanol as alternative of the petrol. But the biofuel definition includes big range of fuel types, some of it still at development level. Concerning the biodiesel, sold at the European markets, there are a lot of standardization requirements, which could not be covered by using the low oleic cultures is impossible. According to the contacted gratis periods, the implementation of the European standards should be done up to year 2010.