Demand for RSO from EU biofuels sector to stay stable

The use of rapeseed oil (RSO) as a feedstock for European biofuels production is expected to stay stable over the next decade, according to participants of a virtual International Grains Council (ICG) conference today.

Demand for biofuels will be boosted by the introduction of the EU's revised Renewable Energy Directive (RED II), which legislates for a rise in renewable fuels in transport to a 14pc share by 2030 from 10pc in 2020. The phasing out of biofuels associated with high indirect land-use change (ILUC) between 2023 and 2030 will support the use of RSO as a feedstock, according to Luc Ozanne, managing director of Sofiproteol, the finance and development arm of Avril Group. Even though there will be a cap for the use of plant-based biofuels at a maximum of 7pc from 2021 onwards, Europe still has spare capacity for plant-based biofuels in the coming years, Ozanne said.

The biofuels market will continue to be a key driver for rapeseed and RSO markets in Germany, said Stephan Arens, managing director of the UFOP union. But "we see the biofuels market as stabilised, not increasing, because of the ongoing political discussion about the use of crop-based biofuels," he said. Two-thirds of German rapeseed production, which is forecast to be 2.8mn t in the 2019-20 crop season according to EU customs data, is currently processed into biodiesel.

Both Ozanne and Arens highlighted climate constraints, restricted access to crop protection products and pressure from pests as key challenges facing European rapeseed producers. These factors have resulted in a 20pc decline in European rapeseed production in the 2019-20 harvest year compared with the average in 2015-18.

The challenges mean that rapeseed imports from countries such as Canada will continue to gain in importance. Canada almost tripled exports of canola to the EU to around 1.35mn t last year. "The European market may still be a strong opportunity for Canada going forward," president of the Canadian Canola Council Jim Everson said.

By Sophie Barthel