German gasoline retailers price E10 to increase sales

Many retail stations in Germany have widened their discount for E10 gasoline against E5 since the end of May after the share of the former started to fall. So far only one large supplier has adapted its trading spread in the inland wholesale market.

The standard E10 discount to E5 at the pump has widened to €0.04/l ($34.13/t), after many retail stations doubled their discount in the past six weeks. This follows a period of different spreads at the start of the year and points to an attempt by road fuel suppliers to harness E10 as a way to reach Germany's tough 2020 greenhouse gas (GHG) emissions reduction quota.

Greater use of E10 would increase the overall amount of biofuels blended into German road fuels, crucial for reaching the quota that this year demands a 50pc higher reduction by road fuel suppliers than last — a 6pc savings mandate from 4pc. But E10 is unpopular with German drivers. Its share in gasoline inland deliveries shrunk slightly to an average of just under 13pc in the first four months of this year, or 46,000 b/d, according to customs control body Bafa, from just over 13pc in the same period a year earlier. In the whole of 2019, Germany consumed 57,000 b/d of E10, a share of 13.7pc (see graph).

One large supplier has said it will adjust its wholesale E10-E5 spread to €3.45/100l from 13 July, which equates to the new retail discount once value added tax is added. The most traded spread remains €1.60/100l, reflective of the earlier €0.02/l pump discount. It is unclear if other wholesalers will change their discounts. The one that has changed had been selling E10 at around €2.5/100l below E5 for several months without other companies following suit.

The higher blending costs of E10 has been an obstacle to deepening its discount. E10 carries up to twice the amount of bioethanol, which is traded at a large premium to non-blended gasoline. T2 ethanol has been at an average $504/t premium to Eurobob in the Amsterdam-Rotterdam-Antwerp (ARA) hub since the start of July.

But E10's larger GHG savings give it a partial commercial advantage over E5 under this years' German quota. Suppliers of E5 need to reach extra savings in other supplies or buy GHG savings certificates, because 5pc content of even the highest-saving bioethanol cannot achieve a 6pc saving. Certificates are currently priced at €390/t CO2 equivalent.

By Charlotte Blum

E10 share in German inland deliveries of gasoline pc