Forecourts: France Authorizes Biofuel but More Carrot Needed
France has joined a number of other countries in approving the commercial sale of biofuels, with the French government stating that it hopes to see biofuel’s share of total motor fuel consumption rise to 7% by 2010. However, legislation alone is not enough. Given the need to convince retailers to provide biofuels, and the attendant costs, the uptake of biofuels also needs to be consumer-driven.
In approving the commercial sale of biofuels, the French finance ministry stated that it wishes to increase biofuel’s share of total motor fuel consumption to 5.8% in 2008 and 7% in 2010.
The French government is seeking to achieve this by quashing all taxes on the green fuel, which contains up to 85% ethanol and 15% gasoline (E85), making it price-competitive with gasoline and diesel. The move follows a general shift across Europe, both from consumers and governments, toward adopting greener fuels and decreasing dependence on oil.
Sweden has been particularly successful in diverting much of its automotive energy needs away from oil. The country already has around 500 service stations offering E85 fuel, accounting for 13% of all service stations. Sweden has adopted a strategy of encouraging drivers to adopting biofuels with an array of incentives, including lower vehicle taxes and exemption from congestion charges.
It is uncertain how effective the French government’s measures will be. For example, there remain a number of unanswered questions, such as how the government will implement its plan to install the 500 to 600 points of sale. Furthermore, even if all of these are installed, they will only account for 3% to 4% of the country’s total service stations.
In addition, it is difficult to see biofuel taken up by the mainstream as it is hindered by the traditional cycle impeding the development of alternative fuels – namely the trade-off between availability and adoption. In general, motorists are unwilling to adopt new fuel technologies until they become widely available in the forecourts, and by the same token, fuel retailers are unwilling to invest in new fuel technologies until there is strong consumer demand.
In sum, the main problem for the French government is that it cannot guarantee the provision of points of sale at this early stage, which is vital to ensure the uptake of biofuels. Consequently, it is not in a position to confidently predict an increase in biofuel consumption.
Read more about Strategic Responses to the EU Biofuels Market for Fuel Retailers
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