When the Spanish government allowed legislation on tax exemption of biofuel additives to expire, without being renewed, leaving only the mandated minimum usage of biofuel percentages in place. Many biofuel manufacturers were concerned for the health of their industry.

Now that the biofuel mandates have been lowered, there is even greater concern for the survival of the industry. For the last few years, sales have dropped sharply, and many are blaming government policy.

For example, when Deloitte analysed the data in their report ‘European Energy Market Reform: Country Profile Spain’, they concluded that the fall in demand was due in large part to the government action. The report stating that, “For transport, the [Spanish government’s] target is 11.3% of renewable by 2020 (mainly through the use of biofuels: 9.2%). According to our own calculations, biofuels accounted for 6.3% of transportation fuels in 2012. In 2014, there was a sharp drop in biofuel consumption due to a government decision to reduce incorporation targets for biodiesel and ethanol to 4.1% and 3.9% respectively.”

Even the EU’s own report on biofuel production, pricing and consumption, the ‘Biofuels Barometer’ agreed, declaring that, “The sharp drop in Spain’s biofuel consumption can be largely ascribed to it’s government’s decision to reduce its incorporation target. The IDAE (Institute for Diversification and Saving of Energy) claims that biodiesel consumption dropped by 57% in 2013 … and that bioethanol consumption dropped by 10.5%.“

Manuel Bustos, Director of the Association of Renewable Energies in Spain (APPA) notes that the fall in production is “quite simply the reduction of Government compulsory biofuel consumption targets.”

Bustos believes that this policy is heading Spain away from the EU goal of lowering carbon emissions. Saying that, “Spain is not doing its homework to reach 10% biofuel objectives” and that the country “is not on the right track.”

The EU’s ‘Biofuels Barometer’ does however give some reasoning behind the policy change;  the weak Spanish economy and lower general fuel consumption. It states that, “The purpose of the new targets is to reduce the price of fuel at service stations and thus bring respite to the Spanish economy…Spain’s lower biofuel consumption is aligned to the general fuel consumption trend, which has fallen relentlessly because of the economic situation and policies aimed at reducing fuel consumption (e.g. limiting motorway driving speed to 110kph). Cores, the public body responsible for ensuring oil company supplies in Spain claims that the drop in road fuel consumption was lower in 2013 (3.6% compared to 6.7%) than in 2012.“

Many economists, politicians and businessmen will argue that the need to improve the Spanish economy and reduce the government’s budget deficit (by easing petrol restrictions and removing tax exemptions) is a priority. Environmentalists and biofuel traders have been baffled by the change in direction, but is Spanish policy really working against the actions of other EU states?