Writing my latest newsletter yesterday (have you signed up yet? You should, it's free!) I was quite taken by how two Australian stocks, Australian Renewable Fuels and Australian Biodiesel Group have clearly not had the same upside - far from it - from a new government in Australia as most of the other alternative energy stocks down under. This is to do with unfavourable changes to Australia's biodiesel tax credit program as well as the more mundane causes like a rise in feedstock costs etc.

Today though I read with some alarm that German biodiesel subsidies are on the way out as of 1st January this year. As this very informative article said, ". . . a consequence of these setbacks is the decline in shares of German biofuel refineries like Verbio, BDI Biodiesel and Biopetrol. These were promising companies until recently, and now face million-dollar losses."

This is a big deal not least because a very large chunk of the global biodiesel market - not unlike solar - is in Germany.

Still, for all the gloom and doom about the biofuels bust, whether ethanol in the Midwest or rapeseed produced biodiesel in Germany (although not in Brazil, more later), I keep thinking about this great piece I devoured this morning in the Daily Telegraph by Tom Stevenson. One of his bullet points toward the end was;

". . . government biofuels targets mean that within 15 years 12pc of the world's agricultural land will be needed for transport against just 2pc today. Farmers, food manufacturers, fertiliser makers and anyone involved in booosting crop yields and improving  the efficiency of irrigation stand to gain"

So in the long run, biofuels are still very much destined for tremendous growth - a sixfold increase in 15 years. The point here is all that really matters is where you source them from. Germany is and will remain a high-cost country.

European and American Farmers are on a hiding to nothing if they think they can compete with Brazilian farmers like these !
Brazil and other developing nations, with vast untapped hectares of land and low cost workforces are certainly not going to have any trouble producing low-cost biofuels - unless Western governments continue to hand out huge subsidies to their own. And Germany, one suspects, quite apart from the environmental arguments, has already taken a view that this is a battle they can't win.