New German Biofuel Phase-in Hits Snags

The German government demanded clarity from the biofuel industry on whether it will continue with a planned roll-out of gasoline with a higher biofuel content after its association send mixed messages about a halt.

"The confusion that the biofuel industry is causing is not acceptable," Environment Minister Norbert Roettgen told journalists on Thursday after the MWV association denied a media report that the roll-out of the fuel, known as E10, would be temporarily halted.

Economy Minister Rainer Bruederle said he would invite industry participants to a "biofuel summit" to explain their plans.

The MWV said on Monday up to 70% of motorists were avoiding the new blend in petrol stations, with many apparently concerned it might cause engine damage.

Uncertainty over whether the fuel's gradual introduction, flagged for the first quarter of the year, would be halted, hit the share prices of Germany's bioethanol firms, which had prepared markets for a major rise in sales.

Verbio ended Thursday down 8.6%, and sugar producer Suedzucker's CropEnergies unit fell 14.7%.

The MWV said in a mid-afternoon statement the E10 phase-in would continue after news agency dpa reported the association's head, Klaus Picard, as saying it would be temporarily stopped.

The fuel is being introduced in stages as part of a push by Germany to better protect the environment.

The government permitted a rise in the maximum level of bioethanol allowed in blended gasoline to 10% from 5% from the start of this year.

But motorists are continuing to use the old fuel with 5% bioethanol content called E5, the MWV said. If the trend continued, petrol stations would run out of E5 gasoline.