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Germany’s Oil-Fired Generation Surges To 8-Year High
Germany’s electricity generation from oil surged to the highest since at least 2017 while gas-fired output soared to the highest in two years, as European power utilities prepare for a slump in wind energy. Meanwhile, German day-ahead power prices reached €222.18 a megawatt-hour for Wednesday on Epex Spot SE, their highest in a month. For some perspective, the contract has settled above €200 in less than 10 days over the past two years.
Berlin is, however, still pushing its green agenda despite surging oil and gas demand. Back in November, the German cabinet approved reforms that will restrict oil companies from carrying excess emissions reductions credits forward, a move that will boost the country’s biofuel industry which has been impacted by a rapid drop in carbon prices in recent years. In recent years, oil companies operating in Germany have met emissions goals by selling extra biodiesel; with sales clocking in at 3.4 million metric tons in 2022, 34% above their target. However, the reforms mean that oil companies will no longer be able to use past greenhouse gas reduction quotas to meet targets in the coming two years, with this option only reopening again in 2027.
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Germany’s Environment Agency rejected carbon credits for 215,000 tons of CO2 emissions from oil companies in September due to suspected fraud involving climate projects in China.
Companies usually meet these targets by using plant-based biofuels or through “upstream emission reduction” (UER) projects. However, concerns arose over a year ago when doubts arose about whether some of these projects met the required standards or even existed
As many of the world’s governments continue pushing to a greener future, the energy transition is colliding with another challenge facing the world as it struggles to emerge from the pandemic: skyrocketing food prices.
Many energy companies plan to increase their biofuel capacity by 2030, mainly using crops like corn and soybean oil as a major feedstock. However, such a move is driving price inflation for a host of commodities and vegetable oils, including palm oil, canola and soybean oil. Meanwhile, corn, oil, copper, and gasoline futures prices have all doubled from a year ago while lumber has more than tripled. Simply put, accelerating demand for renewable biodiesel fuels is directly responsible for commodity price inflation.
By Charles Kennedy for Oilprice.com
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Charles Kennedy
Charles is a writer for Oilprice.com
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DoRight Deikins on January 14 2025 said:
«Simply put, accelerating demand for renewable biodiesel fuels is directly responsible for commodity price inflation.» Yes, indeed! And who pays the price for increased prices of soybeans, corn, etc?
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