PLANS by Germany to phase out the use of crop-based biofuel would have ramifications for Australian canola exporters but analysts say there is no need for panic.
The European Union has been Australia's largest canola customer in recent years with much of it going to make biodiesel.
Germany is the largest manufacturer of biodiesel in the EU, with 2859 megalitres a year ahead of France, 2206mL and Spain 967 mL.
The German environment minister is leading a push to withdraw from grain-based biofuel on the grounds of trying to cut greenhouse gas emissions.
Steffi Lemke said the area required to produce the biofuel to replace fossil fuels was not sustainable.
Instead she is pushing for more biofuel to be produced from waste and products such as used cooking oil.
Dennis Voznesenski, agricultural analyst with Rabobank, said there was conjecture as to whether Ms Lemke's bid would pass.
"This was discussed last May and nothing has come of it yet," Mr Voznesenski.
"While biofuel can be made from waste and cooking oil the price is still very high," he said.
"No doubt if Germany did stop making biodiesel from canola it would have an impact on Australian canola exports but this plan only applies to Germany, not other EU nations and it is not formalised as yet.
"There will be pressure on biodiesel usage from other factors such as the shift to electric vehicles but none of this is happening overnight."
And Mr Voznesenski said other proposed German biofuel policies could work in Australia's favour.
"Germany is planning to phase out the use of palm oil in biodiesel by the end of the year."
"Palm oil makes up around a third of the feedstock used by biodiesel manufacturers globally so without it there is going to be a big hole to fill."
Mr Voznenenski also had encouraging news for the canola sector on other fronts.
"Canada is the world's largest exporter of canola, but it has been putting in more biodiesel refining capacity."
He said Canada normally exported about 10 million tonnes of canola but now had capacity to use about 3.5m tonnes in its new biodiesel plants.
"These plants might not run to capacity straight away but even still it is going to account for a lot of canola that would have otherwise been exported, which should mean more opportunities for Australia."
Lastly, he said there had been a policy change in China, with officials trying to push feeders away from using soybean meal and into alternative products such as canola meal.
"The move is designed to increase food security and ease reliance on imports from the US, so that could be good news for big canola exporters like Australia and Canada."
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