Germany to raise bioethanol blending in gasoline

Reuters
HAMBURG Mon Oct 25, 2010 12:50pm EDT

HAMBURG (Reuters) - The German cabinet will vote on Wednesday on a proposal to raise the maximum level of bioethanol allowed in blended gasoline to 10 percent in January 2011 from 5 percent now, the country's environment ministry said on Monday.

The move is part of Germany's efforts to meet European Union plans to raise biofuel use to protect the environment, it said.

Analysts said the increase would help boost demand for grain next year, but there also would be tough competition from sugar and imported bioethanol.

"Currently sugar is looking most competitive for bioethanol output after the sharp rise in grain prices this year," one analyst said. "But overall there is likely to be increased demand for both grains and sugar, so more blending will be positive news for producers."

Introduction of fuels with higher bioethanol content has in the past been controversial because of fears of engine damage to older cars.

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