Biofuels in Bulgaria

General

Mandatory targets set by the by the Proposal for a Directive of the European Parliament and the Council on the promotion of the use of energy from renewable sources from January 2008 indicates 16% share of RES on the final consumption of energy in 2020. At least 10% share of biofuels of final consumption of energy in transport in 2020. Indicative Target set by the European Biofuels Directive from 2003 Biofuels consumption of 5.75% of petrol and diesel use for transport in 2010.

Renewables in transport: biofules

Consumption data: in 2010 approximately 38 911 tonnes of biodiesel were used in Bulgaria, which gives a percentage of  % calculated on the basis of the energy content of all types of petrol and diesel used in transport. Biodiesel consumption in Bulgaria registered a staggering increase in 2010 amounting to 38,911.13 tons, total of 8551.4 tons of the estimated quantities consumed are pure biodiesel, the remaining are biodiesel blends with petroleum-based diesel fuels. Bulgaria has capacities for the production of 250 000 tons of biodiesel and 60 000 tons of bioethanol per year.

Production data: according to Bulgaria’s Economy, Energy and Tourism Ministry in 2009 some 18,456 tonnes of biodiesel were manufactured in Bulgaria. Around 350 tonnes of this was sold to the domestic market, while the rest was exported. The production of biofuels is based on local raw materials which could contribute to improving the security of supplies. For Bulgaria, biofuels represent an alternative to petrol and diesel fuels which allows the dependency on the import of fuels to be reduced and contribute to the security of energy supplies. Bulgaria has a production capacity of around 240,000 tonnes but the only refinery, which produce biofuels in Burgas has stopped working in 2011. Due to high expectations and standards forced, the owner had to suspend the refinery. Its annual production was  about 400 tons.

In accordance with ZVAEIB (in force since 2007; last amended by the ZVAEIB: 1 March 2010), by Decision under point 2 of Protocol No 43 approved at a meeting of the Council of Ministers of 15 November 2007, a National Long -Term Programme for the Promotion of the Use of Biofuels in Transport in the time period 2008 -2020 was adopted. The Programme sets out the national indicative targets for the promotion of the use of biofuels in Bulgaria in the time period 2008-2020. The national indicative targets for the use of biofuels were determined on the basis of an analysis which reflects the actual potential for the cultivation of energy crops in Bulgaria. That analysis takes into account the information about existing plants and notified future plants expected to be commissioned before the end of 2010. In determining the national indicative targets, the current condition and future development of the use of petrol and diesel fuels in the transport sector in the country has also been taken into consideration. The following national indicative targets for the use of biofuels in transport have been set:

• in 2010 – 5.75%
• in 2015 – 8.00%
• in 2020 – 10.0%

As a measure to reduce fuel prices, the parliament voted in 2011 in the new Law on Renewable Energy (ZVEI) to delay the mixing of 5% diesel with bio-components by the end of the year. To reduce diesel prices, the government postponed by six months the European diesel requirement is 5 percent bio-components. This is to affect seriously the producers of biodiesel. Due to market uncertainty, farmers in 2012 are unlikely to sow energy crops. The National Association of biofuels in Balgaria calculated that the removal of bio-components in diesel will reduce the final price of transportation fuels. It will directly affect 250 people working in the industry, and about 1000 people whose business is related to biofuels.

In 2011 MPs adopted a deferral for a further 3 years for mandatory blending of gasoline with ethanol. The requirement of bioethnol admixture, rather than come into force in March 2011, has been postponed untill 2014.

The Renewable and Alternative Energy Sources and Biofuels Act (‘ZVAEIB’) is the main national instrument laying down the general principles of the policy on the promotion of the production and use of biofuels in Bulgaria. The compulsory blending of biofuels with mineral oil derivatives takes place only in tax warehouses authorised in accordance with the Excise Duties and Tax Warehouses Act. Biofuels may be used in the transport sector in pure form or as a blending component in mineral oil derivatives for the operation of internal combustion engines. Biofuels must comply with the technical and quality requirements for biofuels and their blends with mineral oil derivatives laid down in the Ordinance on the quality requirements for liquid fuels, the conditions, procedure and method of their control and in the relevant standards (for petrol – BDS1 EN 228 and for diesel fuels – BDS EN 590).

It was found that the statutory requirements relating to the compulsory blending of biofuels with mineral oil derivatives were not put into practice and that, thus, no progress was made towards the achievement of the national indicative target. The reasons for the non-compliance with the Renewable and Alternative Energy Sources and Biofuels Act (‘ZVAEIB’) as regards the compulsory biofuel component in conventional fuels are complex. The main reasons cited by stakeholders are given below:

Ø Difficulties encountered in meeting the requirements of the EN 228 standard in the case of blends of bioethanol with petrol;

Ø No tax incentives implemented in practice for the placing on the market of pure biofuels and biofuel blends;

Ø Lack of laboratories accredited to check the quality and composition of biofuels and to determine with sufficient accuracy the biocomponent content in a given blend;

Ø The time needed by producers and importers of liquid fuels to implement the investment programmes relating to the technical preparation of the distribution systems (to bring them into line with the Renewable and Alternative Energy Sources and Biofuels Act as regards the process of blending of biofuels with mineral oil derivatives);

Ø Problems encountered in exercising control over the quality of pure biofuels and of biofuel blends offered on the market as well as the non-imposition of penalties in the case of noncompliance with the statutory blending requirements.

The reasons set out above constituted a determining factor for the failure to achieve the national indicative targets for 2008 and set the trend for 2009. It was therefore necessary to take relevant measures in order to address the problems identified and ensure compliance with the blending requirements. In December 2009, the National Assembly adopted an Act amending the Renewable and Alternative Energy Sources and Biofuels Act. Requirements have been laid down for the phased compulsory blending of petrol and diesel fuels with biofuels; Under the new amendments to the Act, persons placing on the market petroleum-derived liquid fuels for transport purposes are under the obligation, in the event of release for consumption, to offer fuels for diesel engines blended with biofuels in the following percentage terms: - from 1 March 2010 – with a biodiesel content of at least 2 % by volume; - from 1 September 2010 – with a biodiesel content of at least 3 % by volume; - from 1 March 2011 – fuels for diesel engines with a biodiesel content of at least 4 % by volume and fuels for petrol engines with a bioethanol content of at least 2 % by volume; - the biodiesel and bioethanol content in fuels for diesel and petrol engines must not exceed 5% by volume. The phased implementation scheme takes into account the need of producers and final distributors to acquire the technical capacity for blending and comply with the quality specifications for blended diesel fuels. The supervisory body has been clearly indicated – the President of the State Agency for Metrology and Technical Surveillance or officials authorised by him;

The Excise Duties and Tax Warehouses Act (‘ZADS’) (promulgated: SG No 91 of 15 November 2005, in force on 1 January 2006; last amended: No 95 of 1 December 2009, in force on 1 January 2010) lays down the legal provisions concerning the levying of excise duties and the control over the manufacture, use, storage, movement and holding of the goods subject to excise duty. The Act introduced a total exemption from the excise duty on motor fuels for pure biodiesel and a reduction of the rate of excise duty for biofuel blends, which entered into force on 24 November 2009, following notification to the European Commission. This notification was necessary in view of the fact that the reduced rates constitute State aid and, should be applied only after a favourable decision is taken by the European Commission on their compatibility with the common market. However, currently eco-fuels in Bulgaria are taxed with the same duty as those produced by oil. Excise duty levied on bio-fuel in the country disuraged entrepreneurs engaged in the production of biodiesel.

The Ordinance on the quality requirements for liquid fuels, the conditions, procedure and method of their control, adopted by the Decree No 156 of the Council of Ministers of 2003 (promulgated: SG No 66 of 2003; last amended: SG No 93 of 24 November 2009) lays down the conditions, procedure and method of quality control of liquid fuels after their production, on importation – after customs clearance, upon their distribution, including at filling stations and in tanks of combustion plants. The Ordinance lays down the quality requirements for biodiesel, taking into consideration the BDS 14 214 standard. In view of the characteristics of the widely used low-oleic varieties of sunflower in Bulgaria, it sets a transitional period until 31 December 2010 in order to facilitate the transition from the iodine value of 140 g I/100 g to the standard value - 120 g I/100 g.

Future programme changes expected  

In Bulgaria Consumer price inflation jumped to 5.2 percent on an annual basis in February, mainly driven by food and fuel costs. Russia's LUKOIL which controls Bulgaria's sole refinery, has agreed to impose a one-month freeze on retail fuel prices, after holding talks with the government. The moratorium is expected to begin immediately and is among the centre-right cabinet's measures to tame the spike in petrol costs, linked to the surge in global crude oil prices. The government, transport associations and fuel distributors have discussed various measures aimed at cutting rising fuel prices which threaten to speed up inflation and hit incomes in the European Union's poorest member. Mixing diesel with biodiesel will not now be obligatory until 2012, a move expected to cut diesel prices by 0.06 levs ($0.043) per litre. Diesel was selling at 2.50 levs per litre in March 2011. The cabinet also said it will reduce the obligatory fuel reserves distributors are obliged to keep, as part of its drive to cut costs. Earlier this month, tens of thousands of Bulgarians protested across the Balkan country against high fuel prices in March.

NREAP indicates that in order to fulfil the national targets some 115 ktoe of biofules will be consumed in 2015 and  205 ktoe of biofules will be conumed in 2020.

Sources:

Report on the achievement of the national indicative targets for the use of biofuels and other renewable fuels in transport in 2010  

http://ec.europa.eu/energy/renewables/biofuels/ms_reports_dir_2003_30_en.htm

NREAP : http://ec.europa.eu/energy/renewables/transparency_platform/doc/national_renewable_energy_action_plan_bulgaria_en.pdf

http://biofuelsdigest.com/

http://af.reuters.com/article/energyOilNews/idAFLDE72M1UG20110323

http://biofuels.bg/

http://www.novinite.com/view_news.php?id=128833

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Last update: June 2011

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