Biocarbonate Sector Poised to Reduce Oil Dependency Amid Market Volatility
The biocarbonate sector in Spain is prepared to play a significant role in decreasing dependency on crude oil especially amidst the ongoing global crisis caused by conflict in the Middle East. Currently Spain has an installed production capacity of approximately 4.8 million tonnes with only half being utilised. This existing infrastructure offers substantial potential to escalate production and supply more sustainable fuels to the market.
With recent disruptions in fossil fuel supplies and mounting prices driven by escalating conflicts in the Middle East and the blockade of the Strait of Hormuz the biocarbonate industry stands ready to increase its market share in Spain. Manuel Bustos from the Association of Renewable Energy Companies (APPA) highlighted that this expansion could automatically reduce crude oil imports bolstering energy independence for the country.
Prices for biocarbonates have proven to be more favourable in recent days with some days even cheaper than fossil fuels. The industry has reported that the cost of biocarbonates has risen modestly from 7 percent to 15 percent since the escalation of geopolitical tensions a lower increase compared to fossil fuels. Specifically European Union market data indicate that rapeseed biodiesel has increased by 7 percent soybean biodiesel by 7 percent palm oil biodiesel by 12 percent and waste oil-based biodiesel by 15 percent.
International vegetable oil prices also surged by 5.9 percent in April reaching levels not seen since July 2022 driven by increased demand from the biocarbonate sector and rising crude oil prices. This demand was heightened by incentives in producer countries and concerns about reduced future production in Southeast Asia. Despite these market pressures the Spanish industry has maintained stable raw material supplies with domestically sourced maize being a primary feedstock for bioethanol production.
However some supply chain aspects such as maritime freight costs for imports from regions like Asia have increased due to logistical challenges. Nonetheless the sector has not faced significant disruptions in raw material availability within Spain and Europe.
Biocarbonate industry stakeholders emphasise the progress made in policy support noting that the Spanish government has increased the mandatory biofuel blending quota from 12 percent to 14 percent for 2026. Despite this actual deployment in 2024 reached only around 9 percent mainly due to fraud cases involving IVA evasion by certain companies which have since been disqualified. The industry calls for stronger political will and higher targets from the Ministry for Ecological Transition to incentivise further growth and reduce fiscal burdens.
Overall the Spanish biocarbonate sector exhibits strong potential to contribute significantly to energy independence and decarbonisation goals provided that policy support and market conditions continue to favourable developments.