Mr. Dimas, EU commissioner for environment has criticized using edible crops for energy purposes, blaming biofuels for accelerating food price increases, and called for scrapping of the current EU target of generating 20% of energy from renewable sources by 2020. Mr. Dimas statement has been welcomed by environmental organizations, concerned with devastation of rain forest and increasing acreage turned away from food production into bio energy crops.
Our view: We expect a negative market impact on the back of the news today. If the EU goes ahead with proposed cuts in its biofuels use targets, it might remove some of the growth potential from the renewable energy companies. However, the current production capacity of Elstar Oils biofuel unit is tailored for relatively modest target of 5.75 % biocomponent by 2010, and we do not expect this installation to be put out of stream.