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Feb 2019

Regulatory framework finalized

This year will mark the rebirth of the Croatian biodiesel market as the new penalty system which, approved recently through a ministerial decree, is now fully operative. Because they face an “environmental fee” in case of non-compliance, obligated parties should work to fulfill as much as possible of the 7.85% e.c and 3% GHG reduction obligations in 2019.

The new law, completed with ministerial decrees, fully transposed the ILUC directive and fixed permanently the framework within which biofuels market are regulated. The most important feature is the penalty system: depending on the missing quantities, the environmental fees to be paid will range between HRK 0.01-0.3/MJ for the blending obligation, and HRK 0.01-3.5/kgCO2 for the GHG obligation. Because the law was published after the period, obligated parties will enjoy a 75% reduction of their total fees to be (inevitably) paid. For 2019 and 2020, this reduction will be of only 30%.

As on December 31, 2019 the law also introduced double counting and an ambitious 3% GHG reduction target, the incentive to use waste-based biodiesel is clearly set up. Because the consumption of ethanol has so far been inexistent in Croatia, local sources believe all of the biofuels mandate will be filled through the biodiesel segment. We just increased our forecast from 60 KT of SC Fame to 100 KT of Fame, including 40 KT of DC. These quantities would translate into a 6.3% e.c share compliance, the remaining being paid by fuel distributors under environmental fees.