Leipzig, April 29, 2022 – We are very surprised about the reaction of the capital market to the statements of the two ministers Schulze and Lemke. Since January 1,2022 German legislation limits usage of foodstuffs as raw materials for biofuel production to about 4 percent. It’s not any news. In the EU, this limit is set at maximum 7 per cent. Consequently, restrictions in Germany are 40 per cent stricter than in other EU member states.
For reasons of efficiency and costs, we mainly use grain of inferior quality and no bread grain for bioenergy production. VERBIO attaches great importance to the use of inferior, cheap grain for bioethanol production. Technically, this is not a problem, since in the VERBIO biorefinery we primarily process the stillage into biomethane, which replaces fossil natural gas in various areas of application.
Around 40 per cent of our first-generation biofuels are exported to other European markets.
For years, VERBIO's growth strategy has been based on expanding the production of advanced second-generation biofuels from agricultural residues, such as stillage or straw.
Currently, VERBIO is the world's largest producer in this area with its large-scale biomethane and biorefinery plants. We produce approx. 100 million m³ of waste-based biomethane in natural gas quality per year with over 90 percent CO2 savings and are thus already replacing part of the Russian natural gas today. In the future, other agricultural residues such as chicken manure offer additional potential for our production.
It was Ms Svenja Schulze who, in her capacity as Federal Environment Minister during the last legislative period, finally created the legal preconditions that have helped in particular advanced second-generation biofuels to achieve a breakthrough. The new legal situation applies from January 1, 2022. The renewed increase in our guidance is largely due to rising demand for these advanced biofuels.
In September 2021, we already announced an investment programme totalling EUR 300 million for the expansion of our production capacities. For years, VERBIO has been demanding German politicians to focus more on renewable energies from residues. These combine climate protection with regional value creation, security of supply and independence from fossil oil and gas without competing with food production.
Unfortunately, this is not the first time that unprofessional communication by the German government has led to uncertainty on the capital market when it comes to the design of the energy transition or the importance of biomass for this transformation.
Based on this experience, VERBIO has already diversified its business, both geographically and in terms of the depth of value creation.
The current situation proves it once again how important it is to expand our activities to North America and Asia. In addition, our high-quality by-products - today: sterols and pharmaceutical glycerine - in the future: basic chemical products such as 9-Dame, 1-Decene as well as synthetic fuels from hydrogen and CO2 - demonstrate that VERBIO is more future-proof and stable than ever before.
Unfortunately, Ms Schulze and Ms Lemke have done a disservice to German energy transition and the security of supply with domestic energy sources with their misguided statements. Investors should think about carefully before further investing in this chaos.