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GP: Promotion of Biodiesel production - Croatia PDF Print E-mail

Countrywide Feasibility Study for a Potential Croatian Biodiesel Industry

Final Technical Report prepared for Croatian Government by United Nations Industrial Development Organisation (UNIDO)

Introduction

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Croatia is a country with poor fossil fuel resources. Around two third of the consumption has to be imported. Of these petroleum products needs, diesel fuel consumption for the transport sector has increased to around 1,1 million tons during 2004 and more growth is expected in the future.

Like most transition economies, Croatia, has gone through severe changes in the labour market since the 1990s. The unemployment rate in Croatia ranges between 15 to 35% depending on the region. The policies designed to reduce unemployment in Croatia have concentrated so far on the average level in the country, however often a regional/ county approach would be more suitable to deal with the specific situation in each region.

The production of biodiesel is seen by the Government of Croatia as one of the promising options to provide an integrated solution to energy, environmental and socio-economic concerns. Biodiesel production was part of the National Energy Programme BIOEN launched by the Croatian Government in February 1997. The objective of the BIOEN programme was that, at least, 15% of Croatia´s energy needs will be derived from biomass and waste by 2030. To this end, a biodiesel production feasibility study has been undertaken and was presented to Ministry of Agriculture and Forestry in 2001. The next steps in the biodiesel implementation should be the adoption of necessary legislation including standards and taxation exemption, forming clear national targets and strategy and the construction of a demonstration plant, which is expected to provide useful information on the basic part of the production chain (rapeseed, oil and biodiesel), storage and use of biodiesel especially, in relation to economic models.

The Republic of Croatia became a party to the United Nations Framework Convention on Climate Change (UNFCCC) in 1996. Under the Article 22 of the Convention, Croatia undertaken the commitments outlined in Annex I, to maintain its greenhouse gas emissions at 1990 level. In March 1999, Croatia signed the Kyoto Protocol, which globally entered into force on February 16, 2005. Upon its ratification by the Croatian Parliament, Croatia will commit to reduce its emissions of greenhouse gases by 5 percent in relation to the base year, over the commitment period from 2008 to 2012.

Considering the very low initial level of emissions in 1990, the Kyoto target will be an extremely difficult task for Croatia. In 1990, Croatia had almost the lowest emission of CO2 per capita in Europe (4.8 t CO2 per capita), half the west European average. After four years of negotiations, at 11th Conference of the Parties, held in Montreal 2005, Croatia is allowed a certain degree of flexibility in determining its reference level of greenhouse gas emission .In return, Croatia seriously committed to consider renewable energy sources utilisation.

Croatia’s agricultural development has been strongly affected not only by the structural changes following the break-up of the former Republic of Yugoslavia (50 percent of land was farmed by large heavily subsidized, vertically integrated agricultural holdings), but also by demographic changes after the Homeland War (high rate of absentee land ownership). The three major agro-ecological zones differ largely in crops and access to markets, but all producers in all regions have access to a very high level of direct subsidies. The large number of very small holdings (averaging approx. 2,8 ha) make outreach for technical assistance and economically feasible production difficult. A well equipped extension service attempts to provide specialized assistance also in agro-tourism, and organic and traditional production.

The agricultural sector would benefit from the increased oilseed production for biodiesel through an increased usage of the considerable amounts of currently idle acreage, the introduction of rapeseed as the third crop in crop rotation, a guaranteed additional profit for farmers, and better exploitation of farming machinery which would all be summarized in increased profitability of agricultural production.

Rapeseed meal being a by-product in the production of biodiesel would contribute to the replacement of animal protein feeds with protein of vegetable origin in the livestock production as a protective measure against encephalopathy that has luckily not occurred in Croatia.

This study has been conducted under the UNIDO project Promotion of Biodiesel Production in Croatia with the main objective to identify the most promising opportunities for biodiesel production in Croatia, analyse barriers and concerns and give recommendations to the Government of Croatia and other relevant stakeholders.

Chapter 2 focuses on health, environmental, employment and other benefits of biodiesel in relation with relevant Croatian national strategies and objectives. It also analyses some legislative and economic circumstances, and the process of EU accession.
Chapter 3 is stressing the key factors affecting potential establishing of biodiesel industry in Croatia, notably feedstock (oilseed) supply, present diesel fuel market and future development scenarios.

Chapter 4 gives a general technology overview of biodiesel production processes, biodiesel by-products and analyses some key issues to sustainable biodiesel industry like site selection, process technology, policies and incentives.
Chapter 5 gives macroeconomic analysis of future biodiesel production in Croatia and deals with changes in Government revenues.

Chapter 6 describes and proposes policies, financial mechanisms and marketing strategy promoting biodiesel production.
In Chapter 7, a number of factors in technology selection and technology company overviews are given.

Chapter 8 is on financial analysis of a proposed small and largescale of biodiesel production and elaborates needs for biodiesel de-taxation.
Chapter 9 contains a comprehensive set of recommendations and conclusions from this report.

Appendix 1 contains a report of project workshop held on 15th December 2004 including results from a short questionnaire targeting important questions regarding the reasons of the currently inexistent biodiesel production as well as the future actions and implementation measures needed in Croatia which was conducted as a workshop follow-up. As a separate document, there is also Appendix 2 which contains the complete financial analysis prepared by ITPO Italy which summary and main findings are presented in Chapter 8.

Website: http://www.unido.org/fileadmin/media/documents/pdf/Energy_Environment/re_events_croatia_Aide_Memoire_Cavtat.pdf

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