German new generation biofuel plant to start 2010

HAMBURG, July 1 (Reuters) - Germany's first biofuels plant producing using new generations of biomass raw materials is likely to start initial commercial production in 2010, an industry executive said on Wednesday.

The plant is being built in Freiberg in south Germany by Choren Industries to produce about 15,000 tonnes of biomass-to-liquid (BTL) fuels largely using wood products and wood-based waste.

Initial output of gas could start in October this year leading to output of BTL liquid fuels in early 2010, said Michael Deutmeyer, chief executive of Choren's biomass supply subsidiary Choren Biomass.

Germany is among the first European countries building test plants to produce commercial volumes of second generation biofuels from a wide range of biomass materials ranging from wood chips and other forest products to straw, hay, grass, vegetable waste and low grade crops.

Currently, first generation biofuels made from food crops such as grain, rapeseed oil and palm oil are used to produce biofuels to reduce use of fossil fuels and combat global warming.

But there is concern that using such crops for biofuels helps raise food prices.

Choren was also planning a larger 200,000 tonnes capacity second generation BTL biofuel plant in Schwedt in east Germany, Deutmeyer told the European Biomass Conference in Hamburg.

But decisions on this project depend on the political framework and the company would first await the result of the German parliamentary elections in September 2009, he said.

The company needed to know whether second generation biofuels, which have heavy development costs, would be given government assistance.

"We need to know whether there could be a quota for second generation fuels," he said, referring to compulsory blending of biofuels with fossil fuels which Germany is using to meet targets to cut emissions of greenhouse gases which cause global warming.

Another form of assistance could be a feed-in-tariff for second generation biofuels fuels, giving them a set price but in fair competition with first generation fuels, he said. (Reporting by Michael Hogan; Editing by Peter Blackburn)