BERLIN — Germany’s cabinet has approved a draft German biofuels law that keeps crop-based fuels capped at 4.4 percent, scraps a generous double-counting rule from 2026 and bans palm-oil credits from 2027, in a decision taken Wednesday that could reshape Europe’s biggest fuel market while keeping food-based fuels in tanks. The package transposes the EU’s latest Renewable Energy Directive and related fuel rules into national law, promising deeper cuts in transport emissions but sharpening a long-running fight between climate groups, farmers and fuel suppliers, Dec. 11, 2025.
Key changes in the German biofuels law
The German biofuels law would lock in the existing cap on crop- and feed-based biofuels at 4.4 percent of road-fuel energy use, despite earlier phase-out plans, according to Reuters reporting. It also steepens the greenhouse-gas quota for fuel suppliers — rising to 12 percent in 2026, 25 percent in 2030 and 59 percent by 2040 — while ending “double” credits for advanced waste-based fuels from the 2026 compliance year, as outlined by S&P Global Commodity Insights. Reporting from Argus Media adds that palm oil and residues such as palm oil mill effluent will be fully excluded from the quota from 2027, after a one-year transition period when some volumes remain eligible, and links eligibility to stricter audit rules.
A long fight over the German biofuels law
The choices baked into the German biofuels law cap years of argument over whether crops belong in engines or on plates. In 2021, an earlier law implementing the EU’s RED II directive fixed the 4.4 percent crop cap through 2030 after farm and biofuel lobbies fought off plans to cut it to 2.7 percent, as Argus reported in 2021. Two years later, environment minister Steffi Lemke pushed in the opposite direction, arguing that food- and feed-based biofuels should be phased out by 2030 and proposing to lower their share to 2.3 percent from 2024, according to Clean Energy Wire; “Plants belong on the plate, not in the tank, when we consume them,” Lemke said in 2023.
Palm oil has been a flashpoint in that debate. Germany had already pledged to stop using palm oil as a biodiesel feedstock by 2023, a move first announced in 2021 and covered by Biofuels International, amid criticism over deforestation and peatland damage. The new draft law goes further by closing remaining loopholes for palm-based residues and tying eligibility to tougher sustainability rules.
Winners and losers in the fuel market
Industry reaction to the German biofuels law is mixed. Rapeseed growers and conventional biodiesel producers welcomed the decision to keep food and feed ingredients at current levels while scrapping double counting, with one trader telling Reuters, “There is overall relief that food and feed based ingredients will continue to be used while the end of double-counting will also be positive.” Advanced biofuel and used cooking oil suppliers, by contrast, face tougher competition as their fuels lose the double credit that had cushioned margins, and analysts expect higher quotas to lift compliance costs while boosting demand for certified waste-based and synthetic fuels.
The German biofuels law still needs approval from both the Bundestag and the Bundesrat. But with the cabinet now united behind a compromise that keeps crop-based fuels capped, ends double counting and closes palm-oil loopholes, Germany has set a benchmark that other EU states will watch closely as they implement RED III.
