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Good profits in 2005 and 2006 encouraged rapid expansion of biodiesel and bioethanol production capacity in the EU-27. Domestic biodiesel and bioethanol production amounted to about 5.4 MMT for biodiesel and 1.4 MMT for bioethanol in 2007. It is expected to further increase in 2008 to 5.7 MMT and 1.7 MMT, respectively. Overcapacity, high feedstock costs, and competitively priced imports have considerably reduced profit margins. As a result, it is expected that the sector will need to consolidate. Current EU discussions on future biofuel use targets could substantially increase EU-27 vegetable oil demand in coming years. However, discussions on feedstock sustainability criteria could result in sizeable market access issues for U.S. oilseeds and biodiesel.
