BioLNG Put to the Test: Making the Switch Pays Off

Claudius Nießen: Welcome to a new episode of #strawclever podcast. As always, we explore innovative solutions for sustainable energy and raw material supply based on regionally sourced biomass, as well as the policy landscape shaping the environment in which bioenergy producer Verbio operates.

In our last episode, released in September, we discussed the planned implementation of the EU’s RED III Directive into German law—a process that still left many questions unanswered at the time. What measures would ultimately be adopted? How ambitious would Germany’s implementation be? And what impact would these decisions have on climate goals, transportation, the economy, and, of course, the biofuels industry?

Now that Germany has adopted its decision, we are picking up exactly where we left off. What does the decision mean in practical terms? What improvements can be expected, and where do challenges remain? What opportunities does it create for the biofuels industry and other sectors?

We will also look at the decision in the context of a changed global political landscape, where recent geopolitical developments are likely to have a noticeable impact on price trends and security of supply for fossil energy sources.

Joining us once again in the studio are bioenergy expert and Verbio CEO Claus Sauter, along with Stefan Schreiber, President of the German Biofuels Industry Association and a fellow member of Verbio’s Executive Board. Gentlemen, welcome back to the podcast.

Claus Sauter: Thank you, Claudius. It's a pleasure to be here.

Stefan Schreiber: Thank you. Glad to be here as well.

Claudius Nießen: Mr. Sauter, let’s dive right in. Germany has now officially adopted its implementation of RED III. In your view, does this represent a real breakthrough, or is it simply a long-overdue step?

Claus Sauter: I would say it is both. The decision was long overdue, but it also represents a genuine breakthrough. One reason is that biomass is now being given a greater role in other sectors as well—something we had not necessarily expected to this extent.

In that sense, the saying “good things take time” certainly applies. We have been pleasantly surprised by how many of the measures on our wish list ultimately made it into the legislation. During the parliamentary process, additional elements were even added.

There is certainly reason for optimism, although I would not describe myself as an overly enthusiastic person. For now, we should remain cautiously optimistic and see how developments unfold. Overall, the direction of travel looks very encouraging.

Claudius Nießen: So the glass is half full?

Claus Sauter: I would say it’s three-quarters full.

Claudius Nießen: Well, that’s certainly encouraging.

Claus Sauter: There is one aspect that I would still regard as a disappointment. The planned reform of the current good-faith protection rules will not take effect retroactively from January 1, 2026, but only from January 1, 2027.

I find that difficult to understand because there is broad awareness that fraudulent practices have occurred and, in some cases, continue to occur. Yet many of these cases have gone unpunished. If we think back to the UER projects, for example, there were cases involving supposedly decommissioned chicken farms in China that generated claimed CO₂ savings worth tens of millions. No meaningful consequences followed, and no one was held accountable. The fact that this situation will now be allowed to continue for several more months is frustrating, to be honest.

Claudius Nießen: Mr. Schreiber, Mr. Sauter has already highlighted some important points. Let’s take a closer look at what the decision actually entails. Could you walk us through the key measures and explain what they mean in practice?

Stefan Schreiber: First, it is important to understand that the GHG reduction quota applies to the transportation sector.

Claudius Nießen: And just briefly for our listeners, what does GHG stand for?

Stefan Schreiber: GHG stands for the greenhouse gas reduction quota. Put simply, it is the obligation imposed on fuel suppliers to reduce greenhouse gas emissions through the fuels they place on the market.

The key development is that Germany has now extended the quota trajectory all the way to 2040 and significantly increased its ambition. In practical terms, this represents a major step forward.

To put the numbers into perspective: in 2024, the quota required greenhouse gas savings of just under 10% compared with the fossil fuel baseline. By 2027, that requirement will rise to 17.5%.

It is important to note that the 2024 figure was supported by double-counting mechanisms, meaning that the actual emissions reductions achieved were considerably lower. As a result, the increase from 2024 to 2027 effectively represents a doubling, or potentially more than a doubling, of real CO₂ savings.

The quota will then continue to increase through 2030 and beyond. During the final stages of the legislative process, the German Parliament raised the targets even further for 2028, 2029, and 2030. As a result, the quota is now set to reach 26.5% by 2030 and 65% by 2040.

Claudius Nießen: Were you surprised by the level of ambition reflected in these targets?

Stefan Schreiber: The additional increase introduced during the final stages of the legislative process was certainly unexpected. The draft legislation already contained ambitious targets, yet the final version went even further, raising the quota trajectory through 2040.

Another key element is the elimination of double counting, which must be viewed together with the higher quota targets. Going forward, the system will rely less on emissions reductions generated on paper and more on actual, measurable reductions. In practical terms, this increases demand for actual renewable molecules—the products manufactured at facilities such as ours—and ensures that reported CO₂ savings reflect real-world emissions reductions.

A further important change concerns the cap on crop-based biomass. In my view, this represents a genuine paradigm shift. For the past 15 years, the industry has fought to prevent this cap from being reduced. Now, for the first time, it will be increased gradually.

That change reflects the realities facing agriculture today. Farmers are struggling with low commodity prices and limited profitability, while at the same time looking for reliable markets for their products. Against this backdrop, the long-standing “food versus fuel” debate has largely lost relevance, not only in Germany, but globally. The new legislation recognizes the continuing importance of agricultural feedstocks and creates additional opportunities for their use.

Another significant measure addresses a source of fraud within the system. While palm oil itself has already been excluded since 2023, the new rules also exclude certain residues and by-products generated during palm oil processing. These materials have proven difficult to verify and have been associated with significant cases of abuse. Their exclusion is therefore an important step toward improving the integrity of the system.

Finally, the legislation strengthens enforcement. Until now, the responsible authority, the Federal Office for Agriculture and Food (BLE), had only limited ability to verify information provided by foreign producers. Under the new framework, companies seeking to market biofuels in Germany and count them toward the GHG reduction quota must permit on-site inspections and provide the necessary documentation to German authorities. This will significantly improve oversight and transparency across the supply chain.

Claudius Nießen: So, overall, would it be fair to say that your assessment is quite positive?

Stefan Schreiber: Overall, the outcome is clearly positive. The framework is highly ambitious and, for the first time, introduces meaningful mechanisms for oversight and enforcement. These measures not only help prevent fraud but also make it possible to identify and substantiate cases where fraud has occurred. Taken together, this represents a very positive result for the industry.

Claudius Nießen: You mentioned the increase in the GHG reduction quota as one of the key measures. What does that mean in practical terms for the industry? From the way you describe it, it seems likely to have a tangible impact on the market. Do you expect it to provide a significant boost to industry growth and investment?

Stefan Schreiber: First of all, as Claus mentioned earlier, the industry is not exactly euphoric after such a long period of uncertainty. The prevailing attitude is still one of cautious optimism: let's see whether the expected effects actually materialize.

If they do, however, this framework provides something the industry has been seeking for a long time—planning certainty beyond 2030. That is critically important for investors who are committing their own capital rather than relying on government funding. Investors need confidence in the regulatory framework, confidence in public institutions, and confidence that growing demand will create attractive market opportunities.

These effects may not be felt overnight, but I believe the new framework provides a solid foundation for future investment decisions across the industry.

Claudius Nießen: In other words, does this implementation of RED III benefit Germany?

Stefan Schreiber: For Germany, this represents a major step toward reducing emissions in the transportation sector. Transport remains one of the most difficult sectors to move away from fossil resources. In fact, I would argue that “decarbonization” is not entirely the right term. We will continue to use carbon-based molecules, the difference is that they will increasingly be renewable rather than fossil-based. This creates an opportunity to achieve meaningful climate benefits and make real progress toward emissions reduction goals.

Renewable energy solutions are often criticized for being too expensive. However, if you look at our products, they remain among the most cost-effective options available when compared with alternative pathways. That is why I am optimistic that this reality will ultimately become more widely recognized.

Claus Sauter: I would add one point to Stefan’s remarks. He has focused primarily on the climate protection aspect, but biofuels also deliver benefits in two other important areas: supporting regional agriculture and strengthening security of supply. Both of these considerations have once again come to the forefront.

Claudius Nießen: Because of the international crises.

Claus Sauter: Our biodiesel is currently less expensive than conventional diesel, and our BioLNG costs roughly one-third as much as diesel. At the same time, we have been able to maintain stable pricing.

The agricultural dimension is equally important. As I have emphasized repeatedly, farmers also need planning certainty. If livestock numbers decline, as policymakers intend, and meat consumption continues to fall, significantly larger volumes of agricultural biomass become available for other uses.

Even the current European Commissioner for Agriculture has highlighted the fact that many farmers are struggling to earn a viable income. That was one of the original ideas behind biofuels: creating additional markets for agricultural biomass. Over time, however, the debate often shifted in directions that missed this fundamental point.

Today, the other benefits of biofuels are moving back into focus. One is support for regional agriculture, helping to create stable and reliable markets for farmers, whose primary role remains food production. The second is security of supply and price stability.

In fact, our products are currently helping to stabilize energy prices. Rather than adding costs, renewable fuels can now offer a price advantage. In many cases, we are seeing what could be described as a “green discount” rather than the “green premium” that is so often assumed.

Claudius Nießen: Moving from the idea of a “green discount” back to the demand for green molecules: How do these new regulations affect demand? Does demand change at all?

Stefan Schreiber: Absolutely. As I mentioned earlier, we are now talking about real emissions reductions achieved through actual green molecules, rather than reductions that exist only on paper. Looking at the period from 2024 to 2027, that effectively translates into a doubling of demand.

To put some numbers behind it: in 2024, the system delivered greenhouse gas savings of roughly 20 million tonnes of CO₂. However, a significant portion of those savings benefited from double counting and therefore did not reflect actual physical emissions reductions.

By 2027, annual CO₂ savings are expected to reach between 30 and 35 million tonnes, this time without double counting. As a result, demand for green molecules is set to roughly double. The increase amounts to around 15 million tonnes of additional CO₂ savings, with a further increase of approximately 15 million tonnes expected by 2030. That is why I described the targets as ambitious. They are ambitious, but rightly so. The next challenge is turning these targets into reality.

Claudius Nießen: Mr. Sauter, I noticed a bit of a reaction from you earlier when the topic of double counting came up. It seems to be an issue you feel strongly about, doesn't it?

Claus Sauter: As I mentioned earlier, we originally supported the introduction of the mechanism. However, experience has shown that it created unintended incentives and distortions within the system. That is why we strongly advocated for its removal. So yes, we are very pleased with this outcome.

Claudius Nießen: We have discussed the issue of fraudulent biofuel imports, and the broader problem of biofuel fraud, several times on this podcast. It has been a recurring topic over the course of multiple episodes and, understandably, has attracted considerable attention. Earlier, we touched on the introduction of on-site inspections. Do you see these measures as a real game changer?

Claus Sauter: On that point, Stefan and I have somewhat different views.

Claudius Nießen: Let me guess, you’re not exactly enthusiastic about them.

Claus Sauter: No, not at all. I do not believe these measures will eliminate fraud entirely. International traders are often highly sophisticated, and experience has shown that whenever new restrictions or sanctions are introduced, people tend to find ways around them.

What matters most, in my view, is creating effective enforcement mechanisms and establishing accountability. There must be consequences for those who participate in fraudulent schemes. If a biodiesel trader is based in Dubai or Islamabad, for example, it can be difficult for German authorities to take direct action. That is why enforcement ultimately has to focus on the market where the credits are being used.

A useful comparison is the handling of stolen goods. If someone knowingly purchases stolen property, that property can be confiscated. The same principle should apply here. If a company purchases supposedly low-cost CO₂ savings that ultimately fail to deliver what was promised, those credits should be withdrawn. That creates a tangible risk for market participants.

Throughout this debate, my focus has always been on two things: accountability and incentives. First, there must be real consequences for misconduct. Second, double counting had to be eliminated because it distorted the economics of the market.

We should not forget that around 70 to 75 percent of our production still falls into what is commonly referred to as first-generation biofuels—biodiesel produced from rapeseed oil and ethanol produced from grain. In many cases, we use feedstocks that are no longer suitable for food applications, but they are still classified within that category. The resulting market distortions made it increasingly difficult to achieve fair prices for these products.

Fraud will not disappear overnight, that would be unrealistic. However, it has become significantly less attractive. As I have said before, biofuel fraud was, in some respects, more attractive and involved less risk than drug trafficking. The key difference now is that much of the economic incentive has been removed. And that, ultimately, is what matters most.

Claudius Nießen: Mr. Schreiber, Mr. Sauter has already suggested that you take a somewhat different view on this issue. Why are you more optimistic about these measures than Claus Sauter is?

Stefan Schreiber: I would not necessarily say I am more positive. I would say I am realistic as well.

Perhaps we should revisit a second issue that we have only touched on briefly so far: the reform of the current good-faith protection rules. The reform was originally intended to be implemented alongside RED III and the other measures we have discussed, such as the higher quota targets and the elimination of double counting. However, that has not happened yet.

To put this into perspective, let me use an example that Claus often cites. Imagine a bank robber is caught and brought before a judge. The prosecutor presents the case, and the judge responds: “Excellent work catching the robber, but we are going to let him go because he could not have known that robbing banks was illegal.” That is, in simplified terms, how the current system can sometimes appear.

The planned reform, which is being addressed through the sustainability regulations rather than RED III itself, would bring the framework more in line with normal legal principles. In practical terms, if fraud can be proven, the financial benefits derived from that fraud could also be withdrawn. This would include the retroactive invalidation of certificates within a defined period. Naturally, legal certainty must apply at some point, but the key principle is that proven misconduct would have consequences.

This reform is still pending, largely because of disagreements over ministerial responsibilities rather than substantive policy differences. At least to our knowledge, there is broad agreement on the content. As a result, I expect the reform to take effect on January 1, 2027, although the exact timing will depend on when the responsible ministries reach an agreement.

Taken together, the elimination of double counting and the reform of the good-faith protection rules make me more optimistic. Neither measure will eliminate fraud entirely, but they should significantly reduce the scale of the problem we have seen over the past three years. Ultimately, it comes down to creating financial consequences for fraudulent behavior, and on that point, Claus and I fully agree.

There is one additional area where I remain critical. We advocated for the inclusion of biogenic hydrogen as a compliance option under the quota system. Biogenic hydrogen is produced from biomass, for example from biomethane, using existing processing infrastructure.

The current legislation, however, continues to favor electrolytic hydrogen, what is commonly referred to in political discussions as “green hydrogen”, through preferential treatment and multiple-credit mechanisms. The rationale is straightforward: policymakers want to accelerate the development of a hydrogen economy, and if a lower-cost alternative were treated equally, the more expensive option would struggle to gain market traction.

While that approach is understandable from a policy perspective, it is less beneficial for both the country and the industry. So my two main criticisms are the delayed reform of the good-faith protection rules and the continued exclusion of biogenic hydrogen as a compliance option. That said, over time the most efficient compliance solutions tend to prevail. For now, we will have to wait and see how the framework develops.

Claudius Nießen: Waiting is a good point, Mr. Sauter. As you mentioned earlier, the past 15 years have certainly required a great deal of patience, perhaps more than you would have liked. With Germany’s implementation of RED III, would you say we are seeing the beginning of a genuine turnaround for the industry? You have already described it as a 180-degree shift, but does it mark the start of a lasting change in direction?

Claus Sauter: Absolutely. From my perspective, this represents a genuine turning point compared with the past 15 years. Throughout that period, we repeatedly tried to highlight the contribution biofuels can make, yet our message often failed to gain political traction. Today, our industry is still responsible for around 95 percent of emissions reductions in the transportation sector. Despite that, we often found ourselves in the position of having to convince policymakers of the value of our contribution. That has now changed significantly.

What is unfortunate is that it took another energy crisis to bring about this shift. And frankly, I am not sure we are learning the lessons we should. We saw a similar situation in 2022, when the war in Ukraine drove diesel prices sharply higher. At the time, we experienced a comparable surge in interest in alternative fuels. The difference today is that the market is much further advanced. Virtually all BioCNG used as a transport fuel—whether in compressed or liquefied form—is now renewable. And it costs roughly one-third as much as diesel.

As a result, forward-looking transport companies that embraced these fuels not only for sustainability reasons but also for their economic advantages are now benefiting significantly. Those that remained focused solely on diesel are beginning to see the opportunity they may have overlooked. It is worth remembering that the obligation to reduce greenhouse gas emissions rests with fuel suppliers, not with transport companies. Yet transport operators can still benefit directly through substantially lower fuel costs.

The industry as a whole deserves credit for maintaining stable prices throughout this period. A kilogram of BioLNG contains around 30 percent more energy than diesel and can still be purchased for less than one euro. That is a remarkable value proposition.

I hope that this second energy crisis will encourage a broader rethink within the transportation sector. While natural gas-powered trucks may require a higher upfront investment than conventional diesel vehicles, operators gain the advantage of a cleaner, more sustainable solution while also benefiting from lower fuel costs.

In many ways, we have spent the last 15 years waiting for the market to once again recognize the advantages that biofuels offer. And if we are honest, the underlying lesson extends beyond biofuels. Last time it was Putin; this time it may be Trump. The next energy crisis is not a question of if, but when. I believe even Iran itself may be surprised by the degree of influence it can exert through its control of the Strait of Hormuz. In many ways, that has opened a Pandora's box. Similar strategic chokepoints exist elsewhere around the world.

What we are seeing is just how sensitive the fossil energy system remains. If a disruption affects even a small share of global oil and gas supply, the impact is quickly reflected in energy prices. Having worked in this industry for more than three decades, I have never seen crude oil markets experience price swings of up to 30 percent within a single day. Yet that is now the reality for the world's most important energy commodity. To me, that should serve as a wake-up call—not only for our industry, but also for policymakers. And increasingly, we are beginning to see that recognition emerge.

Claudius Nießen: Even OPEC appears to be getting nervous.

Claus Sauter: Absolutely. Take the United States as an example, where we are also active. Corn-based ethanol produced in the U.S. is by far the lowest-cost liquid transportation fuel in the world. Again, we are not talking about a green premium here. The discount is substantial—costs can be roughly 50 percent lower. The economics are compelling.

We are seeing a similar shift in other sectors, including shipping, which is also under pressure to reduce its reliance on fossil fuels. For years, the discussion focused on how expensive the transition would be. Various solutions were proposed, including biomethanol and ammonia. But in many cases, operators can reduce both emissions and costs simply by using U.S. corn ethanol.

The same applies to BioLNG. Because the feedstocks we use prevent greenhouse gas emissions that would otherwise occur elsewhere, we are not only producing a cleaner fuel, we are also delivering additional environmental benefits beyond the fuel itself. As a result, our fuels can achieve net-negative greenhouse gas emissions. We operate a fleet of around 170 trucks, and approximately 99 percent of them now run on natural gas. In our view, this is one of the cleanest and most cost-effective fleet solutions available today. We are reducing costs while achieving net-negative greenhouse gas emissions—an outcome that, in this context, can even outperform electrification from a climate perspective.

Wherever you look, there are highly competitive renewable solutions available today. The frustration is that for the past 15 years, these advantages often went largely unrecognized.

Claudius Nießen: Mr. Schreiber, listening to this discussion and reflecting on the past 15 years, I find myself asking a simple question. If the arguments are as compelling as Claus Sauter has described, why do we still see so few natural gas vehicles on the road? And why is there not a broader recognition, particularly at the political level, that renewable fuels should be a strategic pillar of Germany’s energy system?

Why have we been so slow to embrace these solutions? And perhaps this is not just a question for policymakers. To some extent, does the responsibility also lie with us as a society?

Stefan Schreiber: I believe that, as a society, we have held on to a number of misconceptions, and those misconceptions have inevitably found their way into policymaking. Today, however, I think public opinion has moved further ahead than some parts of the political sphere, where ideological thinking still influences certain decisions.

For many years, we failed to pursue some of the most obvious and practical solutions because the focus remained firmly on alternative approaches. Take biogenic hydrogen, for example, which I mentioned earlier. In many policy discussions, the assumption has been that the solution must be based on renewable electricity. To be clear, renewable power is critically important and will remain a central pillar of the future energy system. But it is not the only pillar. The second key pillar, in my view, will be biomethane. How quickly we recognize that depends largely on how pragmatically energy policy is approached. The implementation of RED III is an encouraging first step, and now we will see what follows.

Germany does not want to rely on nuclear power. While we still have coal, its CO₂ emissions are high. We do not have significant domestic oil resources, and in any case fossil fuels are not the direction we want to pursue. As things stand today, renewable electricity is our primary domestic energy source. The challenge, however, is that it is not always available.

Particularly during the winter months, when solar generation declines and wind conditions can be variable, a modern industrial economy still requires a reliable and stable energy supply. This is where biomethane can play a crucial role. It is an exceptionally versatile energy carrier, not only for power generation, but also for transportation, where we have already discussed BioCNG and BioLNG, as well as for heating applications and industrial processes. For that reason, I see biomethane as a potential backbone of a more self-reliant energy system—one that reduces our exposure to geopolitical disruptions. We have discussed Iran. We have discussed Ukraine. And there will no doubt be other crises in the future. Energy that we produce ourselves cannot simply be taken away from us.

We will need these domestic renewable resources not only to achieve climate goals and strengthen security of supply, but also to support regional value creation. They help sustain our agricultural sector and, indirectly, preserve domestic food production capacity that might otherwise be lost. Finally, as recent crises have demonstrated, domestic renewable energy sources can also play an important role in stabilizing prices. That should not be overlooked.

It has taken 15 years to reach this point and to see a policy development such as RED III implemented in a genuinely positive way. Now the question is how biomethane will evolve from here, and how quickly policymakers are prepared to recognize the role it can play.

Claudius Nießen: Mr. Sauter, we are already familiar with your views on excessive optimism. But on a more serious note, one could also argue that periods of crisis sometimes accelerate decisions that might otherwise take years to make. We have already discussed a number of international geopolitical flashpoints. At the same time, Germany has been debating issues such as self-sufficiency and energy security for several years now, particularly since the start of the war in Ukraine. Does your industry have a role to play in addressing those challenges? And if so, what does that role look like?

Claus Sauter: The biofuels industry is, in many ways, the backup generator of the energy system. When a power outage occurs, a backup generator is there to keep essential functions running. We cannot meet 100 percent of Germany’s energy demand with the biomass available domestically, but in times of crisis, our industry can play a critical role.

That role is increasingly being recognized in the context of national security as well. The reality is that tanks do not run on electricity, and neither do most military drones. Had we raised this topic five years ago, it would likely have triggered a major shitstorm. Today, however, it is simply a fact: we need renewable molecules alongside renewable electricity. It is unfortunate that it often takes a crisis to bring these issues into focus. During the Cold War, energy security was always considered a strategic priority. Today, our industry is once again gaining relevance in that discussion.

The same applies to agriculture. Food production remains stable, but we must ensure that farmers can continue to operate profitably and sustainably. The highest-quality crops are used for food production—the products we ultimately find in bakeries and supermarkets. At the same time, agriculture also generates lower-grade materials that have traditionally been used as animal feed. Those feedstocks can also be used to produce renewable energy.

And finally, as Stefan already mentioned, there is biomethane, the true multi-purpose molecule. Modern agriculture depends on nitrogen fertilizer, which is produced from methane—CH₄, natural gas, or biomethane. In other words, for these essential functions in a crisis situation in Germany, we at Verbio already have practical and currently cost-effective solutions across the board.

I fully agree with Stefan that renewable electricity will remain an essential part of the future energy system. But it is not the only solution. Renewable molecules are also part of the answer, and in the past that contribution was not always given the recognition it deserved.

Claudius Nießen: If we look at it that way, your industry could be considered part of a country's critical infrastructure, given the role you have described in both energy security and defense. With that in mind, could a tank ultimately run on BioLNG?

Claus Sauter: It could, but it would be easier to run it on biodiesel or ethanol, since both are liquid fuels. BioLNG requires dedicated infrastructure because it is a gaseous fuel. For heavy-duty trucks, however, it is an ideal solution.

Claudius Nießen: That's exactly what I was getting at. So what about the infrastructure? Is it already in place and I simply do not notice it?

Claus Sauter: And that is precisely what makes this so interesting. Yes, the infrastructure already exists. Earlier, you asked why this is not more visible to consumers. The reason is that it was never really developed with the average consumer in mind...

Claudius Nießen: I wouldn't mind saving some money myself.

Claus Sauter: Yes, but policymakers effectively decided that consumers should be driving electric vehicles. The planned phase-out of combustion engines set the path forward, regardless of the subsequent debate about how and when it would ultimately be implemented. As a result, automakers that had previously offered CNG vehicles gradually withdrew those models from the market and shifted their focus toward battery-electric vehicles.

Claudius Nießen: And if there is no long-term market perspective, you can understand why they made that decision, can't you?

Claus Sauter: Exactly. That was a business decision. If there is no long-term perspective for a technology, companies will naturally allocate their resources elsewhere. The situation in the heavy-duty transport sector is different. The same regulatory pressure did not exist for trucks, although there were certainly influential voices arguing that the future should be entirely electric. The challenge is that large-scale deployment of electric trucks still faces significant hurdles. The vehicles are not yet widely deployed, charging infrastructure remains limited, and the broader ecosystem is still being developed. With BioLNG, by contrast, the infrastructure is already in place. Today, there are around 200 LNG fueling stations across Germany operated by a small number of market participants. We are one of them. Verbio currently operates 43 stations and provides nationwide coverage.

What makes this particularly noteworthy is that the infrastructure was built by private companies without government subsidies. As an industry, we believe that BioLNG represents one of the most attractive and practical pathways for reducing fossil fuel use in heavy-duty transportation. The difference is that policymakers have not always shared that view. That said, I believe we are now seeing a genuine shift. Policymakers are listening again, partly because circumstances have changed and partly because some assumptions have proven inaccurate. It is also our responsibility as an industry to present viable solutions and explain their benefits more effectively.

One particularly interesting example is the recent reduction in energy taxes on diesel and gasoline. LNG did not receive the same treatment—we continue to pay the full tax rate—yet BioLNG remains roughly 50 percent less expensive. That raises an obvious question. If the objective is to encourage alternatives to diesel, why lower the cost of diesel at the same time? To be clear, society may have had good reasons for providing that relief. But it is another example of the inconsistencies that can arise in energy policy.

Claudius Nießen: You mentioned your own fleet of around 170 trucks, all running on BioCNG or BioLNG, and you also spoke about the transport companies that have embraced these fuels. Have transport operators recognized the potential? Policymakers may now be more willing to listen, but ultimately demand matters as well. If customers and fleet operators start saying, “This is what we need, and this is what we want,” that creates a powerful constituency for change and gives you important allies in the market, doesn't it?

Claus Sauter: The answer is actually quite simple: there was no pressure to change. Why would anyone seriously consider an alternative if there is no compelling reason to do so? If we go back seven months, diesel cost transport operators around €1.20 per liter. We were still less expensive, but the price difference was much smaller. In my view, diesel was simply too cheap at that point, and the economic incentive to switch was not strong enough. Ultimately, several factors have to come together. Pressure can come from policy, but political signals are often inconsistent and subject to change. It can also come from market events, whether it is the war in Ukraine, the conflict involving Iran, or other geopolitical developments. As I have said before, I believe this volatility is here to stay. Unfortunately, it often takes events like these to drive change, because policymakers are not always willing or able to push through difficult decisions on their own.

Claudius Nießen: We have talked about energy taxes as one policy lever. Are there other incentives that could be used to help drive the transition?

Claus Sauter: That is an excellent point. In my view, one of the biggest mistakes of the previous government was its reliance on bans and mandates. What really drives change are incentives. People generally do not respond well when they are simply told what they can and cannot do. Instead, you need to create the right framework and allow markets to work.

The heating sector is a good example. We are now moving toward allowing renewable fuels there as well, applying the same basic logic that exists in transportation. If someone wants to buy an electric vehicle, they can do so. Others may prefer diesel, gasoline, or hybrid technologies. Over time, the market will decide, because prices will evolve and influence those choices. The same market-based approach is increasingly finding its way into heating policy.

There is another point worth mentioning. Germany's current Minister for Economic Affairs, Katherina Reiche, is facing criticism from some environmental groups. While some of her proposals may not directly support our business, I do believe she is taking the right approach in one important respect: she is placing greater trust in market mechanisms. Ultimately, price is the most effective signal. I think it is positive when policy focuses less on outcomes negotiated behind closed doors and more on setting clear objectives while allowing markets to determine the most efficient path forward.

That is why I see a broader shift in policy thinking. The goal is defined, but industry is given the flexibility to identify the most cost-effective solution. In my view, that represents a genuine change in approach. Citizens are perfectly capable of making informed decisions. If the incentives are structured correctly, price signals will guide behavior in the right direction. Relying primarily on mandates, prohibitions, and detailed prescriptions is not, in my opinion, the most effective strategy.

Claudius Nießen: Mr. Schreiber, Claus Sauter has already touched on the heating sector. Earlier, you also mentioned that biomethane can play an important role beyond transportation. How significant is that potential, and where does the market stand today?

Stefan Schreiber: The potential is enormous. So far, however, we have only begun to tap into it. Before I address that in more detail, let me return briefly to your previous question, because it highlights one of the reasons we remain cautiously optimistic.

Take the example of BioCNG, BioLNG, and diesel. We also have electric trucks, which many policymakers would ideally like to see deployed on a much larger scale. The challenge is that there are still practical and physical limitations. Electric truck models exist, of course, but infrastructure remains limited and significant hurdles still need to be overcome. To accelerate adoption, policymakers have introduced a number of incentives, including toll exemptions and a system under which electricity used in electric trucks receives a fourfold credit toward GHG reduction quotas, even though that electricity is not necessarily 100 percent renewable. As a result, we are currently seeing a situation where electric trucks and BioLNG trucks are effectively competing against one another. Two renewable solutions are being pitted against each other, while diesel risks emerging as the ultimate beneficiary.

This illustrates what I mean when I talk about a gradual shift toward greater pragmatism. We are seeing positive developments and important policy improvements, but that thinking has not yet been fully embraced across the political spectrum. In my view, it would make more sense to support both renewable solutions in their competition with diesel, because that is ultimately the objective we are trying to achieve.

Claudius Nießen: But coming back to the heating sector, you mentioned that its potential is still far from being fully realized.

Stefan Schreiber: Absolutely.

Claudius Nießen: Is that primarily the result of political decisions—or political shortcomings, if you will?

Stefan Schreiber: In principle, yes. If we wanted to deploy biomethane on a large scale today, we simply do not have a market of sufficient size. But the reason for that is straightforward: the market does not develop on its own. Demand is largely shaped by policy frameworks. At present, fossil natural gas remains less expensive than biomethane in most cases. That means demand for renewable gas has to be created through appropriate market mechanisms.

We are beginning to see the first steps in that direction. In the residential heating sector, the government has presented a framework proposal that would introduce what I would call a renewable gas quota. The idea is to gradually increase the share of renewable gases used in household heating systems over time.

Claudius Nießen: So, would a renewable gas quota be comparable to the GHG reduction quota?

Stefan Schreiber: That will ultimately depend on how the legislation is structured, but broadly speaking, yes—a renewable gas quota would be comparable to the GHG reduction quota. The key advantage is that it would create a predictable framework, providing the certainty needed to support investment decisions.

Can we produce enough biomethane to meet that demand? I believe we can. Today, Germany produces just under 13 terawatt-hours of biomethane annually. The long-term potential is estimated at between 300 and 400 terawatt-hours, including a certain volume of imports. In other words, we are talking about potential growth of roughly 3,000 percent.

Claudius Nießen: To put those 300 to 400 terawatt-hours into perspective, how significant is that compared with Germany’s overall energy demand? Can you help us understand the scale?

Stefan Schreiber: If I recall correctly, the heating sector alone accounts for around 600 terawatt-hours of energy demand.

Claudius Nießen: But that would already cover close to 50 percent of demand, wouldn't it?

Stefan Schreiber: Exactly. Consumers will continue to have choices. For many households, heat pumps will be the right solution. In fact, most new heating systems installed in newly constructed buildings today are heat pumps. As a result, overall gas consumption in Germany will decline. But it will not fall to zero. There will continue to be a substantial residual demand, likely in the range of 500 terawatt-hours. Different studies arrive at somewhat different figures, but the exact number is less important than the underlying trend: demand will decrease, yet a significant market will remain.

From a policy perspective, however, there is still a tendency to view the long-term solution as phasing out the gas network altogether. In my view, that is the wrong approach. Rather than shutting down the gas grid, we should be decarbonizing it by increasing the share of renewable gases.

Interestingly, that is also the direction favored by the European Commission, largely from the perspective of resilience and security of supply. Countries such as France and Italy are investing heavily in biomethane through quota systems and other financial incentives to ensure that the remaining gas demand is increasingly met with renewable gas. In Germany, by contrast, the dominant political narrative has often focused on reducing or eventually shutting down the gas network. I believe that is a mistake. We need a more constructive vision, one that creates planning certainty and investor confidence so that capital continues to flow into this sector.

At the moment, there is a degree of inconsistency in policymaking—or, if you prefer, a lack of coherence. On the one hand, we are encouraging biomethane and renewable fuels. We are discussing a renewable gas quota for residential heating. On the other hand, we continue to talk about scaling back the gas network itself. Those are contradictory signals. It would be beneficial if policymakers moved quickly toward a more coherent framework. If we are serious about maintaining secure supplies of renewable energy molecules in all their forms, then we also need the infrastructure to support them. Biomethane is an exceptionally versatile solution. In my view, policy should reflect that reality more consistently.

Claudius Nießen: Mr. Sauter, if demand for biomethane increases in the way Mr. Schreiber has just outlined, is there not a risk that supply constraints could eventually emerge?

Claus Sauter: To stimulate investment, you first need a supply constraint. Absolutely. Most of the biomethane facilities operating today were built between 2004 and 2006. Since then, there has been virtually no investment in new biomethane production capacity. That is the first point.

The second point is that we have long argued that using biomethane primarily for power generation does not make sense in the long term. Wind and solar power will continue to become more competitive, and biomethane cannot realistically compete with them in electricity generation. That is why we chose a different path and focused on transportation fuels. Germany has around 9,500 biogas plants, most of them operated by farmers. The vast majority generate electricity. Roughly one-third of those facilities will lose their government support over the next one to two years. For the past 20 years, they have benefited from guaranteed feed-in tariffs of around €0.20 per kilowatt-hour. As those contracts expire, many plants will be shut down. The important point is that the biomass itself does not disappear. The feedstock remains available and will return to the market. That is where I see the opportunity. The raw materials are there. What is missing today is sufficient biomethane production capacity, because there is still no broad market for the molecule.

At present, the main market is transportation fuel, and even there we have discussed the challenges. Diesel continues to benefit from policy advantages. We have just seen reductions in energy taxes for diesel, while we continue to pay the full rate. So there is still work to be done to create a level playing field. But the feedstocks are available. If a market emerges, investment will follow. After 20 years, we—and many others—will start investing again. The key is that the market opportunity must be there first.

That is why I keep saying that we are witnessing a genuine turning point after 15 years. Biomass is no longer viewed primarily as a problem; it is increasingly being recognized as part of the solution. That is one of agriculture's great strengths. And there is another important advantage: in many cases, the same agricultural resources that can be used for energy also contribute to food production. You cannot take a bite out of a solar panel.

That is why the discussion needs to be broader. There is no single solution. What we need to avoid is a situation where different technologies undermine one another for ideological reasons. Take the heating sector. The logic should be the same as it is at the gas pump: let consumers decide. Many households will choose heat pumps. Others may prefer to keep a gas heating system and switch to biomethane. Let the market determine the outcome. If one solution becomes significantly more expensive, consumer behavior will adjust accordingly. That is how a market economy works.

At Verbio, we have always tried to approach these issues with a healthy dose of common sense. In my experience, that takes you a surprisingly long way. Sooner or later, market-based solutions tend to prevail. The frustrating part is that, in this case, it has taken 15 years.

Claudius Nießen: ...I don't think you expected it to take quite that long.

Claus Sauter: No, I certainly did not. And do you know what the real frustration is? Over that time, I have become 15 years older. So have you, and so has Stefan. In many respects, those are 15 years we have lost. At the same time, we have spent decades pursuing certain other solutions, particularly in the electricity sector. The question is: how much longer are we prepared to wait? We have delivered results. We have invested. We have brought technologies to market and communicated their benefits clearly. And in many cases, our assessment of the market has proven correct. I believe that deserves recognition. Fortunately, we are beginning to see that happen. Today, we are once again part of the conversation, offering practical, credible, and widely accepted solutions.

One thing I have never fully understood is why some policymakers failed to recognize that there is not a fundamental difference between methane—whether fossil or renewable—and pure hydrogen. After all, methane (CH₄) is simply a carbon atom bonded to four hydrogen atoms. The advantage is that methane can be stored and transported efficiently. We already have natural gas networks. We have shipping infrastructure. In fact, the entire global infrastructure required to move this molecule already exists.

Claudius Nießen: So why is that?

Claus Sauter: That is exactly what I never understood. My impression is that many people failed to recognize that both are gases, but one is far easier to handle, store, and transport than the other. I suspect the presence of that carbon atom discouraged some people from looking at methane more objectively. Yet that carbon atom was originally captured from the atmosphere by a plant. In that sense, CO₂ is part of a highly effective natural cycle. The carbon contained in the food you ate this morning ultimately came from the atmosphere. When biomass is converted into fuel and that fuel is used, the carbon returns to the atmosphere as CO₂, where it can once again be absorbed by crops such as corn, rapeseed, or wheat. The plants retain the carbon and release oxygen back into the atmosphere, completing the cycle.

That is why I believe we are now moving in the right direction. We have practical and effective solutions—not only for climate protection, but also for the other two objectives we have discussed: supporting agriculture and strengthening security of supply. We help stabilize agricultural markets, and we contribute to energy security by providing price-stable renewable fuels at the pump, even if only to a limited extent. That is why I often use the analogy of a backup generator. The important thing about a backup generator is that it has to be maintained even when it is not needed. Otherwise, when the moment comes that you do need it, it will not work.

Claudius Nießen: As we wrap up, we have covered a great deal of ground. We have discussed market developments, the evolving policy framework, and the ups and downs of the past 15 years. What do all of these developments mean for Verbio in practical terms, Mr. Sauter?

Claus Sauter: We can now look to the future with a great deal of confidence. In fact, we are already seeing the first signs of improvement. A few days ago, we reported our third-quarter results and generated more earnings than in the previous two quarters. That is a clear step in the right direction. What we are seeing above all is stronger demand. We are setting new production records, and those records are meaningful again because they can be translated directly into earnings. In other words, we are operating in a market that once again offers solid business opportunities and fair competitive conditions. That improvement is also reflected in our guidance. After having to lower our earnings outlook repeatedly over the past two years, we have now raised our forecast. Based on our latest monthly results, we expect performance to trend toward the upper end of our guidance range.

The United States is another encouraging example. The environment remains challenging, but we are making significant progress at our facility in Iowa, and we are now moving ahead with our second plant in Indiana. U.S. legislation increasingly rewards greenhouse gas efficiency, and those benefits are now being monetized. That is exactly the direction we want to see.

E15 is becoming the standard fuel blend in the United States. Across the Midwest, E15 is now widely available at fuel stations. It remains one of the most affordable transportation fuels available. In Europe, even European Commission President Ursula von der Leyen has spoken about E20 as a low-cost fuel option. Luxembourg's Agriculture Commissioner Christophe Hansen has emphasized the need for greater use of biofuels, noting that farmers are struggling to earn a viable income. These are not the kinds of messages I have heard coming out of Brussels over the past 15 years.

We will also continue expanding our LNG fueling network because demand is clearly growing. Looking back, it has proven beneficial that we remained committed to our investments. We had to slow the pace because profitability was no longer there, but we never abandoned the strategy. As demand for renewable molecules increases, we are well positioned to benefit.

In fact, I believe we are one of the very few companies that continued investing in biomass processing and biofuels throughout this difficult period. That commitment is now beginning to pay off. At the same time, we remain focused on green chemicals. That will be a longer and more challenging journey. These are the kinds of products that ultimately find their way into everyday consumer goods, including cleaning products and many other household items that are still largely based on fossil feedstocks today. Most people would be surprised by how much petroleum-derived material is present in everyday life, from household products to plastics. Those fossil-based products are likely to become more expensive over time, but renewable alternatives exist.

Earlier, you raised the question of why so many people overlooked these opportunities. The reality is that crises tend to focus attention. Today, these issues are top of mind. The question is whether they will remain top of mind once the current crisis fades from view. That brings us to volatility—whether in energy markets or in our share price. Volatility is ultimately a reflection of uncertainty. And if you look at current market conditions, uncertainty remains exceptionally high. I am confident that this will change. Over time, volatility in our business results and in our share price should decline, leading to greater stability overall. At least through 2030, the outlook appears reasonable and increasingly predictable.

We are already seeing the first encouraging indicators in our third-quarter results and our latest monthly figures. Verbio is back in the game and back on the path to profitability.

Claudius Nießen: Confidence has returned, not only to the biofuels industry as a whole, but also to Verbio as a company. And one thing I think we can say with certainty is that every episode of #strawclever offers valuable insights into the developments shaping both the market and the policy landscape. With that, I would like to sincerely thank my two guests today, Claus Sauter and Stefan Schreiber.

Claus Sauter: Great. It was a pleasure. I really enjoyed it.

Stefan Schreiber: Yes, I enjoyed it as well. We would be happy to come back. And who knows what developments the next six months will bring. I'm sure there will be plenty for us to discuss when we return.

Claudius Nießen: I was just about to say the same. I do not think we will run out of topics anytime soon. And that is one of the great strengths of this podcast. Unlike many other formats, it gives us the opportunity to explore issues in greater depth. Ultimately, that is exactly what we need: context, perspective, and a better understanding of the connections behind the headlines.

Thank you again for listening. We look forward to having you join us for the next episode of #strawclever. As always, the podcast is available on Apple Podcasts, Deezer, Spotify, and online at strawclever.com