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Soaring demand seen driving French ethanol sales to new record this year

PARIS, Jan 28 (Reuters) - Ethanol sales in France should continue to rise sharply this year after reaching a new record in 2019, mostly boosted by tax breaks and a wider availability in petrol stations, French ethanol producer group SNPAA said on Tuesday.

A decline in diesel demand and the growing use of so-called “flex-fuel” kits that allow cars to run on high-ethanol fuel have also contributed to an increase in its use, SNPAA Secretary General Sylvain Demoures told a news conference.

Consumption of ethanol, made mostly from sugar beet and grains, should rise by some 1.3 million hectolitres in 2020 from an initial estimate of 11.3-11.5 million hectolitres last year and around 10 million in 2018, Demoures said.

The additional fuel would come from a drop in exports and more production in factories that can switch easily between ethanol and sugar production depending on demand and prices.

Cooperative groups Tereos and Cristal Union are the two largest French ethanol producers.

“Industry players will use all capacities to meet demand locally,” Demoures said.

France is the European Union’s largest producer of crop-based alcohol, mostly used in ethanol, and the second-largest ethanol consumer after Germany although strong demand in France has progressively narrowed the gap between the two countries.

Gasoline containing up to 10 percent ethanol, known as SP95-E10, claimed nearly half of the gasoline market in France last year, hitting 49.7% in December, compared with an average 43 percent in 2018, SNPAA said.

The E85 mix, containing up to 85 percent ethanol, saw consumption jump by 85 percent to a record 340 million litres, although it remained a small part of the gasoline market with a share of about 3% percent.

Demoures expects this year’s E85 sales to increase by 50% as the number of petrol stations selling the blend continues to rise.

Britain’s departure from the European Union at the end of the month was a concern as the country is French ethanol’s main export market with 2.5 million hectolitres of crop-based alcohol sent every year, SNPAA Environment Director Nicolas Rialland said.

“We don’t know what will be the conditions to access the British market beyond 2020.” he said.

“It is not certain that we will be able to continue exporting in the same conditions as today.” (Reporting by Sybille de La Hamaide; editing by David Evans)

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