Citing the government's decision to impose tax on the green fuel, German biodiesel producer Petrotec has temporarily suspended biodiesel production, reported Reuters citing company sources.

According to a statement released by the company, although a new plant near Emden will be ready for operation by the end of 2007, production will not begin immediately.

The current market scenario, with high biofuel tax rates, does not allow the company to recover at least its production costs, Reuters quoted the company as saying. The company said, however, that it will fulfil its current delivery contracts and will resume operations when the market conditions seem favorable to cover costs, revealed Reuters.

Reuters quoted Roger Boeing, CEO of Petrotec, as saying: With its deliberate lack of action the government in Berlin is driving the biodiesel sector to the abyss. Curiously enough, the government considers desirable the demise of a sector that it has for years encouraged to invest and supported with taxpayers’ money.