PARIS, Oct 28 (Reuters) - Avril aims to meet demand from higher French biodiesel blending levels with output from a 100,000-tonne-per-year plant it opened on France's Mediterranean coast on Wednesday, the chief executive of the European Union's largest maker of the biofuel said.
The facility at Sete, where Avril's Saipol oilseed processing and refining branch already has a plant, will allow the group to raise biodiesel capacity to 1.7 million tonnes, Jean-Philippe Puig told Reuters in a phone interview.
Avril shut two plants in northern France in 2013, reducing its French capacity by 20 percent, after the government said it wanted to pause the rise in biofuel blending in fuels at 7 percent.
It raised the level by one percent for biodiesel late last year.
"The rise in capacity follows a rise in blending levels in France to 8 percent. Even if it's not the case today in all gas stations, we should stretch towards 8 percent in the coming months," Puig said.
Avril chose southern France over the north, where competition is high with Belgium, Germany, and the Netherlands, which are facing overcapacity.
The project, which represents a 13-million-euro ($14.3 million) investment, will compete with a planned Total factory which is expected to produce 500,000 tonnes of biodiesel by 2017, raising concern among farmers and competitors.
"This would mean the close of several French etherification plants (which make biodiesel) from rapeseed oil and maybe even cut rapeseed cultivation in France," he said.
"So we see this as a real danger and are very worried," Puig said, adding it came on top of an anticipated drop in diesel consumption in France if the government goes ahead with a plan to cut tax breaks on diesel fuel to encourage drivers to choose less-polluting vehicles.
Diesel's image suffered after German carmaker Volkswagen last month admitted it installed software in diesel vehicles to deceive U.S. regulators about the true level of toxic emissions.
However, an EU target of 7 percent biofuel blending, from an average 5 percent of biodiesel currently mixed in diesel in Europe, should create new demand, Puig said.
The Sete facility also includes a new biomass-fired boiler producing steam and electricity from sunseed husks to meet its own needs, for an investment of 15.5 million euros.
$1 = 0.9063 euros Reporting by Sybille de La Hamaide