Abstract
This paper presents (1) positive and negative effects about bio-diesel fuels (BDF) promotion policies in Germany, (2) analytical result of German diesel fuel demand curve, especially price elasticity, and (3) German BDF price determination factor. We can conclude the following three points. (1) Energy tax exemption stimulates huge BDF production, while causing serious tax revenue shortage. (2) Demand price elasticity of diesel fuel is much less than that of gasoline, thus it seems that German ecological-tax reform has not restrained diesel demand. (3) BDF price once correlated with diesel price from 1999 to 2004. But it has been determined by feedstock (rapeseeds) price since 2005.
