Europe battles US biodiesel subsidies with imports up 40%
Tuesday 20 January 2009
Europe's battle against "heavily-subsidised" US biodiesel is continuing after new figures suggest that there was a surge in imports last year.
EU biodiesel producers said 1.5 million tonnes of B99 - a blend of 99% pure biodiesel with 1% petroleum diesel - were imported into Europe in 2008, up 40% on the previous year.
Their lobby group, the European Biodiesel Board (EBB), is calling on EU officials to set up some kind of registration system to control the "flood" of US B99 into the European market.
The volumes of US-produced B99 are and will continue to increase if nothing is done.
Biodiesel producers in Europe are struggling to compete against the US biodiesel being sold below cost thanks to subsidies from the US government.
In Britain, new figures from the Renewable Fuels Agency last week stated that 38% of biodiesel used in UK transport fuel in the first six months of 2008/09 came from the US, with most of this coming from soy oil (see this New Energy Focus story).
Biodiesel produced in the US can be subsidised to the tune of $300 (about £216) a tonne - merely by adding a "drop" of mineral diesel. The B99 is then pure enough to gain European subsidies for biodiesel when imported into the EU.
With Europe now seeking to meet a 10% renewable transport fuels target under the new Renewable Energy Directive, the biodiesel firms warn that the "unfair" US subsidies could undermine efforts in the short term.
Last week saw a preliminary meeting of the EU Commission's anti-dumping committee into the EBB's request.
Just ahead of the meeting, the EBB said on Thursday: "The European biodiesel is more and more hit by the catastrophic consequences of B99 unfair exports and it will be necessary to ensure a strong reaction in the short-term to ensure the future viability of the EU biodiesel industry."
Legal moves to counter the US biodiesel imports have been underway in Europe since June last year, with claims that the subsidies breach World Trade Organisation rules. Counter-measures could be announced by March this year, and biodiesel producers are hoping for the measures to be retroactive.
Germany's government is said to be seeking to block US biodiesel imports through a new bill that should be debated in its parliament in April. Perhaps ironically, the bill could itself be accused of breaching WTO trade rules, but it is understood that the German government may get around this by targeting the bill at the lower greenhouse gas savings achieved by American soy and palm oil-based biodiesel.
"Splash and dash"
A loophole in the US subsidies scheme was closed last October, clamping down on the so-called "splash and dash" practice where biofuels were imported into the US to receive subsidies before being exported to markets outside the US.
Rules were added to prevent biodiesel firms claiming the benefits for biodiesel "produced outside the US for use as a fuel outside the US".
But, the EBB said the closing of that loophole would not be enough to deal with the "core problem" of subsidised US B99.
The EBB said: "The volumes of US-produced B99 are and will continue to increase if nothing is done to stop the real reason of the problem, the unfair tax credit granted to US produced biodiesel which is then exported to Europe at a dumped price."
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