InterviewEU must legislate on biodiesel - EBB

23 October 2008 16:54  [Source: ICIS news]

By Rachel Howat

LONDON (ICIS news)--Legislation to prevent US biodiesel imports from flooding the European market with cheap, subsidised product is needed to protect the continent's producers, the European Biodiesel Board (EBB) stressed on Thursday.

“For us, the most important thing is creating a worldwide level playing field,” said Amandine Lacourt, project manager for the EBB.

“While member states such as Germany are trying to stop the imports of US B99 subsidised material, we believe that the long-term solution is at an EU level,” said Lacourt.

Her remarks follow Wednesday’s announcement by the German cabinet of proposed legislation that would cut biofuel blending levels in 2009 from 6.25% energy content to 5.25%, with soy and palm-derived biodiesel no longer counting towards biofuel quotas pending proof of sustainability.

From 2010, the biofuel blending level would be increased to 6.25% and remain fixed at that level until 2014.

“Despite the end of ‘splash and dash’ B99, imports from the US are still undercutting European material.

“Our priority is to get rid of the B99 product being dumped into Europe and endangering the reality of biodiesel trading in Europe,” she said.

The US subsidises B99 to the level of $300/tonne. When the product arrives in Europe, it benefits from EU schemes to encourage use of biodiesel.

Europe is the world’s largest importer of biodiesel, while the US is its biggest net exporter.

There is an ongoing EU investigation into the legality of B99, and the EBB hopes for a decision to be taken before the end of the year.

“There is a major diesel deficit in Europe, and it is still growing,” said Lacourt. “We don’t anticipate this changing so there will be demand for biodiesel.”

“It is important that there is enough legislative support at an EU level to trigger production,” she said.

“At the moment production capacity is about 15m tonnes, but much is not being used.”

Producers have expressed concern recently over EU discussions regarding the potential reduction of biofuel interim targets from the original levels discussed in 2003.

“In 2003, we were given very precise objectives,” said Lacourt. “The new interim targets of 5%, with 20% to be met by these hypothetical second-generation biofuels, are not in line with past and present investments.”

Second-generation biofuels, while much hyped in the media as the solution to the “food versus fuel debate,” have yet to be proven commercially viable.

Traders speaking to ICIS news said that it was currently not possible to envision what effect the new interim targets could have on the market.

More pressing, according to the EBB’s Lacourt, was the issue of creating a positive legislative environment for investors.

“If the EU parliament passes these new targets, then there will be a big problem of credibility in EU institutions. Investors do not like uncertainty.”

A European biodiesel trader told ICIS news on Wednesday that the German legislation’s proposed changes to biodiesel targets would have a disastrous impact on those who had invested in first-generation biodiesel capacities.

The trader hoped that the German parliament would take into account the needs of the biodiesel industry when voting on the proposed legislation in December.

“A lot of capacity has already been built taking into account the previous levels,” said one producer.

“This will put further downward pressure on prices.”

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By: Rachel Howat
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