Self-made problems may derail EU biodiesel trade complaints

03 February 2009 22:50  [Source: ICIS news]

SAN FRANCISCO (ICIS news)--The European biodiesel industry is riddled with so many self-inflicted problems, its anti-dumping complaints could fail against US producers, a lawyer said on Tuesday.

The European Biodiesel Board (EBB) filed anti-dumping complaints with the European Commission in June, alleging that the US biodiesel industry unfairly benefited from their nation's $1/gal (€021/litre) blending credit.

In making a ruling, the governing body has to discover whether US trade practices as a whole caused “material damage” to EU biodiesel producers, said Duane Layton, who is representing some of the US biodiesel producers that the EC is investigating.

That process could be complicated by what Layton described as several self-inflicted wounds in the European biodiesel industry market, including problems with feedstock, tax policy and too much capacity.

“Are your exports in totality causing injury to European biodiesel industry?” he asked the audience at the Biodiesel Conference in San Francisco. “Also, rapeseed is more expensive than soybeans. These things have nothing to do with your exports.”

The US produced 700m gal (2.65bn litres) of biodiesel in 2008, sending the vast majority of it to Europe. The uncertainty over the Commission’s case and Germany’s proposal to limit US imports due to sustainability issues has led to a sharp drop in US biodiesel exports to Europe in the fourth quarter of 2008.

Layton said EC investigators just finished collecting information from US producers last week and has signalled it may delay issuing its preliminary report, which was originally due on 13 February.

C Phillip Riedel, biofuels research manager at LMC International, said the European market was in a “homemade crisis” that had little to do with US imports.

Spurred by government biodiesel demand forecasts, producers jumped into the market and brought capacity to 7.8bn gal/year by 2008. That production level was what the EU forecast for 2020.

Also in 2008, EU lawmakers increased the energy tax on pure biodiesel (B100) from €0.07/litre in January to €0.18/litre in October. This stalled demand and led to 4.5bn gal of idled biodiesel production, Riedel said.

“There’s fundamental problems in the European industry,” he said.

($1 = €0.78)

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By: Ben Lefebvre
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