Splash dash and a lot of biodiesel pain European Biofuel producers are considering legal action through the European Commission to halt they see as US biofuel producers dumping biofuel within the EU. Exports from the US gain an 11p/litre subsidy from the US government, and a further subsidy from the EU. This applies to blends containing 1% biodiesel, according to the Times on Line.
The report says
he European Biodiesel Board (EBB) said that the subsidies have had a perverse effect, sending European imports of biodiesel from the United States soaring from about 100,000 tonnes in 2006 to an expected one million tonnes this year.
In most cases B99.9 blends are sold in the European market as “pure biodiesel” and at a substantial discount of up to €180 (£129) a tonne and in some cases at a lower price than the raw materials purchased by the European industry for producing biodiesel, according to the Times.
European producers say they cannot compete with this and it is an unfair trade practice are at the end of a chain of events that is irritating American biofuel producers too.
According to theHill.com.
Known as “splash and dash,” the loophole allows 100% biodiesel made from soyabeans and other commodities and imported from a third country, such as Brazil or Malaysia, to be carried to a U.S. port, where a “splash” of petroleum diesel is added. This allows the importer to qualify for tax credits intended to promote the production and use of U.S. biodiesel.
The ship then quickly leaves the U.S. port to “dash” to another port, usually in Europe, where the subsidized biofuel is unloaded and sold.
“Allowing foreign-produced biodiesel to be transshipped through the U.S. market solely to take advantage or our biodiesel tax is indefensible,” said Joe Jobe of the National Biodiesel Board, which fully supports efforts to shut down “splash and dash” transactions.
Both committee Democrats and Republicans, such as Finance ranking member Chuck Grassley (R-Iowa), were concerned because the credit for blending fuel was meant to encourage biodiesel production in the U.S., a committee aide said.
It is estimated that the practice cost the U.S. Treasury $30 million in the last year, but critics say the price will grow as the practice is becoming more common.
It looks like a loophole that could be closed by redrafting regulations on both sides of the Atlantic. This should be done with some urgency, since it is causing real pain to the biofuels business.
Making the subsidy apply to biodiesel produced on the respective continents would be one solution. If its not made in Europe it should not get a European Subsidy. We also need free trade in biofuels. I’m not sure how you reconcile the two ideas though.
Secondly Its not clear whether the mixture is 1% mineral oil or 99% mineral oil, but that’s journalism. Can you help clarify that point.