Fuelling the biofuels debate

The increasingly acrimonious spat between the EU and the USA over the dumping of subsidised diesel on to the European market, will do neither party, or for that matter the biodiesel industry, any good in the long run.

For those of you who have, so far, missed this particular piece of nonsense let me bring you up to speed. Early last year the effect of a piece of US Federal legislation, enacted in 2004, started to be felt in Europe. The legislation, designed to support the US biodiesel industry, effectively gave a subsidy of about $300/tonne, in the form of tax credits, to a B99.9 blend biodiesel. In other words, a drop of mineral diesel in the tonne of biodiesel produced a huge subsidy.

The demand for diesel/biodiesel is however, greater in Europe, and it wasn’t long before US biodiesel producers recognised that if they exported their B99.9 subsidised biodiesel to Europe they could come into the market at a price which the European producers simply couldn’t match. Moreover, by exporting it to Europe they were eligible for European subsidies.

The European Biodiesel Board started complaining about what it saw as predatory action by the US producers early last year. It has continued to complain in the interim and has now (25th April) presented an anti-dumping, anti-subsidy complaint to the European Commission (see statement).

The US National Biodiesel Board has, not surprisingly, mounted a robust defence (see reply) suggesting that the problem was pretty much up to Europe to sort out internally. In a statement the NBB said; ““It is unfortunate that the situation has come to this. For months, while the EBB played politics and engaged in heated rhetoric, we have offered to work through these issues without resorting to litigation. These efforts have been rebuffed.”

The statement continued in similar vein, suggesting that it was a ruse by the Europeans to bring in protectionist legislation, but sadly it did not address the core complaint from the Europeans, that the subsidised fuel was being dumped on the European market. I have asked the NBB for a clear statement on the dumping charge, but so far I have had no reply.

So the crucial question appears to be, is the action of exporting subsidised biodiesel dumping? Well the definition of dumping is;

The sale of a commodity in a foreign market at less-than-fair value. Dumping is generally recognized as an unfair practice because the practice can disrupt markets and injure producers of competitive products in an importing country.

I think that on this occasion the Europeans are correct. It is dumping and the US should do something about it as soon as possible. While there maybe a short term gain to be had, long term,dumping does nothing but muddy the waters. We need an open and fair market, its good for the industry, its good for the consumer and, above all its good for the producer.

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