U.S. Biodiesel Suppliers Hit By High EU Taxes

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Researched by Industrial Info Resources (Sugar Land, Texas)--The European Union (EU) has agreed to impose severe import tax and anti-dumping levies on U.S. biodiesel suppliers to combat what it calls "unfair subsidisation and dumping of U.S. biodiesel" on the European marketplace.

The decision will come as a severe blow to domestic biodiesel companies, as Europe is the largest market for U.S. biodiesel exports. The anti-subsidy tax ranges between 211 euros ($271) and 237 euros ($327) per ton and between 23 euros ($31) and 208 euros ($282) per ton for the anti-dumping tariffs. For some U.S. biodiesel suppliers, the combined taxes will add $400-$500 per ton.

The new taxes are now in effect and will remain in place for the next four months until the EU decides whether to make them "definitive" duties. If so, they could be imposed for a period of five years.

"Anti-dumping and anti-subsidy measures are not about protectionism, they are about fighting unfair trade," said Lutz Guellner, an EU spokesperson for trade. "This decision was taken on the basis of clear evidence that unfair subsidisation and dumping of U.S. biodiesel has taken place and that this is harming otherwise competitive EU industry, with potentially dire long term effects."

The decision was welcomed by the European Biodiesel Board (EBB), the nonprofit organisation representing Europe's biodiesel producers.

"This decision represents no less than a decisive move for the European biodiesel industry, as it will re-establish the level playing field that our producers have long hoped for," said EBB Secretary General Raffaello Garofalo. "The European Commission has recognised our legitimate right to produce and market biodiesel under fair market conditions, as well as the need to put an end to obvious unfair trade practices critically affecting the viability of a major EU industry".

The investigation last June into U.S. federal- and state-related biodiesel subsidies was initiated following complaints from the EBB, which alleged that U.S. biodiesel was being sold in Europe for less than what European biodiesel makers were paying for the vegetable oil raw materials they used to make their own.

U.S. biodiesel exports to Europe have rocketed in recent years, rising from just 7,000 tons in 2005 to more than 1 million tons between 2007 and 2008. The U.S. now controls around 17% of the European biodiesel market, worth more than $950 million to U.S. suppliers.

"It could very well put a lot of producers out of business," said Jay Brunson, Industrial Info's Vice President for Alternative Fuels. "We were having problems in the biodiesel industry even before this with some plants closing and other projects being put on hold or canceled." For related information, see March 2, 2009, news article - Planned Ethanol Projects Vanishing into Thin Air. "There hasn't been a new biodiesel plant built in the past year," Brunson said. "Soybean prices have been rising, forcing up the price of biodiesel while at the same time the price of oil and gas has been falling. If the U.S. keeps the $1 subsidy for biodiesel suppliers, then I'd imagine that in four months' time, the EU will vote to keep these new taxes for up to five years."

The National Biodiesel Board (NBB), representing U.S. biodiesel producers, reacted angrily to the European decision.

"This is a flawed decision," said Manning Feraci, Vice President for Federal Affairs of the NBB. "The imposition of provisional duties is nothing more than a politically expedient effort to appease the protectionist whims of the European biodiesel industry and is inconsistent with the European Union's World Trade Organization obligations. This sets a dangerous precedent for global commerce."

Industrial Info's Ethanol Database provides a comprehensive outline of all current development activities in the emerging alternative fuels market. This database covers 177 ethanol plants in operation and 530 plants under development. It also covers 145 operational biodiesel plants and 245 biodiesel plants under development.

Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.