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Trade war brewing over U.S. biofuel subsidies

David Gow

Brussels: European biodiesel producers triggered a fresh transatlantic trade war on Friday by urging the EU to impose punitive duties on cheap imports from the U.S. Low-priced imports of biofuels, as part of the so-called “splash and dash” trade, are putting many European producers out of business, the industry group claims.

Their American rivals immediately hit back by urging the federal government to take action against any protective measures for the European industry. The row comes as oil prices have risen to new highs this week, close to $120 a barrel, and world food prices have surged partly as a result of pressure on land from biofuel production.

The European Biodiesel Board said it had lodged a complaint with the European commission over competition from the U.S. that was putting EU producers out of business. It wants duties on “B99” biodiesel exports (biodiesel with 1 per cent petroleum diesel, claiming they are unfairly subsidised and then dumped in the EU.

U.S. biodiesel exports are subsidised by up to $300 a tonne. Some trading firms have also been shipping biofuels to the U.S., where they add a “splash” of mineral diesel to qualify for the subsidy and then send the fuel back to the EU. These exports have risen dramatically since last year, causing what the EBB calls “severe injury” to European producers.

This month D1 Oils, a leading but loss-making U.K. producer, said it would shut all its British refining operations as a direct result of cheap imports. D1 said the economics of the business were now so poor that it would be lucky to make much on the disposal of its sites.

Elliott Mannis, D1 Oils’ chief executive, said it was “extremely frustrating” that the company had been forced to bow out of refining because nothing had been done to stop the deluge of B99 biodiesel from the U.S. “It’s an unbelievable situation and there is no end in sight,” he added.

Brussels sources said the EBB had a strong case. — ©Guardian Newspapers Limited, 2008

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