European biodiesel production growth rate worst in 10 years

In Italy, the Secretary General of the European Biodiesel Board said that European biodiesel production grew 10 percent in 2007, the worst in 10 years. Production grew 54 percent in 2006.

Raffaello Garofalo said that biodiesel capacity was only 50 percent used in 2007, and blamed US dumping of biodiesel for the problems, and lack of support in EU countries for biofuels.

The European Biodiesel Board said that US exports of subsidized biodiesel threaten the existence of the global biodiesel industry. US exports surged to 80,000 tonnes per month last year from an average of 20,000 in 2006. The EBB has lodged an anti-dumping complaint with the European Commission. European mandates are expected to create a market of up to 28 million tonnes of biodiesel by 2020.

In response to EBB complaints, Manning Feraci, Vice President of Federal Affairs for the National
Biodiesel Board (NBB), issued the following statement on behalf of the NBB:

“The U.S. and European biodiesel industries have a long-standing tradition of working together
to promote the increased production and use of biofuels as a way to reduce petroleum
consumption and address critical climate change issues. It is unfortunate that EBB is advocating
a course of action that could hinder this progress, and in the interest of continued trans-Atlantic
cooperation, we hope that cooler heads will prevail on this matter.

“The biodiesel industry – both in the U.S. and in Europe – is facing similar challenges. Dramatic
increases in feedstock costs have created difficult market conditions for biodiesel producers. We
believe that this, in tandem with policy changes in EU member states, are the main causes of the
problems facing the European biodiesel industry.

“It is in the mutual interests of both the U.S. and European biodiesel industries to enhance global
trade in biofuels. In fact, senior EU officials have publicly noted that if Europe is to meet its
goal to increase biofuels use, the EU will have to import fuels such as biodiesel. U.S. produced
biodiesel yields a 78% reduction in carbon lifecycle emissions and can play a constructive role in
the global effort to reduce greenhouse gas emissions.

“The U.S. biodiesel industry remains open to working with our counterparts in Europe to not
only promote trade in biofuels, but to stop unintended abuses of existing biofuels incentives. For
example, the NBB has strongly denounced so-called ‘splash and dash’ transactions where fuel
produced outside the U.S. is transshipped through the U.S for the sole purpose of claiming the
U.S. blenders excise tax credit before being sent for final use in Europe. We believe this practice
may be more widespread than is being acknowledged by the EBB, and NBB is aggressively
promoting efforts in Congress to end this practice. As has always been the case, we hope the
EBB will recognize our genuine efforts to address this issue.

“Again, it remains the sincere desire of the NBB to constructively address these issues in a
manner that does not harm the positive working relationship that has existed between the U.S.
and European biodiesel industries.”

“The National Biodiesel Board (NBB) maintains that no anti-dumping or anti-subsidy
proceedings should be initiated under European Union (EU) law without sufficient evidence
of dumping and subsidization causing actual material injury or threat of injury to the EU
industry. No anti-dumping or anti-subsidy measures can be imposed unless these are in the
broader Community Interests, including not only those of importers and users but also EU
citizens at large. None of these conditions are met in the case of imports of US biodiesel into
the EU.

• Factors other than imports explain the difficulties portrayed by EU biodiesel
producers. These factors include capacity that is not being utilized because
consumption targets established by the European Union are not being met. In
addition, EU member states have rescinded favorable tax structures and other
incentives that encouraged production and use of biodiesel. Excess capacity in the
EU biodiesel industry will be utilized as new consumption targets are implemented.
• While biodiesel producers around the globe currently face high feedstock prices, the
EU biodiesel industry has been more affected by the trend, given its members’
reliance primarily on rapeseed and rapeseed oil. EU producers have been reported to
face shortages of supply of rapeseed, and prices for rapeseed and rapeseed oil are
consistently higher than for other inputs favored by producers elsewhere.
•Senior EU officials have readily acknowledged that going forward, biofuels will have
to be imported if the European Union is to meet its ambitious goals in terms of
biofuels use. Trade remedy investigations and the potential implementation of
punitive trade remedies would be directly contrary to this and would have a severely
negative impact on the development of demand for biodiesel in the EU.
• The US biodiesel tax incentive can be claimed on both imports and exports.
Accordingly, it does not discriminate against EU biodiesel and is consistent with the
United States’ WTO commitments. That being said, the US biodiesel industry has
conveyed its willingness on multiple occasions to work with both the EBB and US
government authorities to avoid potential abuses associated with the structure of the
US biodiesel tax incentive.”

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