European Commission may clamp down on European use of “splash and dash”

British MEP Linda McAvan has called on the European Commission to clamp down on the practice of European firms utilizing “splash and dash,” shipping B100 to the US, adding a splash of diesel, picking up a $1.00 per gallon blending credit, and shipping the subsidized B99.9 back to Europe to undercut other European biodiesel. The Guardian newspaper revealed last month that up to 10 percent of European biodiesel imports from the US are made using this practice.

The European Biodiesel Board has requested that the European Commission impose punitive taxes on US biodiesel imports. EBB officials told the Guardian that the complaint would call for anti-dumping duties and duties imposed to counterbalance illegal subsidies.

The EU ambassador to the US, John Bruton, recently said that US biodiesel incentives are a “negative development” that threaten the US-EU commercial relationship. US subsidized exports to Europe, which grew by 1000 percent in 2007 to 1 million tonnes, now represents 20 percent of the European market, and that as much as $300 million of US taxes are spent in support of the biodiesel incentives granted on fuel for the European market. The European Biodiesel Board has threatened an anti-dumping complaint with the European Commission, but has not yet done so.

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 biodiesel industry – both in the U.S. and in Europe – is 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.

“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.

• 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.”