Transatlantic trade dispute looms over biodiesel

By William Schomberg and Missy Ryan

BRUSSELS/WASHINGTON (Reuters) - European biodiesel producers kicked off a new transatlantic trade dispute on Friday when they asked Brussels to impose punitive duties on U.S. biodiesel, and their U.S. rivals said they would hit back.

With demand for plant-based fuels starting to soar as the world seeks ways to fight climate change, the European Biodiesel Board (EBB) said companies in the European Union were going out of business because of unfair U.S. subsidies.

"Since 2007, as a result of these measures, there has been a dramatic surge in U.S. biodiesel exports to the EU, thus creating a severe injury to the EU biodiesel industry," the EBB said in a statement.

The EBB said it was formally requesting the EU's executive commission to hit U.S. imports with anti-dumping and anti-subsidy duties.

The EU has set itself a target of using biofuel for 10 percent of its transport fuel by 2020, something that will require large amounts of imports, EU officials say.

The European industry has long complained that U.S. subsidies for "B99" biodiesel, blended with small amounts of mineral diesel, break World Trade Organization rules.

The U.S. exports are also eligible for EU subsidies.

The head of a U.S. biodiesel group accused the EU sector of trying to use litigation for protectionist ends and said his group would "aggressively challenge" EU trade obstacles.