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Summit News

EU seen imposing duties on US biodiesel

LONDON (Reuters) - The European Union is likely to impose countervailing duties on U.S. biodiesel imports this year, the head of a major UK biodiesel company said on Monday.

A chemist holds a bottled sample of biodiesel produced at the Innovation Fuels plant in Newark, New Jersey, November 29, 2007. REUTERS/Jeff Zelevansky

“I think there is a fairly strong momentum towards this happening but I wouldn’t expect to see it until Q2 or Q3,” Andy Hunter, chief executive officer of Argent Energy told the Reuters Global Agriculture and Biofuel Summit from London.

The profitability of many EU biofuels producers has been devastated by a rapid expansion in shipments from the United States which benefit from substantial subsidies if they are blended with mineral diesel in the U.S.

The European Biodiesel Board (EBB) announced in December its intention to lodge an anti-dumping and anti-subsidy complaint with the European Commission and Hunter said he expected a filing would be made in February or March.

Hunter said EU Trade Commissioner Peter Mandelson could announce around June or July he is “minded” to impose countervailing duties which would have an immediate impact on shipments as any duty could be backdated to that date.

“There is a lot of strong lobbying from a number of politicians in Europe for this to take place,” he said.

Hunter said more than one million tonnes of biodiesel from the United States came into the European Union during the first 11 months of 2007, up from about 75,000 to 85,000 tonnes in 2006.

“This is certainly distorting the market very significantly. My guess is it is knocking the price of biodiesel in those markets where it is accepted by the best part of 10 pence a liter which is over 20 percent of the gross value of the business,” he said.

“My understanding is that we are the only plant in the United Kingdom actually operating at 100 percent and if you actually look around in the UK I think there is only one other plant of any size which is operating above 50 percent.”

PLANS POSTPONED

“You have seen plants that were deemed to be coming on line that have been cancelled, you have seen plants going bust, you have seen people who do have plants over here satisfying their contracts with (U.S. subsidized) B99 instead,” he added.

Argent Energy operates the first major biodiesel plant to be built in Britain based in Motherwell, Scotland which uses used cooking oil and tallow as its inputs.

Hunter said the company had put on hold plans to build a second plant in northwest England until the U.S. trade issue could be resolved.

He noted the UK was one of several European countries to have been badly hit although France, which has imposed a quota system, has escaped largely unscathed.

“And it is not just here, if you look in Germany, if you look in the Netherlands, if you look in Denmark, if you look in Belgium you would see a similar impact into all of those markets,” Hunter said.

Hunter said the U.S. had the chance to address the issue in the energy bill but measures that would have ended the subsidies had been removed.

“The U.S. had the opportunity to lance the boil but I suspect when they looked at the hard economics of it they felt they would just play the game as long as possible,” he said.

Reporting by Nigel Hunt; Editing by Peter Blackburn

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