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EU to Investigate Allegations of Chinese Biofuel Dumping

The EU Commission began investigating whether biodiesel from Indonesia was being transshipped through China to avoid EU taxes.

Allegations of biodiesel dumping from China into the EU market, which the bloc’s industry claims has reduced domestic output, prompted the European Commission to initiate an investigation on Dec. 20.

If dumping is confirmed and found to be damaging EU producers, the commission may take measures, likely imposing import tariffs to mitigate the effects of “unfair trading” if these measures are in the best interests of the EU, the commission said. The EU biodiesel industry is worth €31 billion ($33.92 billion) per year, providing a renewable alternative to fossil fuels in the EU’s transportation sector and increasing the EU’s energy security.

“The launch of the anti-dumping investigation is based on a complaint by EU biodiesel producers. EU producers have submitted evidence of biodiesel imports from China coming into the EU at artificially low prices and claim that these imports are seriously harming their industry because they cannot compete with such low prices,” the commission said.

In August, the commission began investigating whether biodiesel from Indonesia was being transshipped through China and Britain to avoid EU taxes. A complaint from the producer organization the European Biodiesel Board (EBB) prompted the latest investigation, which will cover the period from Oct. 1, 2022, to Sept. 30, 2023.

The EU is Indonesia’s third-largest market for palm oil products and an important market for palm oil-based biodiesel. Indonesia is the world’s largest producer of palm oil.

In June, Germany also urged the commission to investigate the flow of allegedly fraudulent biofuels into the European Union, ramping up scrutiny on trading in the fuel that has rocked the industry.

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According to the commission, an anti-dumping investigation is initiated when the commission seeks to ascertain whether products imported into the EU are sold or dumped at a price lower than the price in the producer country.

The commission has an obligation to initiate an anti-dumping investigation if it receives a valid complaint from the EU industry containing sufficient evidence that exporting producers from one or more countries are dumping a specific product into the EU market and causing injury to the industry.

The investigation examines whether dumping is taking place, whether material injury has been suffered by the EU industry, whether it is the dumping that is causing the injury, and whether it would be against the economic interests of the EU to impose measures against dumping—usually an anti-dumping duty.

Concerns have been raised that producers in Asia are blending biofuels with cheaper oils and shipping them to Europe taking advantage of the EU incentives for biodiesel production generated from waste oils and fat to enhance renewable energy consumption.

The EU biodiesel industry employs 3,700 people across 18 member states: Austria, Belgium, Bulgaria, Cyprus, Czechia, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Poland, Portugal, Romania, Slovakia, and Spain.

‘Fraudulent’ Dumping

According to the EBB, China was the leading exporter of biodiesel to the EU in 2023, but consequent to the swamping of Chinese biofuels that led to a collapse of biofuel prices in the EU market, many EBB members feared that some exporters were engaging in “large-scale fraud” through falsification of Renewable Energy Directive (RED) certification.

The EBB alleges that imports of Chinese biodiesel are virtually always classified as “advanced” and “waste-based,” as advocated by the RED.

However, Chinese biofuels offer no competitive edge over EU producers, and their artificially low prices result in severe dumping, causing widespread damage throughout the supply chain.

“We at EBB are resolute that the European biodiesel industry will not tolerate these kinds of highly damaging unfair trading practices, and we will not cease to fight to protect our biodiesel production from them,” Dickson Posnett, president of the EBB, said in response to the initiation of the anti-dumping probe. “Those unfair practices are causing serious injury to our producers at a time where the climate objectives of the EU require more sustainable biodiesel than ever. The EBB stands for fair trade practices and welcomes this announcement from DG Trade that will support continued European biodiesel investments, and which will help deliver to Europe the decarbonization that Europe—and the world—so urgently needs.”

The board expects that the commission’s assessment of anti-dumping duties will come within the next eight months. The EBB is also collaborating with the commission on the prospect of imposing interim charges because of the high volume of imports and concomitant losses to EU producers.

High Stakes

The EU has been striving to accelerate the pivot to advanced biofuels that come from sustainable feedstock. Biofuels such as biodiesel and bioethanol are used in the EU’s transportation sector as a renewable alternative to fossil fuels for reducing greenhouse gas emissions and improving the EU’s supply security.

The RED requires EU countries to ensure that renewable energy accounts for at least 14 percent of total energy consumption in transportation by 2030, with advanced biofuels accounting for at least 3.5 percent of total energy consumption.

The EU has also developed bioenergy sustainability requirements through various measures, including the unfavorable direct effects that biofuel production may have because of indirect land use change.

The commission has also suggested a new EU-wide fuel pricing scheme based on energy content rather than volume, with the goal of eliminating subsidies for gasoline and diesel in favor of encouraging the use of green biofuels, renewable hydrogen, and synthetic fuels.

The use of food-based biofuels to achieve the RED’s 10 percent renewable energy target will be reduced to 5 percent, creating new incentives to produce other, better-performing biofuels.

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