EU Confirms Probe into Cheap Chinese Biodiesel Decimating EU Industry

January 12, 2024

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by Sean Goulding Carroll (EURACTIV) European biofuel producers have praised the European Commission’s decision to launch an anti-dumping investigation into Chinese biodiesel imports, calling it a positive step to stop the economic devastation of the domestic EU biofuel sector.

Last month, the EU executive announced it would formally investigate allegations that Chinese biodiesel imports are being sold at artificially low prices across the bloc, a prohibited practice under international trade rules known as dumping.

The measure was taken following a complaint by the European Biodiesel Board (EBB), a trade association representing EU biodiesel producers, who warned that EU producers were at risk of collapsing in the face of such low prices. A formal complaint from industry is necessary to start the EU investigation process.

“We are confident that the Commission and the governments in the EU are now well aware that these imports of biodiesel from China constitute an existential crisis for EU biodiesel producers and are committed to enforcing international trade laws to protect this industry,” said Xavier Noyon, the EBB secretary general.

If dumping is proven, the EU may impose trade duties on Chinese biodiesel imports to correct the price imbalance. The investigation is expected to last a maximum of 14 months, though the EU may consider imposing provisional duties within seven months.

In response, Chinese officials portrayed the EU’s investigation as protectionist and an “abuse of trade remedies”, Chinese media reported, adding that officials will “closely watch” its progress.

The EU biodiesel market is worth some €31 billion annually. The fuel is considered a green alternative to fossil fuels, making it a valuable commodity as the EU looks to reduce its carbon footprint in line with its goal of slashing emissions by 55% by 2030 compared to 1990.

China ‘flooding’ the market

The recent years have seen the quantity of biofuels imported from China rise sharply. The first months of 2023 saw an 80% rise in biodiesel imports from China compared to January and February 2022.

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There are also major concerns, shared by industry and NGOs alike, that Chinese biodiesel exports are being mislabelled to take advantage of EU legislation.

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However, while possible fraud in imports contributes to the difficulties faced by the EU biodiesel industry, the EU investigation will focus solely on the trade issues caused by dumping.

Requesting an investigation “is not something that we do in the absence of a better way to act against fraud” said Noyon.

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While the imposition of tariffs on Chinese imports would help to stem EU industry losses, there are concerns that it would see biodiesel prices rise, pushing up the cost of decarbonisation.

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December’s announcement marks the second EU probe into biofuels from China.

In a separate investigation, EU authorities are currently looking into allegations that Indonesian biodiesel is transiting through China and the United Kingdom in a bid to circumvent taxes.

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The so-called anti-circumvention investigation was launched in August 2023 and is expected to take nine months to complete.

If a company is found to have engaged in deceptive practices, its certificate to trade with the EU may be suspended. READ MORE

Related articles

Germany, France push EU to halt import of fraudulent biofuel (Bloomberg)
Germany, France Push EU to Halt Import of Fraudulent Biofuel (AgWeb/ProFarmer)
France, Germany urge tougher EU checks on biofuel imports in fraud probe (Reuters)
EU biodiesel industry may not survive 2024 if left unprotected from Chinese unfair imports (EurActiv/European Biodiesel Board)
UCO (Used Cooking Oil) for biofuels: how much is fraudulently imported virgin vegetable oil? (energypost.eu/Transport & Environment)
Fledgling biofuel production in the EU under threat from cheap imports (The Loadstar)

Excerpt from The Loadstar:

Even as a new EU regulation approaches mandating its use, biodiesel and SAF production within Europe could be in big trouble, according to experts.

Last week, Shell announced that it would be putting construction of a Rotterdam facility on hold, and is expecting this to add up to non-cash impairments of up to $2bn this quarter.

Shell will “temporarily pause construction work at its 820,000 tonnes a year biofuels facility at the Shell Energy and Chemicals Park Rotterdam to address project delivery and ensure future competitiveness, given current market conditions”.

At the beginning of next year, airlines will be required to use a 2% proportion of SAF as part of their fuel mix, which rises to 6% by 2030 and 70% by 2050.

While this would appear to guarantee sufficient demand for Shell’s refinery, sources confirm that China is overwhelming Europe’s paltry biofuel production capability with its cheap biofuel exports.

Last month, Transport & Environment (T&E) revealed that European countries were importing almost all their used cooking oil (UCO) biofuel, with the UK in particular consuming some 15 times more UCO (1.93Mt) than the 0.13Mt it collected last year.

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However, EcoCeres, which has a plant in China and is building one in Malaysia, said it traced feedstocks.

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Palm oil is more energy-rich than other oils, and its producers are able to apply agriculture’s efficiencies, standardisation and scalability. While it is unsurprising that biodiesel and SAF made from palm oil is drastically cheaper, it is considered more-polluting than fossil diesel, emitting similar CO2 at the funnel, and requiring extensive deforestation –undermining the case for its use.

“It’s hard to imagine that an industry player would take a $2bn hit on a product if they truly believed in it,” said Mr Delaney. “Oil giants, such as Shell, BP and Chevron, are starting to backtrack on biorefinery development due to a lack of profitability and market predictability. READ MORE