EU confirms probe into cheap Chinese biodiesel decimating EU industry.
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.
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Xavier Noyon, the EBB secretary general said:
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.
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.
According to EBB, the dumping margin is estimated to be 110%, despite China having no competitive advantage over the EU industry.
There are also major concerns, shared by industry and NGOs alike, that Chinese biodiesel exports are being mislabelled to take advantage of EU legislation.
Under the EU’s renewable energy directive, advanced and waste biofuels can be counted twice towards renewable energy targets, giving producers an economic incentive to use waste as feedstock.
It has been alleged that crop-based biofuels which are not eligible for double counting are being fraudulently passed off by Chinese companies as advanced biofuels.
“We’ve always imported feedstock from China and the volumes in absolute terms are relatively constant. But all of a sudden, over the course of 2022 and 2023, what increased massively and at an incredible pace was the production of biodiesel and hydrotreated vegetable oil in China,” Noyon told Euractiv.
“The fact that this came on the market, a surge of a product that was very competitive in price, in a segment where availability is the most limited of all and is supposedly very hard to collect and process, completely disturbed the market, which tumbled down completely,” he added.
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.
“We do it because we believe there is dumping and it’s important for us to structurally make sure that the growing market for biofuels can be addressed also by the EU production, which abides by the highest standard of sustainability.”
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.
However, Noyon said that these fears are unwarranted, arguing that removing unfair Chinese competition will simply bolster competition among other biofuel producers. The EBB chief also stressed that EU industry is “capable of meeting 100% of EU demand”.
Anti-circumvention investigation
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.
EBB formally complained to DG TRADE that Indonesian biodiesel, which is subject to a customs duty, is being relabelled as being of Chinese and British origin to avoid import taxes.
The routing of biodiesel via China and the UK appears to have “insufficient due cause or economic justification other than the imposition of the duty”, according to the EU’s official journal.
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.
EU confirms probe into cheap Chinese biodiesel decimating EU industry, January 12, 2024
