European
Commission Proposes Duties on Imports of US Biofuels
The European Commission (EC) has proposed anti-dumping
duties of 9.5 percent on US fuel ethanol imports for
five years, following an internal investigation. The planned anti-dumping duty
seeks to protect Europe’s domestic bioethanol industry from low-priced imports
by increasing the effective price of the imported ethanol. The duty - if
adopted by the bloc’s 27 member states - would be applied across the board to
all US producers of ethanol exporting to the EU.
The EC report found that the surge in low-priced imports from
the US stalled the European Union’s bioethanol industry by decreasing profits
and seriously affecting the industry’s ability to raise capital and attract
investment. “Exporters from the [US] managed to increase their market share by
systematically undercutting European Union industry’s prices,” the Commission
proposal said.
From October 2010 to end-September 2011 - the official period
during which the EC investigated the possibility of imposing duties - imports
of US ethanol catapulted from a 1.9 percent market share
to 15.7 percent of the EU market. Volume grew
ten-fold to 686,185 tonnes. The United States is the single largest foreign
source of ethanol for the EU. The only other substantial supplier is
Brazil, but during the investigation period their market share in the EU shrank
from 30.3 percent to 4.5 percent.
The EC investigation began in October 2011 in response to a
complaint lodged by ePURE, an association of European
producers that together constitute more than 25 percent
of the EU’s total ethanol output. ePURE
complained that their prices and market share were eroding because of the
growth in low-priced US ethanol imports.
The European Commission has recommended that the European
Council adopt the proposal for implementing these duties no later than 22 February.
However,
this is not the first time Brussels has slapped duties on imports of US
alternative fuel. In 2009, the EU imposed both anti-dumping and anti-subsidy
duties on imports of US biodiesel for a period of five years. At issue was a US
tax credit of US$1 per gallon of biodiesel produced, which caused European
producers to lose market share, according to the EC investigation.
The EC had also recently been conducting an anti-subsidy
investigation into US ethanol imports, but concluded in December 2012 that the
various American subsidy and tax credit schemes, many of them state programmes,
were being phased out. Further, the subsidies that were still in place in the
US were considered insignificant. The report concluded that, accordingly, no
anti-subsidy measures would be initiated. However, the EC left open the
possibility for anti-subsidy duties to be implemented down the line if the US
restarted its main subsidy scheme, a tax credit that expired in 2011.
As Washington and Brussels spar to bolster their respective
biofuel industries, both countries have also been a target for criticism for
their role in price spikes for food in the developing world. The US now devotes
40 percent of its corn crop to biofuel production.
These oft-criticised biofuel mandates are seen as a way to
reduce reliance on foreign oil and reduce carbon emissions. Recent research
suggests, however, that the once-touted environmental benefits of biofuels are
negligible. Still, European vehicle fuels will need to contain 10 percent biofuel as a part of Brussels’ 2020 targets.
This past October, in response to food security and
environmental concerns, the EC proposed an amendment calling for a maximum of
five percent - half of the target - to come from
first-generation biofuels, ones made from food crops. The other half would need
to come from second-generation biofuels - ones that do not directly require
cropland - such as those generated from feedstock or waste products.