Spanish biodiesel industry crippled by imports

Posted July 20, 2010

Only 18 months after the EU took action to mitigate the influx of U.S. products into the European biodiesel market, a Spanish renewable energy organization is claiming that European biodiesel markets are once again being overtaken by unfair imports. APPA Biofuels, a division of Spain's Association of Renewable Energy Producers, recently released a report stating that 60 percent of the biodiesel utilized in Spain during the first quarter of 2010 was imported into the country, with the vast majority of those imports coming from Argentina.

According to APPA Biofuels, the influx of Argentinean biodiesel into the European market primarily stems from an export tax in Argentina that encourages the export of finished biodiesel over the export of soybean oil. In fact, APPA Biofuels states that while a 32 percent export tax has been levied against soybean oil in Argentina, the export tax on biodiesel is only 18 percent. This imbalance is exacerbated, said APPA Biofuels in its report, by the EU's exemption of Argentine biodiesel from paying the 6.5 percent import tariff normally levied against biodiesel imports.

While Argentinean biodiesel flows into the Spanish market, APPA Biofuels reported that 75 percent of the capacity of Spain's 46 biodiesel plans is currently idle. The most recent statistics available through the European Biodiesel Board show that while Spain has the capacity to produce approximately 3.7 million metric tons (about 1.1 billion gallons) of biodiesel per year, only 207,000 metric tons (62 million gallons) was produced in 2008.

According to APPA Biofuels President Roderic Miralles, several countries, including France and Portugal, have already taken internal measures to protect their local biofuels industries from unfair competition posed by imported biodiesel. "Spain cannot remain [a] paradise for exporters when we have invested in [dozens of biodiesel plants] in [this] country," Miralles said in a press release.

While some countries have taken measures to protect their biodiesel producers, Dieter Bockey, spokesman for German-based Arbeitsgemeinschaft Qualit�tsmanagement Biodiesel e.V. (AGQM), said the problem with Argentinean biodiesel is affecting a significant portion of the European market. He estimated that German biodiesel producers are operating at less than 50 percent capacity. Although biodiesel producers in the U.S. are struggling primarily due to the failure to extend the biodiesel tax credit, Bockey said the European industry's challenges can primarily be attributed to internal completion and the import of biodiesel from other countries. "Nowadays, I think it's also [due to] additional biodiesel from Argentina due to the exporting subsidy system they have," Bockey said.

APPA Biofuels also states that the market damage being caused by Argentinean biodiesel exports has been further aggravated by the Ministry of Industry, Tourisms and Trade's delay in approving a Royal Decree for new fuel specifications that would allow biodiesel to comprise up to 7 percent of a diesel fuel mixture. According to APPA Biofuels, approving the use of B7 would increase market demand for biodiesel, allowing local producers to increase production.