Europe's Biofuel Makers Cry Foul Over US Tax Break
Date: 20-Jun-07
Country: SPAIN
German and French producers have already raised the alarm about a loophole in US tax laws that gives substantial credits to biofuels that have passed through US ports.
Spain has just approved mandatory blending levels for plant-based biodiesel and bioethanol as part of its efforts to curb greenhouse gas output.
That should give the industry a boost, but APPA said it would not help national producers get off the ground if refined US biodiesel was coming in below the price of raw vegetable oil in Europe.
"We are creating a market, but not for Spanish producers," said Roderic Miralles, head of APPA's biofuel division.
The association is urging the Spanish government and the European Commission to put pressure on the US to stop giving tax credits of 0.20 euros a litre for biodiesel exports.
"The entry of subsidised biodiesel from the United States can cause the closure of many European production plants within a few months," APPA said in a statement.
In May Germany's Campa-Biodiesel said it was stopping production at its 150,000 tonne a year plant because it was being undercut by US imports.
"There is a transatlantic traffic under which some smart alecks import palm-based biodiesel into the United States then mix it with a few drops of standard diesel before exporting it to northern Europe with a subsidy," said a senior manager at one of France's largest biodiesel makers.
"This system is starting to seriously disturb markets."
He stressed, however, that the imported biofuel was used more as a "bio-combustible" or heating oil than a biofuel to be used in transport and that the main markets were Britain and the Netherlands but not France.
END LOCAL TAX BREAKS
APPA wants the Spanish government to exempt these US imports from the lower tax on biofuels in Spain.
"Just as it makes no sense to tax twice, it makes no sense to give two lots of credits ... If this continues, it will not be profitable to produce in Spain," Miralles told journalists.
A dozen biodiesel plants were producing in Spain at the end of last year and several dozen more -- many of them large ones -- are being built and planned.
Crude soyoil, which provides raw material for some of these plants, now costs at least 600 euros (US$805) a tonne.
Once refined that becomes 750 euros, while refined US biodiesel was arriving at 600 to 650 euros, he said.