EU confirms investigation into cheap Chinese biodiesel destroying EU industry

European biofuel producers have applauded the European Commission’s decision to initiate an anti-dumping probe into Chinese biodiesel imports.

European biofuel producers applauded the European Commission’s decision to begin an anti-dumping probe into Chinese biodiesel imports, considering it a positive step toward reversing the economic destruction of the domestic EU biofuel sector.

The EU executive announced a formal investigation into allegations of Chinese biodiesel imports being marketed at unfairly cheap rates across the EU, a practice known as dumping under international trade regulations, as reported by Euractiv.

The European Biodiesel Board, a trade body representing EU biodiesel producers, lodged a complaint warning that such low pricing could lead to the collapse of EU manufacturers, prompting action. To begin the EU investigative procedure, an official complaint from industry is required.

“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 secretary-general of the EBB, in the interview with Euractiv.

If dumping is proven, the EU has the authority to impose trade tariffs on Chinese biodiesel imports in order to address the price disparity. The probe is likely to take up to 14 months, while the EU could think about applying interim levies as soon as seven months.

Chinese officials responded by portraying the EU’s inquiry as protectionist and an “abuse of trade remedies,” according to Chinese media, adding that regulators will “closely monitor” its progress.

The EU biodiesel sector is worth approximately €31 billion per year. The fuel is a green alternative to fossil fuels, which makes it a desirable commodity as the EU seeks to minimize its carbon footprint in order to meet its objective of reducing emissions by 55% by 2030 when compared to 1990.

China has dramatically increased its biofuel imports in recent years. Biodiesel imports from China increased by 80% in the first two months of 2023 compared to January and February of 2022.

EBB projects the price-dumping margin to be 110%, despite China lacking a competitive edge over the EU industry.

Industry and non-governmental organizations alike share serious concerns that Chinese biodiesel shipments are mislabeled to exploit EU legislation.

Companies using waste as material have a financial incentive under the EU’s renewable energy regulation, as advanced and trash biofuels can be scored twice towards renewable energy targets.

Chinese enterprises are allegedly passing off crop-based biofuels that do not qualify for double counting as high-quality biofuels.

Industry officials are warning that the EU waste biodiesel business could ‘collapse’ in European markets unless quick regulatory steps are taken to address the sharp surge in Chinese biodiesel imports.

While probable import fraud adds to the challenges encountered by the EU biodiesel industry, the EU probe will concentrate only on trade-related problems created by dumping.

While tariffs on Chinese imports would help to prevent industry losses in the EU, there are fears that they will raise biodiesel prices, increasing the cost of decarbonization.