EU biodiesel industry shows resilience

EU biodiesel industry shows resilience amid unfair international competition and degraded market conditions, according to the annual biodiesel production and capacities statistics of the European Biodiesel Board.

Unfair trade practices led to a moderate production increase in 2008. In line with the trend initiated in 2007, the year 2008 saw a relatively low increase in EU biodiesel production, and even a reduction in two major producing Member States, Germany and Austria. A clear stagnation of biodiesel output is also to be noticed in a number of EU countries.
With 7,7 million tonnes, 2008 production increased by only 35,7% compared to 2007 level (up from 5,7 million tonnes). 2007 already saw a reduced 16,8% increase compared to 2006.
The increase of biodiesel production in 2007 and 2008 is still not in line with the ambitious EU objective for climate change mitigation outlined in the recently published Renewable Energy Directive 2009/28. “This situation has to be understood primarily against the background of unfair international trade competition which has severely affected the profitability of EU biodiesel producers since early 2007″, according to the EBB.
For more than two years, EU biodiesel producers had to compete with heavily subsidized and dumped biodiesel from the US (known as “B99″). US B99 has been sold in the EU with a considerable discount, even at lower price than the raw material soybean oil. Following the complaints lodged by EBB in 2008, the European Commission’s investigation established that unfair US B99 caused significant damage to the EU biodiesel industry, particularly in terms of profitability and return on investments.
In spite of degraded market conditions, the EU biodiesel industry showed in 2008 some relative resilience, allowing a moderate production increase compared to 2007. This however stands far below what EU biodiesel producers could achieve in a more favorable environment.

EBB statistics for 2008 and 2009 however show that at least 50% of existing plants remain idle. Unfair international competition has been the main driver of this trend, while the political discussions in 2008 on adoption of the Renewable Energy Directive have added to market uncertainty. This situation means that the important investment from the industry has so far not been mirrored by the corresponding market deployment.