This is a timely story, coming on the heels of the previous story on the tariffs the U.S. applies to Brazilian ethanol:
European tariffs stun U.S. biodiesel industry
The U.S. biodiesel industry will suffer from new trade barriers that threaten to end its lucrative export business to Europe, and in Texas the measure could be devastating.
Last week, the European Commission said U.S. biodiesel exporters will now have to pay additional anti-dumping tariffs of up to 29 percent, and anti-subsidy duties of up to 41 percent. The tariffs are temporary for the next six months, but the commission will decide by this summer whether to extend them for five years.
The tariffs came after complaints last year that U.S. biodiesel producers were collecting both U.S. and European subsidies and then selling huge quantities of fuel in Europe at prices that undercut domestic producers.
European officials estimated that 80 percent of U.S. biodiesel production was exported in 2008.
I would suspect that people who might have a problem with their tax dollars subsidizing Brazilian ethanol would also have a problem with their tax dollars subsidizing European biodiesel users. If I am not mistaken, ethanol that is exported loses most of the U.S. tax advantages, hence the incentive is to use it at home. Apparently the biodiesel industry is set up differently with respect to the tax credits.
Credit to KingofKaty for the find.
Two interesting things from this story. First, I'm sure some of the same people complaining about the EU also complained about Tyson & COP getting the TDP credit. Subsidies for me but not for thee!
Secondly, look at this jewell at the end of the story:
Texas has 30 biodiesel plants with a total production capacity of 691 million gallons per year, said Jess Hewitt, president of the Biodiesel Coalition of Texas. Forty percent of that capacity is idle, including several plants in the Houston and Galveston area, he said.
Wow, biodiesel is running at only 60% of capacity! Yet our politicians are calling for MORE investment in alternative fuels.
Where is the “use it or lose it” provisions for running the existing tax-payer supported alternative fuels industry? Why subsidize even more capacity that won’t run? It is insanity.
King-
Get used to the subsidies, they will outlive you, me, our children, our grandchildren.
Agriculture subsidies enacted in the Dust Bowl days are going strong. Government programs never die.
We still keep troops in Germany, more than six decades after winning WWII. We have troops in Korea, five decades later.
My guess is that 100 years after WWII, we will still have troops in Europe, and in Korea. Only a few more decades to go. Of course, we will still subsidize farmers and ethanol.
In government-speak, a few decades is a blink of the eye.
Even worse: CERA says we have entered an age near-permanent natural gas gluts in North America.
You can bet that will not mean an end to ethanol, but rather even heavier subsidies of it.
Benny,
More bad news for PHEVs: Ford Hybrid Drops 5.5 MPG in MI Cold. That’s almost a 15% drop in efficiency. If cold effects the Volt the same way (may be worse), your 40 mile gas-free drive gets cut by more than 6 miles. AND your top speed gets trimmed by an eye-popping 36%! Bucketload of not-good.
So Benny, talking about 100 year time frames: I bet a 100 years from now PHEVs still makes up less than 10% of the cars on the road. Assuming PHEVs ever make it to market…
BTW, did you see the way oil prices responded today to rumors that Uncle Sam might eventually have a semi-workable plan for the banks? What will happen if the economy really picks up? I think the centipede gets cruched…
Optimist-
It is true, I have had a few of my legs broken in this latest oil bull market. Since global oil demand is falling, and we face long-term gluts of natural gas, I wonder why oil prices are going up. I suspect it is speculation and manipulation.
Port traffic at Los Angeles-Long Beach was down 40 percent in February, y-o-y.
Sadly, this is a real deep recession. I hope the new bank plan works, but even if it does, oil demand will not return to 2007 levels for years and years, maybe ever.
CERA just released a report basically stating that North America has ample natural gasfor decades and decades, thanks to shale gas. The question is demand, not supply, they say.
That can’t be good for oil.
PHEVs? If oil goes over $100, maybe they will work. Problem is, oil never stays over $100….
“PHEVs? If oil goes over $100, maybe they will work.”
Benny — the European consumer has been paying well over $100/Bbl, more like the equivalent of $200/Bbl, for years. And Plug-in Hybrid Electric Vehicles have not taken off in Europe.
It's a technology issue. When the technology is good enough to undercut the Internal Combustion Engine in open competition, then we will have PHEV by the boatload. But not before.
There is an interesting sidelight to this biodiesel scam — the division that has opened up between EU & US, with the EU tending more to diesel and the US tending more to gasoline. Given the limitations of product splits from refineries, this has resulted in the US importing lots of EU gasoline — seems only logical that it should also open up the possibility for a diesel counter-flow, although this is the first I had heard of it.
Strange that "Greener-Than-Thou" EU is blocking the use of imported green green green biodiesel. What a tangled web we weave ….
“…your 40 mile gas-free drive gets cut by more than 6 miles.”
That’s probably about right. GM is on record as saying the Volt will get “up to 40 miles” on a single-charge, if the driver turns on none of the auxiliary power equipment such as the heater, defroster, A/C, sound system, headlights, etc.
Since no one will drive around with everything turned off, the Volt’s true range on a charge will probably be in the low 30’s.
That 40 mile figure is pure PR spin.
I thought the 40 mile per charge figure was purely to qualify for tax credits. As long as the car meets that number in tests that qualify it for the tax credit, there’s no need for it to meet that number in real life. A bit like meeting CAFE numbers.
I thought the 40 mile per charge figure was purely to qualify for tax credits.
I think it is the other way round, in a true tail-wagging-the-dog way: the law was written to support GM and the Volt.
Boy, our prostitutians will look (even more) stupid when GM goes bankrupt later this year…
Robert,
I’ve been monitoring this development for some time. It should not have come as a surprise to anybody connected with the U.S. biodiesel industry. The European Commission’s investigation that led to the imposition of temporary CV and anti-dumping duties was initiated a year ago.
The Houston Chronicle article is wrong, by the way. The duties are not expressed as ad valorem percentages, but in euros per 100 kg.
By company, the countervailing duties have been assessed as follows:
Archer Daniels Midland (ADM) …. € 26 per 100 kg
Cargill ……………………………………… € 27 per 100 kg
Green Earth Energy Fuels ………… € 28 per 100 kg
Imperium Renewables …………….. € 29 per 100 kg
World Energy Alternatives ………. € 29 per 100 kg
Note that ADM, which receives the lowest duty, is also the largest producer of biodiesel in Europe.
Biodiesel from Peter Cremer North America and most other U.S. biodiesel companies exporting to Europe will be levied a duty of € 41 euros per 100 kg.
Expressed in more familiar units, the duties range from about € 0.23 to € 0.36 per litre ($1.11 to $1.74 per gallon).
These rates are interesting because they exceed – significantly exceed, in some cases — the value of the federal excise tax credit ($0.26 or € 0.21 per litre). That suggests that the Commission also took into account other U.S. federal subsidies (such as the small producers tax credit), plus subsidies provided by individual U.S. states.
Robert, I believe you ARE mistaken regarding the difference between biodiesel and ethanol. Don’t forget that, in the ethanol market, the United States competes with Brazilian ethanol. Moreover, Europe imposes a normal MFN tariff of € 0.195 per litre (about $0.95 per gallon) on imported undenatured ethyl alcohol. This substantially reduces the price received by exporters. By comparison, the EU’s normal tariff on biodiesel is 6.5% of the c.i.f. price.
Brazil, with its lower-cost cane ethanol, some of which is produced close to ports, can under-cut U.S. corn-based ethanol produced in Midwest plants any day — especially in a market protected by a $0.95 per gallon import tariff.
By the way, I suggest that everybody skim through the comments provided by readers on the Houston Chronicle article to which Robert's blog links.
The comments are down-right scary if, like me, you are a person who sees value in developing and maintaining a rules-based, increasingly open multi-lateral trading system.
Here is a selection of some of the ugliest comments:
"Is there any way to get this Democratic Congress to pass retaliatory tariffs on all products from offending countries: i.e. EU & Mexico?"
"Obama is the Herbert Hoover of the century: raising taxes (yup Hoover did that) and setting off trade wars with international trading partners (just like Hoover)." [NB: this dispute predates the Obama Administration.]
"They [i.e., Europeans] can just keep their VW, Mercedes, BMW, Michelin tires, and all of those machine tools they keep sending over here. We can get along without them just fine."
"Wait, the Euro-scum warned US that we should not have any buy American clasues in our bail out bills because they would be upset if we did and now THEY are enacting preotectionist measures? Wow, aren't we stupid (by "we" I mean Obama and the Democrats) for falling into that trap. Maybe we ought to stop selling them grain and let them starve."
For those of us working to avoid the mistakes of previous protectionist downward spirals (such as the Smoot-Hawley Tariff Act of 1930), these comments are a painful reminder: even in "free-market" America, support for a rules-based international trading system is veneer deep. Most people have no background knowledge of what lies behind trade disputes, and are willing to ask Congress to retaliate at the drop of a hat.
Ron,
Those sure are ugly comments, but I’m not so sure they represent a majority opinion. Some blogs just seem to attrack the angry uninformeds, for no apparent reason. The Sacramento Bee has the same problem.
The comments you list also show that severely slanted view (“It’s ALL Obama’s fault!”) that is a dead give away for somebody who won’t be shifted by logic or reason.
Optimist: I hope you’re right. But notice that the comment likening Obama from Herbert Hoover received 45 thumbs up from other readers, and only 21 thumbs down; and the one suggesting that Europe can “keep their VW, Mercedes, BMW, Michelin tires” received 30 thumbs up, and only 22 thumbs down. (In both cases I’m excluding the thumbs down from me).
I think it is the other way round, in a true tail-wagging-the-dog way: the law was written to support GM and the Volt.
Ha ha, I think you’re right, Optimist. Same reason why California’s latest electric vehicles rule actually gives hydrogen cars more credits than electric cars. Or something like that.
I will read a few more articles before deciding whether to dump this site or not but this seems like one of the sites where too many opinions are PC greenies and not a whole lot of thinking is necessary.