US-EU Deal Could Expand Biodiesel Production and Use

John Davis

useuflags.jpgThe United States and the European Union… at odds over some biodiesel issues… are expected to sign a deal that would set international standards for trading biofuels, which senior U.S.diplomats say will give a boost to jatropha-based biodiesel in the world market.

As you might remember from a previous post of mine on October 24th, the EU is threatening a World Trade Organization complaint over American subsidies on biodiesel ($1-a-gallon biodiesel mixture credit) that the Europeans claim artificially reducing the price of biodiesel sold in Europe by about 60-90 cents a gallon… compared to what European biodiesel goes for. But this article in the UK-based Guardian says now the Americans and Europeans seem to be agreeing on some international standards to be hashed out at the new Transatlantic Economic Council (TEC) in Washington on November 9:

The agreement would be a significant boost to efforts by biodiesel producers such as D1, chaired by former Shell chairman Lord Oxburgh and partnered by BP, to refine thousands of tonnes of oil produced from the seeds of the jatropha curcas grown in poor, dry soil in Africa and the Caribbean as well as India.

Last month D1 cut back its expansion plans, including an increase in refining capacity at a Merseyside plant to 320,000 tonnes by the end of 2008, because of subsidised imports of soya-based biodiesels from the US. The European Biodiesel Board, a trade group of EU producers, has threatened legal action over the $1 a gallon subsidies for biodiesel. US exports to the EU have soared from 90,000 tonnes in 2006 to 700,000 tonnes so far this year. The EU has set a target of 10% use of biofuels by 2020 as part of its campaign to reduce greenhouse gas emissions by at least 20%. [C Boyden Gray, US ambassador to the EU] accused the EU in turn of precluding other feedstocks for biofuel in favour of rapeseed oil – prompted, he claimed, by the German farming lobby.

The plan is also seen as a response to environmental concerns of the Europeans using palm oil (which causes deforestation) and the Americans producing ethanol from corn.