US closes controversial biofuels tax loophole
Fri 27 March 2009
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The United States has closed a loophole allowing foreign-produced biofuels consumed outside the US market to benefit from US subsidies. The controversial policy was ended by a new provision added to US financial bailout legislation.
The provision will be applied retrospectively to claims for the blenders’ credit made on or before 15 May 2008.
The European Biofuels Board (EBB) acknowledged the closing of the loophole but said, however, that subsidized biofuels from the United States will continue to be a problem. The EBB complains that biofuels produced in the U.S. and exported to Europe will still benefit from the blenders’ credit and that this subsidized biofuel represents 90% of the volume entering Europe.
European biofuel producers say that the surge in imports of cheap US biodiesel underwritten by government subsidies has undermined European industry. From just 7,000 tonnes in 2005, US producers now send more than 1m to the EU each year.
In an earlier decision, the European Commission decided to apply temporary duties on imports of US biodiesel. The decision, according to the Commission was taken on the basis of clear evidence that unfair subsidisation and dumping of US biodiesel has taken place, and that this is harming otherwise competitive EU industry, with potentially dire long term effects.
The measures came into effect from 13 March and will be in place for four months while the investigation and contacts with stakeholders continue.
In a separate development on biofuels, officials at the US Environmental Protection Agency are reported by the New York Times to be 'open to changing methods for measuring biofuels' greenhouse gas emissions and plan to seek outside review of the matter'.
However, the Agency has not bowed to industry pressure to remove clauses in the review about emissions from 'indirect' land-use changes. The EPA is understood to be planning to consulte its Science Advisory Board and also seek external peer review on the lifecycle analysis.
Some industry groups are reported to have 'leaned on EPA' to withhold the indirect land-use change aspects but environmental groups put forward the opposite case, stating that calculating emissions from land-use changes is needed to ensure that the full impacts of biofuels production are taken into account in policy making.
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