The anti-dumping measures entail an additional duty rate ranging from 13 to 36 percent of the value of the goods. In December 2023, the EU initiated controls and an investigation against China due to suspicions that biodiesel imported from China was falsely declared as an “advanced biofuel” within the meaning of Annex IX Part A of the Renewable Energy Directive II (RED II). In reality, the biodiesel is alleged to have been made from palm oil instead of used fats.
Moreover, EU biodiesel producers have complained that biodiesel imports from China are entering the EU at dumping prices, exposing them to unfair competition. The provisional tariffs will continue to be levied until the final level is determined.
Should tariffs have been higher?
Similar to the case of punitive tariffs on electric cars, there is a debate about whether the tariffs are too low to be effective. The Association of the German Biofuel Industry shares this concern.
“The German and European industry has been suffering from the unfair practices of Chinese producers since the beginning of 2023. We therefore expressly welcome the provisional tariffs. In our view, however, the lower limit should have been higher because the increased costs cannot be priced in at this low level. This does not compensate for the unfair competitive advantage. The decision is an important industrial policy signal that has significance beyond the biofuel sector. It shows that the European Union does not stand idly by when unfair trading practices are used to force competitors out of the market,” emphasised Elmar Baumann, Managing Director at VDB.
Concerns about exceptions
Additionally, the EU Commission has decided on an exception for Hydrotreated Vegetable Oil (HVO), which is used as a sustainable aviation fuel (SAF) in air transport. This decision has raised concerns for some:
“Such a loophole can lead to tariffs being ineffective. We therefore demand that SAF also be included in the provisional measures,” explained Baumann.
Will biodiesel soon become more expensive?
Anti-dumping duties are a double-edged sword. On one hand, the measure can strengthen the biodiesel industry in Europe, as the decline in Chinese imports could increase demand for the raw material rapeseed in Europe, benefiting domestic agriculture.
On the other hand, an increase in biodiesel prices is very likely because production in Europe is more cost-intensive, and Chinese biodiesel could become more expensive due to tariffs. This could also indirectly impact the prices of other fuels to which biodiesel is added, such as regular diesel fuel at some petrol stations. However, it is currently difficult to quantify the economic consequences precisely.
The geopolitical implications should not be overlooked either. The tariffs could further strain the already tense situation between the EU and China due to the punitive tariffs. Countermeasures from China cannot be ruled out.