They just can't lift their heads. It is the classic sector which is suffering two crises: the general recession and a more specific crisis.
The latter, the Spanish trade association, APPA Biocarburantes, reports, is the blame of a massive influx of Argentine biodiesel (37% of total consumption in the first quarter of 2010) and industrial uncertainty due to delays in approving the amendment to the royal decree on fuel specifications and increased biodiesel and bioethanol mixes therein.
Of the 277,857 tonnes of biodiesel consumed in Spain during the first quarter of 2010, 101,695 (37%) came from Argentina. Furthermore, according to official data from the Spanish Department of Customs and Excise, over that period a total of 166,714 tonnes of pure biodiesel came into Spain, accounting for 60% of all consumption in Spain, compared to 51% in the previous quarter. Against this backdrop, it is no wonder that 75% of Spanish biodiesel plants are lying idle.
The biofuels section of the Spanish Association of Renewable Energy Producers (APPA) states that "nearly a year and a half after the entry into force of anti-dumping measures by the European Union to curb the influx of biodiesel from the United States, the Spanish market is again basically saturated with unfair imports, now mostly from Argentina". The same association also provided the figure that 75% of the 46 plants in Spain have virtually stopped production, with an average operating capacity of 10% of total output, i.e. 421,000 tonnes annually out of a possible total of 4210,000 tonnes.
Portugal and France should be copied
According to information from APPA Biocarburantes, the major inflow of biodiesel from Argentina is the result of the system of differentiated export taxes (TDE) introduced by the Argentine government. This system imposed a levy on exports of soybean oil of 32%, while biodiesel produced from this raw material is only taxed at a rate of 18%. "This leads to an obvious distortion of trade" says the association. "The situation is exacerbated by the unjustified preferential treatment that the EU gives Argentine biodiesel, which is exempt from paying the 6.5% duty generally applicable to any biodiesel flowing into the EU."
"It is therefore impossible to compete," complains Roderic Miralles, president of APPA Biocombustibles, "when it isn't US dumping, it's Argentina's trade distortions. Spain cannot remain a haven for biodiesel exporters when we have invested in dozens of plants". To curb this damage, it has called on the Government to introduce "the internal structural measures required to prevent unfair competition from imported biodiesel, and ensure the survival of the national biofuels industry, as they have done in countries such as France and Portugal".
One third of exports from Argentina arrive in Spain. The rest is mainly shipped to Holland and Italy. However, there are others who suffer less from this problem, such as France and Portugal, which have adopted the so-called "quota system". APPA Biocarburantes explains that this is a mechanism by which the State allocates certain benefits, usually fiscal, to EU-based enterprises to produce biofuels through a tender process published in the Official Journal of the European Union. "Hence, producers from outside the EU are unable to penetrate markets such as France and Portugal, within a system approved by the European Commission which ensures its legality," concludes APPA Biocarburantes.
5.2% of the mix this year
The industry is even more concerned because the effect of Argentine biodiesel is joined by the delay in the Ministry of Industry, Tourism and Trade approving an amendment to Royal Decree 61/2006 on the technical specifications of fuels, which increases the proportion of bioethanol (10%) and biodiesel (to 7%) in petrol and diesel, respectively, without the need for labelling. "This delay makes it physically impossible to fulfil the overall obligation of 5.83% of transport fuels comprising biofuels set for 2010, which will have a knock-on effect on the environment and socioeconomics," warns APPA Biocarburantes.
As previously forecast by Spain's National Energy Commission, it is likely that percentage of biofuels in the mix will not exceed 5.2%. APPA Biocarburantes considers that the two specific obligations for biodiesel and bioethanol set for 2010 (3.9%) will, however, not be affected by this legislative wrangling, as the targets can easily be achieved with the technical specifications currently in force.
For additional information:
Spanish Association of Renewable Energy Producers
