Production of biodiesel in the EU

With a production growth of 17% in 2009 with respect to 2008, the European Union remains the major producer of biodiesel in the world. In 2009, biodiesel production in the EU reached 10'187 Ml (i.e. 55-60% of the world production). With a production of 2'060 Ml in 2009 (down from 2'650 Ml in 2008) according to the US National Biodiesel Board, the United States come second, ahead of Brazil (1'535 Ml according to biodiesel.gov.br) and Argentina (1'340 Ml according to the Cámara Argentina de Energías Renovables). The production of biodiesel in Asian countries (Thailand, China, Korea, India, Malaysia, Philippines, Indonesia, etc.) in 2009 is estimated at about 2'000 Ml.

Overall, the production of biodiesel worldwide in 2009 is about 18'000 Ml (i.e. +11% with respect to 2008).

The production of biodiesel in the EU and in Switzerland is shown in the figure below. Figures are given in million litres (Ml) and refer to the year 2009.

Table : Production of fuel-biodiesel in the EU-27 and Switzerland in 2009

In a press release of 22 July 2010, the EBB (European Biodiesel Board) provides a complete summary of the biodiesel situation in the EU. The main points are listed below:

The European biodiesel industry consolidates its position at EU and international level despite a lower increase in production growth rates in 2009. With a 10.2 billion litres biodiesel output, 2009 EU biodiesel production saw an increase of 16.6% on the basis of previous year production. Although this stands well below the increase in production of 35% registered in 2008 and in previous years (54% in 2006 and 65% in 2005), it witnesses the strong vitality of the EU biodiesel sector, which even confronted to important difficulties and degraded market conditions was able to maintain its market positions as it already happened in 2007 when the industry growth rate was equally of 16%. This however stands far below what EU biodiesel producers could achieve in a more favorable environment.

In 2009, biodiesel production has been decreasing in number of EU Member States, including Germany, Greece and the UK, but important production expansions have been realised in other countries such as Austria, Belgium, Finland, Italy, Netherlands, Poland and last but not least in Spain, which last year has taken the place of Italy as third largest EU biodiesel producer, behind Germany and France.

Despite this lower production increase, the EU remains the leading biodiesel producing region worldwide. As far as the European biofuels arena is concerned, biodiesel remains by far the main biofuel produced and marketed in Europe. In 2009, biodiesel represented about 75% of biofuels produced in Europe (bioethanol fuel production last year being approximately 3.7 billion litres).

The lower growth rate in EU biodiesel production and the reduced capacity utilisation rate are to be primarily explained by the persistence of unfair trade practices on the worldwide biodiesel market. Since early 2007, the profitability of EU biodiesel producers had been severely affected by heavily subsidized and dumped biodiesel from the US (known as "B99"). US B99 has been sold in the EU with a considerable discount, even at a lower price than the raw material soybean oil. Following an EBB action, robust anti-dumping and countervailing measures have been imposed by the European Commission in March 2009. However, circumvention practices started emerging soon after the imposition of the EU measures, in particular the trans-shipment of US biodiesel via non-EU destinations (mainly Canada) and the production of artificial blends (typically B19) not covered by the EU duties. In the first quarter of 2010, the worrying circumvention trend was found to be confirmed. The European Biodiesel Board remains strongly determined to address any circumvention or fraudulent practice that would undermine the remedial effect of the EU anti-dumping and countervailing duties.

Parallel to the increasing circumvention of the B99 duties, Argentine booming exports to the EU are greatly damaging EU biodiesel producers’ ability to operate in a level playing field. Argentine exports to EU reached 960 million litres in 2009 according to Eurostat and already 290 million litres in the first quarter of 2010. This trend is driven by an artificial mechanism of Differential Export Taxes. The Argentine DETs scheme is distorting trade as it maintains a large differential between an export tax on crude soybean oil of 32% and an export tax on biodiesel of only 20%, therefore incentivising the export of the finished product biodiesel.

The table below shows the evolution of biodiesel production over the past 7 years in the 10 major producing countries in the EU.

Table : Legal aspects of biodiesel production in the EU (situation in 2003-2009)

In spite of a slight production reduction with respect to 2008, Germany remains the major biodiesel producer in the EU with nearly 2.9 billion litres (i.e. 28% of the global production in the EU). Germany is followed by France whose production just exceeded 2.2 billion litres in 2009, Spain (967 Ml) and Italy (830 Ml). Belgium, Poland, the Netherlands, Austria, Portugal and Finland come next, with a production of the order of 250-450 Ml.

The production of biodiesel within the EU has grown significantly over the past ten years, reaching an output of more than 10'200 Ml in 2009, i.e. an average increase of +35% per annum between 1992 and 2009. Production increase was however only 17% between 2008 and 2009. The figures presented here are those of the European Biodiesel Board (EBB).

Table : Evolution of biodiesel production in the EU-27

The European biodiesel production capacity currently reaches some 25 billion litres. The number of existing biodiesel facilities as of July 2010 stands at 245 with a slight decrease compared to 2008 due to the reorganisation of the sector. This strong industrial basis is the result of considerable investments in biodiesel production planned already before 2007 in reliance of the ambitious objectives for biofuels consumption given by EU authorities. Despite this considerable commitment from the EU biodiesel industry, a large part of today installed capacity should be considered as idle.