The European Renewable Ethanol Association said Tuesday it continues to investigate the imports of E90 from the US into the EU, but it "hasn't gotten to the bottom of it yet," ePURE president Rob Vierhout told Platts in a telephone interview.
E90 is a mixture of 10% gasoline and 90% ethanol which can be used as a surrogate for ethanol in the gasoline blending process.
At present, the influx of E90 is beneficial to end-consumers as the blend trades at a lower price than pure ethanol. It also incurs a significantly lower import duty into the EU of 6.5%, while ethanol is subject to a levy of either Eur102/cubic meter or Eur192/cu m ($0.53 or $1.00/gal).
In addition, the export of great amounts of E90 to Europe benefits from a tax credit in the US of $0.45 for every gallon of ethanol blended into gasoline. The credit was due to expire in December 2010, but was extended by the US Congress for another year.
Vierhout said ePURE is still working with the EU authorities to investigate whether E90 imports could be consider unfair competition. "We are making progress," he added, noting that a resolution on the issue would depend on measures taken by the European Commission.
Meanwhile, the number of European operators trading E90 has increased considerably compared with last year, sources said. "There are many more players now doing E90," one trader told Platts.
Still, many companies are hesitant to take positions on E90 due to a debate on whether bringing the product to the European market constitutes a breach of ethical conduct.
"Doing business with E90 means walking on borderline of ethics," one trader said.
"It's money from the taxpayer in the US being used to subsidize exports to the EU," a second source said.
"We don't want to get involved with it, we don't want our name on the cover of the Financial Times if something happens. This would be a pretty bad story," a third source told Platts Tuesday.
Vierhout said E90 looks particularly attractive now as prices for European ethanol are close to all time highs, making the imported product more competitive. "It's all about price, but that could change any time soon if corn prices keep going up in the US, forcing producers to cut back output," he said.
Vierhout also told Platts a resolution on E90 could be expected within 2011. "It should be resolved before the end of the year," he said.
Market participants have recently compared the case of E90 imports to B99 biodiesel, which had anti-dumping duties imposed by the European Commission in 2009. B99 consists of 99% biodiesel and 1% gasoil.
B99 biodiesel gained a $1/gal tax incentive in the US and therefore was considered unfair competition to EU products.
