Spain's largest renewable lobby group has urged the country's government to ignore political pressure from Argentina and reform the country's biodiesel industry to allow guaranteed quotas of locally produced fuel.
Biofuel imported from Argentina benefits from preferential tariffs that encourage its export and give it an unfair advantage over local producers, 85% of whose production has been halted, Asociacion de Productores de Energias Renovables, or APPA, said in a statement on its web site dated Tuesday.
These measures we ask for are exactly the same as those implemented by our neighboring countries against unfair competition from Argentine biodiesel, Alfonso Ausin, president of APPA's biofuel department said.
According to the group, Spain imported 825,000 mt of pure biodiesel in 2010, equivalent to 61% of national demand. Three-quarters of the imports came from Argentina and Indonesia with the combined percentage rising to 90% so far this year.
The comparative advantage for Argentine and Indonesian biodiesel arises from cheaper taxation on biofuel when compared to the feedstock, APPA said. For example, Argentina imposes a 32% export tax on soybeans but only a 20% tax on biodiesel produced from soybeans. The advantage can be as much as the equivalent of Eur100/mt ($143/mt), APPA said.
"We're not asking for protectionism, but just a halt to unfair competition in the Spanish market. Other countries understood this years ago," Ausin said.
Other European countries such as France, Belgium, Portugal Greece and Italy have already approved internal laws that guarantee a market share for local producers.
APPA said 85% of Spain's biodiesel production capacity has been halted, while a number of producers are on the verge of bankruptcy and 3,000 jobs in the sector have already been lost. MINISTERIAL ORDER
In October last year, the country's Industry Ministry proposed a ministerial order that would assign a quota of up to 5 million mt of biodiesel to European producers for a two-year period, which could be extended for a further two if required. The country has the capacity to produce 4.2 million mt/year of biodiese, according to Platts data. APPA estimates Spain will consume 1.6 million mt of biodiesel this year.
In March this year, the Spanish government raised the proportion of biodiesel used in common diesel to a minimum of 7% from 5.8%, in an attempt to reduce dependence on oil as crude prices soared.
Spain is heavily dependent on oil imports for road transport as it has very little oil of its own.
APPA, which represents 36 companies that produce bioethanol, biodiesel and biogas, called Argentine political lobbying 'intolerable,' adding that all that was missing was the Industry Minister's signature to carry through the new legislation.
According to Argentina's Biofuel Chamber, Carbio, Spain is the destination for 23% of its biofuel exports and the business was worth about $500 million in 2010.
