Peter Mandelson makes some slippery remarks about US biofuel boondoggle - fist fight in sight ?

In September Lord Patel detailed how a subsidy for US farmers was actually resulting im heavily subsidised biofuels reaching Europe and destroying the domestic EU market -Boondoggling biodiesel - How Uncle Sam subsidises the EU motorist

A shipload of biodiesel derived 100% from palm oil arrives at a Texan or Georgia port, Houston or Savannah - ho;ding say 9 million gallons . At the dock they add , 9,000 gallons (0.1% of the total) of traditional diesel (1 US gallon =3.8litres). This is the "splash and dash" and it is transformed into B99 biofuel blend. Hey presto! The entire load is eligible for the Federal US blenders tax credit.

The US importer of the load applies to the Internal Revenue Service for the credit – a dollar for each of the 9 million biodiesel gallons (approx Euros 20 cents per litre approx 11p) and then the ship hightails it for Rotterdam.

Result is - happy motorists, US taxpayers out millions of tax dollars and the EU biofuel manufacturers stuffed.

The EU complained officially in March 2007 and today Peter Mandelson, the European Trade Commissioner(see pic), has said he "may" investigate....er.. real soon now of dumping in the European biofuels market.

The European Biodiesel Board (EBB) claim that the subsidies have had a perverse effect, sending European imports of biodiesel from the United States soaring from about 100,000 tonnes in 2006 to an expected one million tonnes this year. In most cases B99 blends are sold in the European market as “pure biodiesel” with a tasty discount of up to €180 (£129) a tonne andoften lower than the cost of raw materials in Europe.

“We will certainly examine carefully any case put forward by the EBB,” says Mr Mandeson ..which doesn't leave you with the impression that anyone is breaking much sweat over this boondoggle.

Elliott Mannis, CEO of D1 Oils, one of Britain’s biggest biofuel producers, claims the EU industry is operating at only 10% capacity, mothballed refineries and companies facing administration.

“There is just no way that European manufacturers can compete,” . One British company, Biofuels plc, has cited American subsidies as a key reason for delisting from AIM in July, owing Barclays about £90 million and the shareholders losing all their money (all within 2 years). See Saturday, July 14, 2007 Biofuels plc - all that is green is not golden
Biopetrol biodiesel and glycerine production sales / profits soar about Biopetrol Industries the Swiss based biofuel processor.

Just another example of the Laws of Unintended Consequences when lawmakers decide to use the tax system as more than a source of revenue but want to influence commercial behaviour.

Don't expect any action from Mr Mandelson for a very long time.