MARKETS AND FINANCE DEVIOUS “DEFEAT DEVICE” MIGHT BE GOOD FOR BIOFUELS BBiiooeenneerrggyy IInntteerrnnaattiioonnaall NNoo 8822,, 66--22001155 4433 ON SEPTEMBER 15 THE EU regulations 2015/1518 and 2015/1519 were published, extending both anti-dumping and anti-subsidy duties, the so-called “B99” measures, on US biodiesel imports for an additional 5-year period. This ends a 12-month investigation initiated by the European Commission (EC) acting on an expiry review request filed in April 2014 by the European Biodiesel Board (EBB), a trade organisation that represents almost 80 percent of European biodiesel production. US$1 per-gallon issue The original “B99” complaint was first lodged in 2008, resulting in the placement of anti-dumping and anti-subsidy measures for 5 years, starting in July 2009. Duties were then “circumvented” via Canada, which led to the imposition of anticircumvention measures in 2011. Upon the expiration of the original B99 duties in July 2014, the EBB asked for their extension. – The US biodiesel industry has benefitted from favourable taxation policy, at both Federal and State levels, for many years. Ever since the US$1 per-gallon biodiesel tax credit was first implemented a decade ago, it never ceased to play a key role in upscaling US biodiesel production and securing it a significant advantage. Even though it kept expiring several times, the US authorities have established a tradition of reinstating the tax credit in a retroactive manner as part of the so-called ‘tax extenders package’ policy, said Raffaello Garofalo, EBB Secretary General. According to Garofalo the EC decision was very timely since the approval of the most recent tax extenders package made it “crystal clear” that the draft of the bill, extending the US$1-per-gallon biodiesel tax credit through 2016, is progressing well through the US legislative pipeline. The EU also has five-year anti-dumping duties on biodiesel imports from Argentina and Indonesia imposed in November 2013. EU protectionism? Across the Atlantic the National Biodiesel Board (NBB), a trade organisation representing the US biodiesel industry challenged the duties throughout the expiry review emphasising that European producers are able to sell biodiesel in both Europe and the US without duties or limitation and can freely participate in US policies such as the Renewable Fuel Standard (RFS) and, before it had expired, the US biodiesel tax incentive. – The EC has decided to continue a policy that is clearly aimed at giving European biodiesel producers an edge over their competition and a lock on the European market. It is disappointing, and we will continue evaluating our options for fighting these protectionist duties, said Anne Steckel, NBB Vice President of Federal Affairs in a statement. According to Steckel, citing the US$1-per-gallon biodiesel tax incentive as a reason ignores the fact that the biodiesel tax incentive is currently expired and that European biodiesel was eligible to receive the tax credit so long as it was blended in the US. Statistics from 2009–2014 imports of “biomassbased” diesel fuel from EU member states by the US Energy Information Administration (EIA) show steady imports of under 160 000 barrels per annum during the last four years, except for 2013 when imports jumped ten-fold. – This decision highlights why the US biodiesel tax incentive should be reformed and converted into a domestic production credit. When the incentive is in effect under the current structure, European biodiesel can be shipped to the US only to be rewarded with a US$1- per-gallon incentive, while at the same time US biodiesel shipped to the EU is slapped with punitive duties, said Steckel. At the end of September, California Air Resources Board (CARB) finalised California’s revised Low Carbon Fuels Standard affirming that biodiesel reduces greenhouse gas (GHG) emissions by 50 to 81 percent versus petroleum making it the best performing liquid fuel. Defeat by own device It was the revelation on 18 September by CARB and the US Environmental Protection Agency (EPA) that Volkswagen Group (VW) had intentionally installed a “defeat device” on over 480 000 diesel vehicles sold between 2009 and 2015 in the US that made global headlines. The “device” consists of an embedded engine software programme designed to detect if the vehicle is being driven under test conditions, and, if so, adjust all engine operating parameters to provide lowest possible emission results. Under normal driving conditions the engine performs differently with far more emissions as a result. It was independent on-road testing of the EPA simulated route tests by the International Council on Clean Transportation (ICCT) that found real world results were far worse than expected compared to EPA simulated route tests on VW vehicles but not on other tested manufacturers. Subsequently VW admitted that a staggering 11 million diesel vehicles globally had such a programme, which means significantly higher actual emissions of diesel-specific pollutants such as NOx and particulate emissions (PM) than originally supposed. This is of particular significance for Europe. Not just because VW is a German-headed corporation, but Europe is a diesel market. In 2014 diesel accounted for 70 percent of the European liquid transport fuel market and 17 EU Member States were found to be in breach of their air quality targets the same year. – A rebalancing of the European transport fuel market in favour of petrol with increased ethanol content is one solution to the problem, commented the European Renewable Ethanol Association (ePURE), an organisation that represents 90 percent of fuel ethanol production capacity in Europe. Call for “well-to-wheel” The good thing is that the VW episode has brought much-needed attention to the broader issue of realworld emissions, not just for diesel. It highlights the difficulty in ensuring that the policy objectives of reducing air pollutants and GHG emissions from vehicles are not only met during certification/typeapproval testing but throughout the full vehicle life across a wide range of operating conditions. Several governments around the world have since launched investigations related to such “defeat devices”, and policymakers are looking for ways to address the challenge of controlling real-world emissions. However as pointed out by ePURE such tests should “assess the well-to-wheel emissions of the transport fuels used in the engines to ensure that the full life-cycle emissions of fuels are fully taken into account when assessing reallife vehicle emissions.” Text & photo: Alan Sherrard BI82/5031/AS September proved eventful for diesel. The EU extended anti-dumping and anti-subsidy duties on US biodiesel imports whereas California, the strictest regulatory board in the US, affirmed biodiesel as the lowest-carbon liquid fuel. Yet it was auto-maker Volksvagen Group (VW) that put diesel onto global headlines. For VW it was for all the wrong reasons but for biofuel stakeholders, on both sides of the Atlantic, it might be a good thing. – The so-called double counting incentives in the old RED Directive 2009/28, continued in the new article 3 advanced biofuel amendment, Directive 2015/1513, have lead to cases of fraud. The lack of a single EU-wide certification and traceability tool has enabled virgin-oil based biodiesel to be passed off as UCO-based as well as multi-state registration of a single unit of product. The Register of Biofuels Origination (RBO) project seeks to address this, told Chiara Girardi, Project and Communication Manager, European Biodiesel Board (EBB) during the recently held Advanced Biofuels conference in Stockholm-Arlanda, Sweden.
Bioenergy no 6 October 2015
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