Game-changer in US Biofuel Sector

Of the 2016 imports, 48.5% (444 million gallons) came from Argentina, 64 million gallons more than was cumulatively imported over the previous three years. Imports from Indonesia were 102 million gallons, nearly double the 52.4 million gallons in 2015. This is assumed to be biodiesel made of palm oil, which generates D6 Renewable Identification Numbers (RINs). While these imports would compete with ethanol on a compliance basis, they compete with domestic biodiesel that generate D4 RINs in the physical fuel market.

On March 23, the National Biodiesel Board (NBB) filed an anti-dumping and countervailing duty petition with the US Department of Commerce and the US International Trade Commission (USITC) against both Argentina and Indonesia. It alleges dumping margins of 23.3% for Argentina and 34% for Indonesia that result from selling biodiesel at below the cost of production.

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Source: WPI

The petition claims that Argentina subsidises feedstock and that Indonesia provides direct grants to biodiesel producers. Both countries impose an export tax on feedstock, which is applied to soybean in Argentina and palm oil in Indonesia.

The USITC must make a preliminary decision within 45 days (May 8) on whether to move the case forward. The law is stacked in favour of the petitioners (in this case, the US) as, in the early proceedings, the burden of proof needed to move a case forward is low. Accordingly, the USITC probably will vote to proceed, especially if the NBB has good, experienced lawyers who know the ITC system; and there is no reason to think it did not.

The hearing in the investigation’s final phase is likely to occur a year from now (Box 2). It’s significantly more likely for respondents (Argentina and Indonesia) to prevail in the final phase than in the preliminary stages. But if the facts show injury to the US industry, the law still would require the commissioners to vote in favour of imposing duties. The ITC will receive the staff report on May 1 and will likely vote on May 5.

Dave Juday
Ag Review, April 2017
World Perspectives, Inc

This is a slightly edited version of the article.


 

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