Europe opens investigation into biodiesel imports from Indonesia transshipped via China, UK

The European Commission officially opened an anticircumvention investigation Aug. 17 to address suspected evasion of EU countervailing duties on Indonesian biodiesel imports via China and via the U.K., which was triggered by a July request from the European Biodiesel Board.

Since the imposition of countervailing duties on biodiesel imports from Indonesia in December 2019, the EBB said it has had “strong indications” that subsidized Indonesian palm oil-based biodiesel continues to enter the EU market via third countries*.

“Growing volumes of Indonesian palm oil-based biodiesel appear to be exported to China, and then reexported toward Europe,” the organization stated. “The Chinese Island of Hainan, located in the South-China Sea, makes an ideal green-fuel hot spot for evaders. In 2022, Hainan, which has no sizeable biodiesel capacity, surprisingly accounted for nearly a third of the 2.3 million tons (690 million gallons) of Chinese biodiesel declared for exports to Europe.”

The EBB said it also has evidence that a share of this Chinese export volume of biodiesel from Hainan has further acquired U.K. origin before reaching its final EU destination.

“We believe such a pattern of trade aims to further elude the 6.5 percent customs duty applicable to biodiesel imports from nonpreferential origins and consequently to maximize the benefit resulting from circumvention practices,” EBB stated. “U.K. biodiesel imports into the EU in 2021 and 2022 amounted to twice the U.K. biodiesel capacity, which deserves in-depth investigation.”

The investigation will shine a light on operators involved directly or indirectly in any illegal circumvention practices, which, if and when proven, would lead to heavy financial penalties for operators that will be retroactively applied from the launch of this investigation, according to EBB.

“The EBB and the European biodiesel industry is very satisfied with the decision and fast action taken by the European Commission to defend us against unfair and illegal trade practices,” said Dickon Posnett, president of EBB. “We cannot, and will not, allow fraudulent trading, such as circumvention, to go unchallenged. The EU industry welcomes and is ready for global competition in its drive to decarbonize transport in a fair and sustainable EU biodiesel market, but a series of fraudulent and unfair practices have severely disrupted the entire EU biodiesel market, causing us huge injury, which must be repaired.”

Posnett added that this is not the only action the organization is taking with the industry to address other forms of fraudulent practices.

“Our association remains committed and is working with the EU Anti-Fraud Office (OLAF) to address fraudulent biodiesel imports into the EU from China, which would also entail heavy financial penalties if fraudulent practices are proven,” he said.

The EBB said it remains fully committed to “fighting unfair trade and has been actively tracking circumvention attempts, new trade patterns affecting the efficacy of the duties, and any suspicious imports.”

The EBB estimates that operators engaged in circumvention practices could have eluded the payment of import duties totaling around 221 million euros (nearly $240 million) in 2022, which are a direct loss to the EU budget.

“Operators should be aware that any attempt to circumvent the existing EU duties, or to bypass our rules and systems, can be investigated and remedied in the same way, in accordance with WTO regulations and with retractive financial implications for the companies involved,” Posnett warned.

*Editor’s Note: In related news, the International Sustainability and Carbon Certification System GmbH announced in April it had opened an investigation into potentially fraudulent trade flows of biodiesel labeled as “advanced” supposedly made from waste materials entering Europe from China “and produced from waste and residue materials that are at least partly supplied from Indonesia and Malaysia.” In addition, the World Trade Organization announced Aug. 15 that Indonesia had initiated a dispute complaint regarding EU duties on biodiesel imports from that country.