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Europe’s Impending Biodiesel Trade War?

| Wednesday August 5th, 2009 | 0 Comments

EUEurope’s “Renewable Energy Directive,” which the European Commission adopted in June, appears to be creating waves. The Directive is intended to encourage increased production of renewable energy, including biodiesel fuels, by the European Union, thereby improving Europe’s economy while protecting the environment. However, while these goals are not mutually exclusive in theory, analysts believe the European biofuel producers’ response to the Directive may trigger a “global trade war,” the Wall Street Journal reports.

Protectionist attitudes seem to be at the core of the issue. Some European biofuel producers, fearing competition from abroad, are seeking restrictions on foreign biofuels. Already, they successfully pressured Brussels into restricting foreign imports of biodiesel. The Commission also seeks to impose hefty production standards on Asian and Western Hemisphere (but not European) fuels, while one coalition seeks to punish American biofuel producers specifically for their impact on the developing world and “dumping” of subsidized biofuels onto the international market. European biodiesel producers have also targeted Asian imports, which they claim aren’t environmentally friendly enough.

Given the potential disaster these measures could have on international trade and relations, it’s no wonder trade analysts are buzzing. While Europe’s need to create a viable domestic biofuel market is real and pressing, so are its consumers’ needs for cheaper, cleaner energy in a struggling economy. Some analysts believe Europe should rely on solar and wind power, while others believe these wouldn’t produce enough viable energy. Analysts also emphasize that Europe’s biofuel producers aren’t exactly struggling: 78 percent of biofuels used in the EU are from the EU’s own biofuel producers, while Europe produces 65 percent of the world’s biodiesel fuels.

The Wall Street Journal writer concludes his report by calling on the EU to defend free-trade of biodiesel fuels. Would this approach work?


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