A few days ago, the European Union announced that it will impose provisional duties on some Chinese biodiesel (see reuters).

But will EU taxes on price an effective solution to solve these ‘unfairly low prices’??

First, let’s define “advanced” biofuel: it is mainly the use of non-food crops, biomass and waste into its production process. It has lower GHG emission but higher production cost. Now let’s dig into some numbers:

– See above the chart showing biofuel production by region, differentiating conventional/advanced feedstocks, taken from OECD-FAO agriculture outlook 2024-2033 (here). EU biofuel production is ~ twice as large as China. In 2033, China’s advanced biofuel will probably remain at ~25% of their biofuel total production when European Union’s advanced biofuel to move from ~31% to ~37% of their total biofuel production.
– All the impacted chinese companies paying duties seems to produce advanced biodiesel, though it is not fully acknowledged if all exports are of advanced type. The ~1.8 M tons of exported biodiesel are ~68 PJ, to be compared to ~82 PJ of advanced biofuel total production in China. So the export represents a ~83% of total advanced biofuel production!
– Some details on the RED directive (RED iii in 2023) in Europe, promoting the use of advanced biofuel, with target from 3.5% to 5.5% by 2030 (here), whereas regulation in China stays imprecise, with “volatile policies in recent years” (there).

My takeaways:

EU biofuel production is twice China production, with half of the population. EU has the ambition to increase (higher cost) advanced biofuels production up to ~37% of total production in 2033. China is producing less advanced biofuel, and exporting almost all of it, i.e. a market player behavior.

EU sees it as a correct trade price question when I see it as a regulation one: lack of regulation on advanced biodiesel in China. I think setting a duty on trade price is arguable and even counterproductive, it creates discontents and locks into an endless discussion on the duty level.

If I were the EU, I think I would simply ban the import of advanced biodiesel from any company without significant volume sold to be consumed within the country producer. Not clear how to set the rule to ensure consistent development there in line with EU ambitions. Is that easily feasible? Not sure! I believe it would stimulate constructive dialogue and encourages the implementation of a global regulation. Reliable certification would be certainly a part of the debate.


(note that I may have been convinced by Jean-Marc Jancovici arguments for promoting “communist” norm on quantity versus “liberal” tax on price that he explained in a recent video on carbon regulation in agri)