Local biodiesel fuel producers have welcomed the Spanish government’s decision to lift restrictions on biodiesel imports from any country outside the European Union (EU), saying the move will allow Indonesian producers to increase sales of their products to the country.
Spain, one of the biggest consumers of biodiesel within the 22-member bloc, recently changed a ministerial order issued in April last year by its Ministry of Industry, Energy and Tourism that regulated the allocation of biodiesel production quotas from EU countries.
The regulation effectively put restrictions on any third country selling their biodiesel to Spain and instead, encouraged local production and higher imports of raw materials.
Togar Sitanggang, an activist with the Biofuel Producers Association (Aprobi), said on Sunday that the amendment of the rule would give local biodiesel producers wider opportunities to export their products to Spain.
“Exports of biodiesel to Spain have dropped significantly due to the quota system imposed by Spain in the past year,” he said, adding that Indonesia’s biodiesel exports to Spain fell to below 100,000 tons after the restriction was imposed.
“As the rule has been changed, it will give a chance for our exports to rebound to the level before the rule was implemented,” Togar further said.
Spain’s move is a response to a complaint lodged by Argentina with the World Trade Organization (WTO) in June last year, protesting the new law that prohibited sourcing biodiesel from overseas, particularly key suppliers like Argentina and Indonesia. Argentina said that with the new rule, Spain violated the WTO rules and would cause it a loss in export earnings of around US$1 billion per year.
Argentina is the top supplier of biodiesel to Spain, delivering 695,000 tons of the fuel in 2011, or 60 percent of Spain’s total imports of 1.21 million tons during the year.
Indonesia ranked second with 325,000 tons of the fuel to Spain, accounting for 25 percent of overall imports. Imports represent more than 70 percent of Spain’s biodiesel consumption.
As the amendment of the rule was put in place, Indonesian biodiesel producers could now export bio-fuel to Spain without hurdles, the Trade Ministry’s trade defense director Ernawati said.
However, the government was still cautious over dumping and subsidy allegations from the European Union, she added.
The government would return questionnaires sent by the European Commission as part of the procedures for subsidy investigation on Jan. 9, Ernawati said.
“We are also expecting the verification of a dumping investigation that will take place in mid-January,” she said in a text message.
The cases started in August last year when the European Biodiesel Board representing 75 producers and almost 80 percent of European biofuel output proposed a formal complaint to the European Commission, saying that the surge in imports from Indonesia and Argentina had already led to several bankruptcies, forced the European firms to sell their output at a price below production costs and slashed production.
Imports from both countries leaped markedly from very low levels in 2008 to around 2.5 million tons in 2011, covering more than 90 percent of the bloc’s imports, according to the biodiesel board and EU statistics agency Eurostat.
Referring to market sources, the board also said that imported biodiesel from Indonesia and Argentina had been sold for between $60 and $110 per ton lower than biodiesel produced in the EU.
Following the complaint, dozens of local firms working in the local biodiesel industry, including producers, retailers and exporters, have responded to questionnaires proposed by the commission in September last year.