EU is urged to take action as a biofuel trading scam is exposed

A biofuel trading scam has been exposed that exploits US agricultural subsidies and weakens any fight against global warming.

It is believed that up to 10% of all biofuel exports from the US to Europe are believed to be linked with the scheme that results in agricultural trading companies ending up with large profits.

The scheme has been christened “splash and dash” on account of the fact that it involves shipping biodiesel from Europe to the US where a “dash” of fuel is added. This then allows for traders to claim 11p a litre of US subsidy for the entire cargo. The fuel is then returned to Europe where it is sold below domestic prices, thus undercutting the biofuel industry in Europe.

Whilst not illegal, the trade seems to break the point of producing green fuel as it is transported unnecessarily back and forth across the Atlantic Ocean. This is particularly so as campaigners are currently stating concern over emissions produced from global shipping.

The European Biodiesel Board, the producer’s body, exposed the trade as a part of an investigation into why British, Spanish and German producers are in financial trouble whilst biodiesel prices are staying high.

As a result the board is set to call for retaliatory action against the US over subsidies for its leading biofuel.

It is currently estimated that of 1m tonnes of biodiesel exported from the US to Europe, about 10% is a part of the “splash and dash” trade.

Biofuels, plant-based oils from crops including corn and soy, are expensive to produce yet have recently become relatively cheaper as the price of crude oil has risen to over $100 a barrel.

The British Representative on the board and director of a Scottish biofuel company, Doug Ward, has stated that a full report on the impact of US fuels will be completed within the next few days.

The report is anticipated to recommend that the European commission intiate an anti-dumping action against Washington for the subsidy. Ward has stated that although no one is doing anything illegal it is an environmental “disaster”. He also stated that we could have also sold the product for cheaper if it had been shipped over to the US and bought back again as the cheap cost of shipping makes the trade profitable for all involved.

A biofuel consultant at the company FiveBarGate, Ian Waller visited the southern states of US last October and spoke with firms about splash and dash. He has claimed that US producers concerned about the trade also call it the U-boat trade on account of the fact that boats arrive, then almost immediately return.

Britain and other European countries have complained that their industries are being destroyed and therefore put pressure on the European Biodiesel Board to act against subsidised US exports of biofuel. Concern lies with the idea that US producers are saturating the market with subsidised fuel whilst facilities are standing empty in Germany.

A Teesside-based biofuel business D1 Oils is considering halving its workforce as a result of problems caused by US imports.

Britain is set to introduce demands stating that 2.5% of all petrol and diesel is made up of non-carbon fuels within the next fortnight. “Splash and dash” could potentially be eradicated as companies will be required to provide information regarding the sourcing of their biodiesel.