Europe’s biofuels sector is sounding the alarm over Chinese imports

Good morning and welcome back to Energy Source, coming to you from London and Brussels.

First, I want to direct you to Amanda Chu’s excellent investigation into the delays facing some of the largest US manufacturing investments announced in the first year of Joe Biden’s flagship industrial and climate policies.

The US President’s Inflation Relief Act and the Chips and Science Act provided more than $400 billion in tax credits, loans and grants to jump-start the development of a clean technology and semiconductor supply chain in the US. It spurred a flurry of investment, but of the 114 big projects tracked by the FT, each worth more than $100 million, a total of $84 billion – or 40% – were delayed between two months and several years , or suspended indefinitely.

Among the largest pending projects are Enel’s $1 billion solar panel plant in Oklahoma, LG Energy Solution’s $2.3 billion battery storage facility in Arizona, and the 1.3 billion lithium refinery billion dollars of Albemarle in South Carolina.

Amanda and others conducted more than 100 interviews with companies and state and local authorities to determine the status of projects. If you missed the story yesterday, it’s well worth your time.

Companies blamed deteriorating market conditions, slowing demand and a lack of policy certainty in a high-stakes election year. In addition, some have cited overproduction of certain products in China, which is also the subject of the main report in today’s Energy Source from EU correspondent Alice Hancock.

Thanks for reading – tome

China’s biofuel imports are causing concern in Europe

European energy companies are being undercut by cheap Chinese imports, causing major difficulties in the industry and leading to plant shutdowns.

Sound like the solar industry? It is not: this time Europe’s biofuels sector has sounded the alarm.

Biofuels are liquid fuels that are made from easily renewable sources such as used cooking oil, waste or even algae. They generally burn cleaner than fossil fuels. But as substitutes, there are still few.

Despite the potential demand, energy companies have shut down factories and laid off workers in the past two months. Chevron, which furloughed workers at a German biofuel plant in July, said the problem was that imports of allegedly fraudulent biofuels made with uncertified materials and dumped Chinese biodiesel were “flooding the market”.

At the same time, Shell suspended construction of a major biofuel plant in Rotterdam. And Argent Energy said in March it planned to cease production at its biodiesel plant in Scotland.

In Germany, one of Europe’s biggest biofuel markets, prices have halved over the past year, according to the European Biodiesel Committee.

“The Chinese biodiesel industry has developed in recent years to almost exclusively target the EU market,” EBB wrote in a letter to the European Commission, requesting urgent anti-dumping measures.

“The EU receives more than 90% of China’s total biodiesel exports,” the trade body added, saying “the EU must act before it is too late.”

The commission finally acted last month, announcing a set of tariffs on Chinese biofuel imports ranging from 12 percent to 36 percent. The charges take effect provisionally on Friday. Member States must approve them to make them permanent.

However, Brussels has exempted sustainable aviation fuels from the measures, in part because SAFs are seen as a critical way to decarbonise aircraft, but also because they currently make up a small part of China’s imports.

The UK announced its own anti-dumping probe in June and is considering including SAFs.

Cian Delaney, a biofuels campaigner at Transport & Environment, warned that omitting SAFs could open the door to tax avoidance: “(The EU) has excluded SAFs, so that means there will be diversion and probably more SAFs ( originating from China) than they were. .”

The EBB echoed this, saying it was “deeply concerned by the EU’s unexpected exclusion of dumped Chinese sustainable jet fuel”. Chinese SAF producers plan to increase production in response to the exemption, Argus Media reported.

Another major problem, Delaney added, was fraudulent imports of biofuels, which could increase as airlines and other large energy-consuming industries rushed to meet targets for more sustainable fuels.

“With the current use of used cooking oil imports and the increasing demand for SAF mandates, there will be a massive crunch to purchase these products and limited availability,” he said.

T&E warned that a significant proportion of imported biofuels could be falsely labeled to hide palm oil-based fuels – a feedstock the EU wants to avoid as it is a major contributor to deforestation.

Germany, the Netherlands and France asked the commission to impose tougher controls on biofuel importers in June to prevent circumvention of the bloc’s higher standards. But no action has been taken yet.

And for some good news in Europe. . .

Temperatures have reached sweltering highs in Brussels, but there is some good news on the green energy front.

Wind and solar power overtook fossil fuel generation in the EU for the first time in the first six months of 2024, despite rising electricity demand.

The record showed the two sources make up 30 percent of the EU’s electricity mix, according to energy think tank Ember, demonstrating a measure of success in the bloc’s efforts to overhaul its energy system away from fossil fuels.

Fossil fuels accounted for 27 percent of power generation in the first half of the year, down 17 percent year-on-year, driven by a dramatic drop in coal consumption, which fell by nearly a quarter. Greenhouse gas emissions were 31% lower than in the first half of 2022, which Ember described as an “unprecedented” drop.

Analysts had previously attributed the decline in fossil fuel consumption to the destruction of overall demand in the EU, as industries shut down factories or production lines in the wake of record energy prices, driven by Russia cutting off gas supplies to the bloc in 2022.

But Ember said for the first time the growth of wind and solar power was “the biggest driver of fossil fuel decline”.

“It’s not just a lucky turn of events with a milder winter and good conditions,” said Sarah Brown, program director for Europe at Ember. “We showed that the main factor is due to structural changes and added (renewable) capacity.” (Alice Hancock)

Power points

Energy Source is written and edited by Jamie Smyth, Myles McCormick, Amanda Chu, Tom Wilson and Malcolm Moore, with support from the FT’s global reporting team. It reaches us at [email protected] and follow us on X at @FTEnergy. Keep up to date with previous editions of the newsletter Here.