European Govt is always quick to say that every major US competitor competes unfairly (Microsoft, biofuels, etc)...what about the government subsidised industries from the EU? Airbus anyone? Isn't there also a state owned automotive manufacturer over there as well?

On the other hand why does U.S. biodiesel have to be shipped to Europe? A major purpose of the whole biofuel scenario is to wean us off foreign reliance. Let Europe make their own biodiesel and lets get even 20 percent of the U.S. using ours. Match the Euro subsidies with more U.S. credits and keep our biodiesel at home.

Sulleny:

You are completly correct. US biofuel export should not be allowed until a surplus situation arrives or no more oil is imported.
High profits and greed can turn a good idea into a nightmare. With world free trade is it sometime difficult to stop such non-sense.

The same should apply for EU biofuels.

If they export the biofuel and reap greater profits due to such:
They have the opportunity for more cash flow to reinvest in R&D to improve the process (or move to more sustainable feedstock than food crops). This could bring the price of production down more to allow expanded production which could have a bigger impact on world wide fuel supplies to mitigate the increase in oil prices.

But hey, I'm of the opinion that food to fuel is a bad idea and if prices of oil are kept in check (by any amount) it slows progress towards alternatives [which may or may not be more environmentally sound but more fully secure our energy interests].

I read last week in a German newspaper that the US imports are 99% Brazilian biodiesel with 1% diesel added in the U.S. and rexported. One such Biodiesel plant in the UK blamed these imports for their demise, they closed this month. The comments above I think are correct, why is the US exporting to Europe anyway? They should be blending at home. This tells me that the EU accusation is probably true.

Mark,

Read it again. They are charging that the US is selling subsidized B99 to the EU...if we buy it from Brazil and then ship it to the EU what would we gain by subsidizing the Brazillian farmers/refiners? If the German paper's report is true than the US is acting as a middle man to take some profits and perhaps Germany should go straight to Brazil for their B99 if they don't like it!

I don't have the article anymore but I recall that yes the U.S. was simply acting as a middle man to extract a profit margin. On the web though I did find a similar article from a UK paper, I was wrong on the source for the biodiesel:

http://www.greentechmedia.com/articles/european-biodiesel-blames-us-837.html

to quote in part:

They (the EU) also have to contend with a $1 per gallon tax credit that the U.S. gives to American biodiesel producers.

The credit has distorted the real price of the fuel and has led to a practice called “splash and dash,” they claim.

A European Biodiesel Board investigation earlier this month uncovered the practice, in which European biodiesel is allegedly shipped to the U.S. and splash blended with a small amount of U.S. fuel, allowing traders to tap into the U.S. subsidy before the fuel is shipped back to Europe for sale (also see this Green Light post). All the shipping results in needless greenhouse-gas emissions to get a subsidy intended to be a boon for the environment

"When subsidies go bad"

Mark

Not to mention the cost of the diesel to ship the diesel back and forth and...

The $buck a gallon at this stage of development is a necessary incentive to get new business going. It seems unfair to claim "subsidy" when there is barely an industry in biodiesel yet.

It seems odd that they can ship it there but not seem to get it to the stations here. Diesel is well over $4 per gallon here and I see no mention of any biodiesel.

Subsidies are the game here because the special interests can slip legislation in, to make a buck without really doing anything. And usually, its bad for someone. Take ethanol for example. The Brazilians can make it 8 times more efficiently from sugar cane, so special interests here got tariff's up to keep Brazilian ethanol out, so that US can make it out of very inefficient corn, drive the price of corn, meat, all derivatives of these up. Consumers suffer. Its not really a free market, its a manipulated market, and a game that ends up in the futures market, manipulated by the hedge funds, so that they can make exorbitant profits. The top 25 hedge fund managers made more money than all of the fortune 500 CEOs combined. Some hedge managers made over a billion dollars annual compensation. Everybody else suffers, but the politicians and the hedge funds that own them. Gram, one of the legislation drafters, now works for them openly.

Guess the Europeans have more honest government, they are just slow, takes them longer to catch on. Problem is they have hedge funds over there too. Nobody knows the bets laid by hedge funds, no government oversight or regulation. Its a freeforall. But Bear Stearns learned the hard way, the 30:1 leverage makes it a too edged sword and lethal when you loose.

This partially explains why US biodiesel has gone from $3.50/gal to over $5.50 in the past few months. And we are exporting high-cetane petrodiesel to EU as well. More profits for producers, higher prices for consumers...is this what "free-marketeers" cheer for?
So much for priorities like getting clean diesel engines and a robust alternative fuel industry off the ground.

Not only do the 25 hedge fund managers take more than the 500 CEOs, but they pay less taxes on it. Hedge fund management takings are taxed as capital gains at 15%. The CEOs salary is taxed as income at more than twice that.

I'm in the UK. I appreciate the issues over 'protection' oriented fuel standards - however if US producers do wish to export to the EU they must be able to meet these - otherwise there wouldn't have been a 10 fold increase in exports from 2006 to 2007.

At present the USA is effectively subsidising biodiesel and allowing US producers to gain additional profit by selling the subsidised fuel in the EU. US producers argue this should be allowed to continue - but they are the ones profiting. The US tax payer is losing out as they the ones paying the subsidy. So if you pay tax in the USA then you are subsidising biofuel sales to the EU.

If this biofuel was produced from US produced oil then that would be bad enough - however it is quite possible for the vegetable oil to come from Brazil or even Europe, get a subsidy in the USA and then get shipped on. The US economy thus gains precious little, we in the EU get cheaper biodiesel, the US shipper / blender makes a healthy profit at the US taxpayer's expense.

The irony is that this only benefits the profiteering company - it doesn't benefit the US economy and suppresses biodiesel production in the EU.

As an aside, some interesting economic questions are raised by the fact that in some cases international production chains are managed almost entirely within a single multinational corporation (roughly 40 percent of U.S. merchandise trade is classified as intra-firm) and in others they are built through arm's-length transactions among unrelated firms. But the empirical evidence in both cases suggests that substantial productivity gains can often be achieved through the development of global supply chains.