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Biodiesel producers relying on European marketDES MOINES, Iowa (AP)--Biodiesel producers struggling to stay in business have found a new source of funding: Europe. As production costs soar, plants in Iowa and across the country are shipping more biodiesel to Europe, where they benefit from tax incentives and the relative weakness of the dollar against the euro. "You have to look for every market you can find," said Bill Horan, chairman of Western Iowa Energy LLC, a Wall Lake biodiesel producer that lost $2.6 million last year. The producer is now shipping biodiesel to European buyers through Ames-based Renewable Energy Group, which manages the plant and markets its biodiesel. Western Iowa Energy is one of many that has suffered from the rising price of soybean oil, the traditional feedstock for biodiesel. According to U.S. Department of Agriculture data, the price of soybean oil increased to 45 cents from 28 cents a pound during 2007. Horan said the European market is providing "breathing room" for producers until domestic sales increase. The United States shipped about 300 million gallons of biodiesel to Europe in 2007, a 10-fold increase from the year before, according to the European Commission. U.S. biodiesel production last year was estimated at 450 million gallons. The imported biodiesel represents 15 percent to 20 percent of the European biodiesel market. The boost of U.S. biodiesel has some European producers threatening to file an anti-dumping case against the imported products. They argue it is unfairly subsidized because of a $1-a-gallon U.S. tax credit. The case could result in new duties being imposed on U.S. biodiesel. "What we are witnessing here is U.S. taxpayers effectively subsidizing European motorists to the tune of around $300 million last year," said John Bruton, the European Commission's chief U.S. representative. He said biodiesel trade "is a good thing, but that trade must be fair, not distorted by subsidies." Bruce Babcock, an economist at Iowa State University, said that subsidizing biodiesel for sale to Europe is "kind of bizarre" and contributes to higher soybean oil prices. "It's hurting the American taxpayer," he said. "It's not really helping anything." The soybean oil prices certainly aren't helping Western Iowa Energy. The company can produce 30 million gallons of biodiesel annually but has been operating at 75 percent of capacity, according to its annual report. Auditors warned that the plant may have to shut down temporarily or longer because of its precarious financial condition. 3/24/08 Advertisement
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