Europe’s biofuels sector sounds alarm over Chinese imports | Invesloan.com

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

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

The US president’s Inflation Reduction Act and Chips and Science Act offered more than $400bn in tax credits, loans and grants to spark development of a US cleantech and semiconductor supply chain. It galvanised a wave of investment but of the 114 large projects tracked by the FT, each worth more than $100mn, a total of $84bn — or 40 per cent — have been delayed for between two months and several years, or paused indefinitely.

Among the largest projects on hold are Enel’s $1bn solar panel factory in Oklahoma, LG Energy Solution’s $2.3bn battery storage facility in Arizona and Albemarle’s $1.3bn lithium refinery 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 is well worth your time.

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

Thanks for reading — Tom

Chinese biofuel imports cause concern in Europe

European energy companies being undercut by cheap Chinese imports, causing major distress in the industry and resulting in plants being closed.

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

Biofuels are liquid fuels that are made from easily replenishable sources such as used cooking oil, waste or even algae. In general, they burn more cleanly than fossil fuels. But as a replacement, they are still in short supply.

Despite the potential demand, in the past two months energy companies have been mothballing plants and furloughing workers. Chevron, which put workers at a German biofuels plant on leave in July, stated the problem: allegedly fraudulent biofuel imports, made with uncertified materials, and dumped Chinese biodiesel was “flooding the market”.

Around the same time, Shell put the construction of a major biofuels plant in Rotterdam on hold. And Argent Energy in March said it plans to end production at its biodiesel plant in Scotland.

In Germany, one of Europe’s largest biofuel markets, prices have halved in the past year, according to the European Biodiesel Board.

“The Chinese biodiesel industry has developed over the past years to almost exclusively target the EU market,” the EBB wrote in a letter to the European Commission calling urgently for anti-dumping measures.

“The EU receives more than 90 per cent of total Chinese 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 per cent to 36 per cent. The levies provisionally come into force on Friday. Member states must approve them to make them permanent.

However, Brussels has exempted sustainable aviation fuels from the measures, in part as SAFs are seen as a critical way to decarbonise jets but also because at present they make up a small fraction of Chinese imports.

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

Cian Delaney, a biofuels campaigner at Transport & Environment, warned omitting SAFs could open the door to circumvention of the levies: “[The EU] excluded SAF so that means there will be redirection and probably more SAF [coming from China] than there was.”

The EBB echoed this, saying it was “gravely concerned at the EU’s unexpected exclusion of dumped Chinese Sustainable Aviation Fuel”. Chinese SAF producers are planning to increase production in response to the exemption, Argus Media has reported.

Delaney added another major issue was fraudulent biofuel imports, which were likely to increase as airlines and other energy intensive industries rushed to meet targets for more sustainable fuels.

“With the current usage of used cooking oil imports and growing demand of SAF mandates, there will be a massive crunch for purchasing this stuff and limited availability,” he said.

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

Germany, the Netherlands and France called on the commission to impose tougher checks on biofuels 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 hit sweltering highs in Brussels but there is some good news on the green energy front.

Wind and solar power has overtaken fossil fuel generation in the EU for the first time in the first six months of 2024 despite an increase in electricity demand.

The record saw the two sources account for 30 per cent of the EU’s electricity mix, according to the 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 made up 27 per cent of power generation in the first half of the year, a drop of 17 per cent year-on-year driven by a dramatic fall in coal use, which fell by almost a quarter. Greenhouse gas emissions were 31 per cent lower than in the first half of 2022, which Ember described as an “unprecedented” decline.

Analysts have previously attributed decreases in fossil fuel use to overall demand destruction in the EU as industries shut down plants or production lines in the wake of record high energy prices prompted by Russia cutting off gas supplies to the bloc in 2022.

But Ember has said for the first time growth in wind and solar power was the “single largest driver of the fossil fuel fall”.

“It’s not just down to a lucky turn of events with a milder winter and good conditions,” said Sarah Brown, Europe programme director at Ember. “We’ve shown that the main factor is due to structural change 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 team of reporters. Reach us at [email protected] and follow us on X at @FTEnergy. Catch up on past editions of the newsletter here.