Ethanol Blog

The U.S. ethanol industry will not face anti-subsidy duties from the European Union, after the 27-nation block decided Tuesday to drop the year-long investigation, according to an EU Commission report obtained by DTN.

The EU started the investigation after the EU ethanol industry lodged a complaint in October 2011 that U.S. producers had an unfair market advantage from the 45-cent-per-gallon blenders tax credit that expired at the beginning of 2012, and a variety of other state- and federal-level subsidies.

As a result of the decision, the EU also terminated a requirement for all U.S. ethanol imports to be registered with the EU.

U.S. ethanol producers could find it harder to export to the EU if the duties are levied. This could hurt an important corn market for U.S. farmers.

Growth Energy press secretary Michael Frohlich said the industry is pleased the EU dropped the anti-subsidy case but still has concerns about an anti-dumping probe.

"The anti-dumping case is still ongoing and a final decision has not been reached," he said. "Growth Energy remains committed to defending and protecting the U.S. ethanol industry from potential trade actions by the European Union."

The original anti-subsidy complaint lists a number of state and federal subsidy programs including Illinois E85 infrastructure grants; the Illinois biofuels production facility grants; the Iowa biofuels infrastructure grants; the Iowa alternate energy revolving loan program; the Minnesota cellulosic ethanol investment tax credit; Minnesota E85 fueling infrastructure grants; Nebraska ethanol production tax credit and the South Dakota ethanol production incentive.

A separate anti-dumping investigation is ongoing into whether U.S. ethanol producers sold excess supplies in the EU during 2010-2011.

In a general disclosure document made public last week, the EU indicated it was prepared to slap the U.S. industry with a 9.6% anti-dumping duty. The anti-dumping probe is scheduled to end Feb. 25.

There is a distinction between an anti-dumping and an anti-subsidy probe. In the anti-subsidy case, the EU alleged that the U.S. was selling subsidized fuel to the European market and European producers could not compete against a subsidized product.

U.S. ethanol producers could have faced an import levy on exports to the EU as a result of the anti-subsidy case.

The anti-dumping case argues the U.S. was unloading or dumping excessive amounts of renewable fuel into the European market.

Todd Neeley can be reached at todd.neeley@telventdtn.com

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