Cheap import threat to North’s biofuel industry

Apr 16 2008 by Peter McCusker, The Journal

THE region’s booming biofuel industry could be burned out by cheaper imports, experts have warned as the Government introduces a new law to increase the use of the renewable fuel source.

Yesterday saw the introduction of the Renewable Transport Fuels Obligation which requires 2.5% of all petrol and diesel sold in UK forecourts to come from renewable biofuels – rising to 5% by 2010.

The move is part of the Government’s drive to gradually introduce biofuels to cut million of tonnes of carbon dioxide emissions.

The new legislation could be good news for the region which, thanks to its hinterland for feedstocks, large petrochemical industry and deep water ports, has become a huge biofuels hub.

However, according to business leaders across the region, the future of the North East’s biofuels industry is under threat by the increasing use of cheap imports.

Sean Sutcliffe, chief executive of the Teesside-based Biofuels Corporation, said: “We still have outstanding US import issues that attract unfair subsidies and until the EU sorts that out European producers will be standing by while the US benefits.

“It is disappointing that the market structure does not allow European producers to compete on a level playing field. This [new legislation] will not alter that. ”

Martin Callanan, Conservative MEP for the North East who sits on Europe’s Environment, Public Health and Food Safety Committee, said US subsidies are putting the livelihoods of biofuel producers at risk. He also believes the Government should commission more research into second generation biofuels, which are produced from different parts of the crop and result in a higher output of usable material.

The high cost of doing business in the UK and the increasing use of cheap biofuel imports have already showed worrying signs of denting confidence in the North East’s biofuels sector.

Last week saw global biofuels giant D1 Oils confirm plans to close its Middlesbrough refinery and concentrate on biodiesel production in other parts of the world because it is not economically viable to process here.