Galih Nidyasmoro

IMM Program Batch 4

How does biodiesel contribute to the EUs market?
It is known that energy consumption mostly depends on oil (petroleum).
The oil reserves in the world however are very limited, while the global demand
for energy is progressively increasing. In other words, the most dependable
energy in the world will become scarce due to the high demand. It is therefore
necessary to overcome this scarcity problem by developing alternatives of
energy to substitute oil in the futurebiofuel, for example.
Biofuels can be described as solid, liquid, or gas fuels derived from
biomass1 and any renewable energy sources (Patil; Tran; Giselrd, 2008: 11881189). There are four main features of biofuels (Koizumi, 2014: 1-2): 1. Biofuels
are renewable fuels; 2. Biofuels utilization can contribute to energy security; 3.
Biofuels expectedly generates fewer greenhouse gas emissions; and Biofuels can
contribute to boosting agricultural, rural, and social development. Currently,
there are two kinds of biofuel produced on an industrial scale, biodiesel and
bioethanol. According to Licht trade data on world biofuels production in 2012,
bioethanol production is much higher than the biodiesel production 2, yet in the
other hand, biodiesel trade share is much higher.
EU is the largest biodiesel producer in the world. 3 By producing biodiesel,
EU is meeting a major opportunity for its economy. Producing biodiesel can help
EUs economic development, for example, biofuels production generally
increases the demand for agricultural output and this eventually impacts the
incomes and returns in agriculture (MosChini; Cui; Lapan, 2012: 277-278). Also,
particularly, biodiesel provides new job opportunities in rural areas and within
industrial companies (EU, 2006: 5). Other than that, biodiesel has been a big
contribution to the EU market. Biodiesel is the most important biofuel in the EU.
Approximately, biodiesel represents 80% of the total transport biofuels market
(USDA, 2015). Therefore, the demand for bioethanol and other gasoline
substitutes will be restrained slightly. In addition, biodiesel imports are mostly
imported from Argentina and the US. However, the B99 (blends of 99.9%
biodiesel with 0.1% mineral oils) biodiesel export from US has been a
controversial issue for several yearsthis is due to the lower prices of B99 than
the biodiesel produced in the EU, which actually the US producers had claimed
maximum subsidies for the blendsand afterwards, an anti-dumping duties were
imposed on the US biodiesel exports in 2009 (Johnson; Pacini; Smeets, 2012: 48).
Why does EU feel injured by Indonesias biodiesel production?
Apart from the US case (2009) above, the EU imposed anti-dumping duties
on biodiesel imports from Indonesia as well. Throughout a 15-month
investigation, the European Commission affirmed that Indonesian biodiesel
producers were dumping their products on the EU market. As founded in the
investigation, Indonesian biodiesel producers are able to get biodiesel raw
materials at prices that are lower than the world market prices available for other
1 Biomass can be defined as any organic matter derived from plants or animals on a renewable
basis (Koizumi, 2014: 1).

2 Biofuels total production reached 109,406 million L in 2012, which 76% of it83,353 Million L
accounted for bioethanol production and the remaining 24%26,053 Million Laccounted for
biodiesel (Koizumi, 2014: 2-4).

3 According to OECD Agriculture statistics (database), EU biodiesel production reached 11,599

million L by 2014, become the largest biodiesel producer (OECD/FAO, 2015: 142).

Galih Nidyasmoro
IMM Program Batch 4
biodiesel producers, particularly EU (European Commission, 2013: 1-2).
Furthermore, the investigation also found out that the dumping margin for
Indonesia was between 8.8% and 23.3%. This implies that the Indonesian
biodiesel imports had eventually negatively affect the EU biodiesel producers
financial.

References:
Books:
Johnson, Francis X.; Pacini, Henrique; Smeets, Edward. (2012). Transformations in
EU Biofuels Markets Under The Renewable Energy Directive and The Implications
for Land Use, Trade
and Forests. Bogor: CIFOR.
Koizumi, Tatsuji. (2014). Biofuels and Food Security: Biofuel Impact on Food
Security in Brazil, Asia
and Major Producing Countries. Rome: Springer.
Legal Documents:
Biofuels Research Advisory Council. (2006). Biofuels in the European Union: A
Vision for 2030 and
Beyond. Final draft report
European Commission. (2013). EU to impose definitive anti-dumping duties on
biodiesel from
Argentina and Indonesia. Brussels: European Commission
Press Release.
EOCD/FAO. (2015). OECD-FAO Agricultural Outlook 2015-2024. Paris: OECD
Publishing.
United States Department of Agriculture (USDA). (2015). EU-28: EU Biofuels
Annual 2015. The Hague: Attach Reports (GAIN).
Scientific Journals:
MosChini, GianCarlo; Cui, JinGbo; and lapan, Harvey. (2012). Economics of
Biofuels: An Overview of Policies, Impacts and Prospects. Bio-Based and Applied
Economic 2016, Vol. 5 (1), 269-296.
Patil, Vishwanath; Tran, Khanh-Quang; and Giselrd, Hans Ragnar. (2008).
Towards Sustainable
Production of Biofuels from Microalgae. Int. J. Mol. Sci.
2008, Vol. 9 (7), 1188-1195.