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Splash and Dash

 

Splash and Dash- Your Tax Dollars at Work

By Peter Brown

There is a nasty little biodiesel war brewing, it is fueled by foreign oil, paid for by US citizens and may have destroyed Europe’s biodiesel infrastructure. My company, EMT, sits squarely in the middle of the war and we have a worm’s eye view of the battles as we work on projects in the US and Europe.

It is called quite simply “Splash And Dash” and it involves the swift passage of biodiesel from all over the world through US ports to pick up a couple of gallons of diesel fuel and collect up to $ 9 million in Federal blending credits per load. The newly created 99.99% biodiesel is then shipped to Europe where it is sold on the open market with an extra dollar profit per gallon compared to the local competition.

The US taxpayer has been the biggest loser in this whole operation because he is the unwitting treasure chest from which the subsidies flow. To start with, it is very clear that a dollar a gallon in the highly competitive petroleum industry is a huge subsidy to dump overseas with absolutely no local, national or even international benefit to the US. It is even bigger when you take into consideration that a lot of that biodiesel is not even made with American oil, in American processors or even using American ships. 

But even if some American producers are selling their biodiesel in Europe, it still does not meet the smell test of ethical businesses because the blenders credit had a triple purpose, to increase energy independence in the US, to lower pollution rates in the US, and to promote the production of renewable fuels in the US. Once the splashed biodiesel hits European shores, it immediately benefits from the full panoply of the European incentives, from tax breaks to subsidies. In effect, having taken from Paul (the US taxpayer) the exporter/importer will now take from Pierre to pay himself. And lest we feel a whole lot of sympathy for the starving American soy bean producer, remember that he is probably the most highly subsidized farmer in America, second only to corn growers, and those subsidies are taxpayer dollars.

There is little joy in Europe, when a new load of biodiesel arrives, au contraire mon frère.  A German biodiesel producer told me about a year ago that he feels twice betrayed, the first time when his government removed his product from preferential tax treatment, the second when the US subsidized biodiesel was dumped into his market.  Needless to say he no longer makes biodiesel but has a thriving business distributing “foreign oil” but this time he is not supporting middle eastern oil cartels, he is peddling US biodiesel, and is not too happy about it.

In the US and in Europe, legislation is slowly moving into position;    U.S. Rep. John Shadegg (R-Ariz.) is expected to introduce legislation closing up the so-called "splash and dash" loophole and the European commission is going into bilateral trade talks on the issue. The European Biodiesel Board has held an active and bitter campaign on the issue for over a year now condemning the practice in order to protect its members. The sad thing is that it may be too little too late, severe damage having already been done to the European biodiesel industry, some of it self inflicted, but quite a bit through our administration’s laissez faire attitude.

It will not be easy to put this genie back into the bottle, no one has done anything illegal and no one really anticipated how international our business has become.  Decisions in Washington have repercussions in Indonesia.  But this small trade war amply demonstrates that the altruistic reasons for making biodiesel now have a healthy layer of financial interest. In our estimation, each country will have to keep their biofuels incentives strictly within their borders, apply their own incentives and base them on the local sale of biodiesel.  And biodiesel once again becomes a regional solution to a global crisis.

(Appeared in May 2008 Biodiesel Magazine)

Peter Brown is the principal of Euro Marketing Tools, a sales and

marketing group specializing in the creation of ecologically friendly

biodiesel facilities in Europe and the United States. Reach him

at peter@euromarketingtools.com or (408) 206-7035