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Ethanol in EuropeUpdate on market and trade flows

Pla$s 2nd Annual Biofuels conferenceJune 10-‐11, 2013, Amsterdam

Robert VierhoutSecretary-‐GeneralePURE

european renewable ethanol

Voice of the European Renewable Ethanol industry

RepresenEng EU ethanol producers for all end-‐uses, e.g. energy, potable, industrial.

Accounts for 80% of EU installed producEon capacity i.e. around 8 billion litres.

Has world leaders amongst its 53 members: Abengoa, Tereos, CropEnergies, DuPont-‐Genencor, Novozymes.

Ensuring EU policies that promote the producEon and use of renewable and sustainable ethanol.

About ePURE

About ePURERenewable Ethanol: Made in Europe for Europe

Economic:(Jobs(&(Growth(

Responsible(Land(Use(

Road(Transport(Emission(Reduc<on(

Food(+(Fuel(

About ePURERenewable Ethanol = Food + Fuel

Food$ •  $$

Fuel$ •  Ethanol$

About ePURE

The EU ethanol market

Ethanol trade

Customs classificaEon and AD duEes

Summary

Outline

130610-‐11, Pla?s, Amsterdam

EU ethanol producEon and consumpEon* (2000-‐2012e)

x mln litres

0900

180027003600450054006300720081009000

2000 2002 2004 2006 2008 2010 2012e

EU producEon ethanol for fuel EU producEon ethanol non-‐fuelNet Imports Installed ProducEon Capacity all ethanol**

Sources: ePURE, F.O.Licht’s, Eurostat, SECEX, USITC

All EU ethanol consumpEon EU Fuel ethanol consumpEon

*Most is from biomass**esEmate


0

1

2

3

4

5

6

7

8

9

2005 2006 2007 2008 2009 2010 2011 2012e

Bio-‐diesel Ethanol for fuel

EU biodiesel and fuel ethanol producEon (2005-‐2012e)

Source: ePURE, EBB

Mtoe Installed capacity (Mtoe)

20.21

3.85 2.7

5.6


UElizaEon rate (%)

70

28

About ePURE

EU ethanol fuel market (S&D) is plateauingSlower than foreseen growth of MS complianceMore fuel efficient petrol cars, smaller cars: less gasoline consumpEon (declining year-‐on-‐year)tax discriminaEon between diesel and ethanolEconomic crisisRegulatory uncertainty

Both EU biodiesel and ethanol producEon capacity not fully uElized

High level of importsPoor marginsDouble counEng material (UCOME)

Summary


About ePURE


Ethanol trade


Summary

Outline


Ethanol imports into the EU by region (2008-‐2013e)

x mln litres 0

225

450

675

900

1125

1350

1575

1800

2025

2250

2008 2009 2010 2011 2012 2013e

BrazilU.S.A.AsiaCentral-‐AmericaAfricaSouth-‐America (ex BRZ)RoW

Sources: F.O.Licht’s, Eurostat, SECEX, USITC

0

2250

imports for fuel


Data 2013: extrapolation based on first 2 months

0

14,000

28,000

42,000

56,000

70,000

84,000

98,000

112,000

126,000

140,000

0908 1008 1108 1204 1208 1303

Ethanol exports from U.S.A. to EU (0908-‐1303)

Source: USITC

In CBM


AD duty in force 23 Feb

2013)211 in force

AD duty of 50 Euro per m3 closed arbitrage between USA and EU (T2 FOB Rdam)

About ePURETrade numbers in the RE Progress Report

1 toe = 2 000 litres of EtOH


About ePUREThe USA-‐EU gap

0

200

400

600

800

1000

1200

2007 2008 2009 2010 2011 2012

USITC COMEXT

Million litres

455

37

242


About ePUREThe Brazil-‐EU gap

0

250

500

750

1000

1250

1500

2007 2008 2009 2010 2011 2012

SECEX COMEXT

Million litres

419

151

468


About ePURE

Last 3 years (2010-‐12) no 1 exporter to the EU: USA

2013 may show a quite different picture

New classificaEon rules and AD-‐duty seem to have effect

European import data not reliable, need fixing

Summary


About ePURE


Ethanol trade

Customs classificaDon and AD duDes

Summary

Outline


About ePURE

Recourse to legal means by:

Asking for a technical correcDon of inconsistent applicaDon of custom rules; Goal: obtaining a harmonised classificaEon of ethanol/petrol blends under chapter 2207 20 (denatured ethanol). Result: COM RegulaEon 211/2012.

An invesDgaDng on U.S.A. ethanol subsidy and dumping. Result: Council RegulaEon 157/2013 anE-‐dumping duty of 9.5% for 5 years. The subsidy invesEgaEon clearly demonstrated severe injury to the EU industry. But no countervailing duty was imposed.

What was/is ePURE’s strategy against increased imports?


About ePURE

Blend: 2 chemical components; mixture: at least 3 chemical components

Custom law says that “when goods are prima facie classifiable under two or more headings, classificaEon shall be effected as follows: (a) The heading which provides the most specific descripDon shall be preferred to headings providing a more general descripEon.

CN 2207 2000 is a more specific descripEon than 3824 90 97 (other other).

So, every blend that contains over 50% ethanol should be 2207.

Custom rules need to be applied in a harmonized way.

Addressing imports of blends through proper classificaEon


About ePURE

Member States approved a customs classificaEon of ethanol/ETBE blends in a raEo 90/10 as denatured ethanol. COM RegulaEon 70/2013.

Approach not consistent with RegulaEon 211/2012 and was opposed by the EU industry. Reasoning: EtOH/ETBE is a simple blend; ETBE is a gasoline component and 211 covers all gasoline components; moreover, EtOH is the biggest component: hence a denatured product. What if we have a 85/15 ethanol/ETBE blend in the market? How to classify?

Discussion ongoing in Customs Code Commi$ee on E85 (summer grade) and ED95. So far disagreement in Council on how to classify. Vote expected in October.

New challenges: ETBE, E85, ED95


About ePUREThere are industry concerns over circumvenEon both on RegulaEon 211 and RegulaEon 157

RegulaDon 211One MS is allowing imports of a blend of 92% EtOH and 8% petrol as a chapter 3824 product.This is a clear violaEon of the customs classificaEon rules; ePURE submi$ed a complaint at COM level and this is under invesEgaEon.Also the CCC is looking into the ma$er.

RegulaDon 157CircumvenEon by changing water content. Risk is small but if it happens and end-‐use is fuel it is fraud.

CircumvenEon -‐ closing loopholes


About ePURE

A joint complaint from the “RFA” and “Growth Energy” at the CEJ against RegulaEon 157. Main argument is that ADD can be applied against market operators only and not to an enEre jurisdicEon. There is case law that says differently.

Proceedings will not start before September and, if case is found admissible, can take more than 1 year.

Both AssociaEons lobby U.S.A. government to ask for a GATT panel in Geneva. Not likely that the U.S.A is interested in a fight at WTO prior to the launch of EU-‐USA FTA negoEaEons.

Legal acEon against AD duty


About ePURE

The industry was successful in finding Member State support in issuing a classificaEon on simple ethanol/petrol blends.

The market impact of RegulaEon 211 was less than expected.

CircumvenEon of 211 being addressed.

New classificaEons under discussion. Too early to tell what the outcome will be.

EU industry hoped for Countervailing duty and got AD duty. Effect is noEceable.

U.S.A. ethanol industry started legal case against ADD. Too early to speculate on outcome.

Summary on customs classificaEon and AD


About ePURE


Ethanol trade


Summary

Outline


About ePUREThe S&D of ethanol in Europe is plateauing for a number of reasons.

Both the EU ethanol and biodiesel producEon capacity are underuElized

The (re)classificaEon of blends delivered modest results but sEll a landmark decision. The anE-‐dumping duty seems to be paying off. Should result in be$er market condiEons for T2.

2013 may show a rather different picture regards imports: more equal distribuEon between regions

CircumvenEon of RegulaEon 211/2012 is happening and of anE-‐dumping duty expected. ePURE will deploy every legal mean to stop this.

Summary


european renewable ethanol

Thank you for your a$enEon!

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