BRUSSELS: European bio-ethanol producers have asked EU trade authorities to investigate whether their US rivals are receiving illegal subsidies from Washington and dumping fuel on the EU market, legal and industry sources said on Monday.
The EU could impose tariffs next year on hundreds of millions of litres from the United States if it can prove that US tax credits for US firms that blend ethanol with gasoline are illegal.
Bio-fuel producers have been racing to secure a slice of Europe's lucrative renewable energy market, where demand is boosted by official targets designed to fight climate change and wean the bloc off higher-polluting fossil fuels.
Europe used about 5 billion litres of bio-ethanol in 2010, with about 12 percent imported from the United States and Brazil, according to industry estimates a proportion expected to grow as EU producers struggle with smaller fields and colder weather than their rivals.
"The EU ethanol industry filed its complaint in October and now the question is whether (US President) Barack Obama continues US subsidy payments," said one source.
EU officials must decide by late November whether to reject the complaint or start an investigation, the sources say.
If they opt to investigate, the bloc could launch duties at the end of 2012, which could stay in place till 2017.
ePURE, an industry group representing firms that make up 80 percent of EU bio-ethanol production, earlier this year said it was considering a complaint to defend EU producers struggling to survive in a price war triggered by imports of US-subsidised gasoline-ethanol blends.
US producers defend the so-called Volumetric Ethanol Excise Tax Credit, which provides a 45-cent-a-gallon tax credit to ethanol blenders, as essential to propping up a fledgling industry.
Congress decided last year to extend the tax credit until the end of 2011, but with budgets being cut it is unclear whether the scheme will be scrapped, ending the need for EU action.
In a similar case in 2008, the EU raised tariffs against US bio-diesel after it found Washington had given illegal payments to blenders and determined that exporters were dumping bio-diesel on the EU market.
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