Trade: Ethanol imports into EU continue troubling trend
Imports of ethanol into the European Union increased dramatically in 2020, even as Brussels continues to limit the EU market for the renewable fuel by capping the use of crop-based ethanol in the fight against climate change. The rapid surge of imports threatens to have serious negative consequences for the European renewable ethanol industry, but there are signs the EU is ready to act if necessary.
The latest trade statistics show total imports of ethanol in the EU grew from 1,310 million litres (Ml) in 2019 to 1,676 Ml in 2020. This 28% overall increase reflects a troubling trend that comes after a record-setting increase of ethanol imports in 2019, when volumes doubled from 2018.
The numbers from some key ethanol exporters are even more daunting: imports from the U.S. grew by 53%, from 286 million Ml in 2019 to 437 Ml in 2020; imports from Brazil skyrocketed from 17 Ml in 2019 to 238 Ml in 2020; and Canada registered more than a five-fold increase from 15 Ml in 2019 to 89 Ml in 2020, benefiting from the CETA eliminating tariffs on these imports.
There are other threats on the horizon. If ratified, the EU’s agreed deal with the Mercosur bloc of South American countries would open the floodgates to even more imports of ethanol from Brazil – potentially up to 70% of the EU market for industrial ethanol.
Hope on the horizon?
However, there are some glimmers of hope. As these numbers were unfolding in 2020, the European Commission decided last November to introduce surveillance measures on imports of renewable ethanol for fuel from third countries. That was an important step towards preventing a surge in imports from causing further injury to the EU renewable ethanol industry.
The decision allowed a close monitoring of the volume of fuel ethanol imports into the Union, which will facilitate a prompt and effective reaction in case the threat related to increased imports materialises.
In February of this year the Commission published a Communication promising an “open, sustainable, and assertive trade policy” that would reinforce EU competitiveness and uphold its social and environmental ideals. This Trade Policy Review sounded the right notes in terms of promoting trade agreements while at the same time requiring partners to comply with international agreements on climate and deforestation.
Why ensure a strong European ethanol industry?
The EU renewable ethanol industry is a strategic sector for Europe. EU biorefineries produce renewable low-carbon fuel to reduce emissions from road transport, high-protein animal feed to reduce the need for imported soy, and a reliable domestic source of ethanol for industrial and hygienic use. Renewable ethanol production is also an important source of income for Europe’s farmers, and it boosts rural economies.
As the Commission continues to monitor imports from countries, it will be interesting to see how closely it sticks to its principles on these matters and whether it will be ready to take more assertive action if needed.