Editor's Note: Greetings! This week brought news from the European Commission about launching an investigation into biodiesel imports from China. We'll be taking a closer look at it in the analysis. As winter break approaches, CCCEU wishes you a Merry Christmas and a warm and joyful start to the new year!s

▶︎ Focus

Biodiesel, known as "green diesel," is a renewable fuel produced by transforming various plant and animal oils through a process called transesterification with methanol or ethanol. It boasts environmental friendliness, excellent engine performance, high fuel quality, diverse raw material sources, and renewability.

Biodiesel is extensively utilized in Europe and the United States. The European Commission values the industry at 31 billion euros annually. In 2020, the European Union led global biodiesel production, generating 1,287 tons, representing roughly 30% of the world's output. Indonesia stands as the largest producing country, manufacturing 815 tons in 2020, constituting approximately 19% of the global total. Meanwhile, China's biodiesel production remains relatively modest, reaching 1.5 million tons in 2021, with nearly 1.1 million tons exported to Europe.

Biodiesel consumption is primarily focused in Europe, the Americas, and Southeast Asia, with Europe contributing to 47% of the global consumption. In 2022, major biodiesel suppliers to the EU included Argentina, China, the United Kingdom, Malaysia, South Korea, and Indonesia. These countries accounted for 36%, 22%, 14%, 12%, 4.98%, and 4.79% respectively in EU biodiesel imports. Importation from China surged by 61% in 2022 compared to 2021, impacting shipments from Argentina and Malaysia.

In August 2023, Brussels began probing whether biodiesel from Indonesia entered the EU market via China and the United Kingdom to bypass EU tariffs. Data showed that following the EU's  probe in August, China's total exports declined, hitting a 27-month low in November. The Netherlands, a major destination, imported only 60,695 tons from China, dropping by 40.4% from the previous month and 46.8% from the same period last year, marking the lowest level since May 2021. Spain's imports plummeted to zero from 3,500 tons in October and significantly dropped from 18,605 tons compared to the prior November. Among EU countries, Belgium increased its import volume to 10,837 tons, becoming the second-largest buyer with an 181.6% increase from October and a 3.4% rise year-on-year, surpassing South Korea.

On December 20, 2023, in response to a complaint from the European Biodiesel Board (EBB), the EU initiated an anti-dumping investigation into imported biodiesel and renewable diesel produced in China.

The inquiry covers the period from October 1, 2022, to September 30, 2023, during which Chinese exports surged to new highs. EU producers allege that these exports have squeezed renewable fuel and biodiesel prices, leading to decreased production and plant closures. The investigation seeks to ascertain if biodiesel imported from China is being sold at artificially low prices (termed as dumping) in the EU market.

The European Biodiesel Board (EBB) claims that the influx of "low-priced" Chinese biodiesel in 2023 caused a collapse in EU member countries' markets as local biodiesel couldn't compete with such prices. Additionally, the European Waste-based & Advanced Biofuels Association (EWABA) has accused Chinese renewable fuel producers of engaging in "fraudulent" and "unfair trade practices."

The EU's inquiry may result in temporary tariffs on China, impacting China's biodiesel exports to the EU. Key Chinese companies like Longyan Zhuoyue New Energy Co., Ltd, Zhejiang Jiaao Enprotech Stock Co., Ltd, Beijing Haixin Energy Technology Co., Ltd, and Hebei Longhai Bioenergy Co., Ltd are involved. The anti-dumping process might last until February 2025, with provisional measures possible by June of the next year or sooner. Any formal measures could be retroactively applied 90 days before implementing provisional measures.

The Chinese Ministry of Commerce emphasized the EU's status as the largest biodiesel consumer and how Chinese imports meet its demand while aiding in environmental goals. Both China and the EU have synergies in green industries like biodiesel, offering potential for cooperation. Closer collaboration benefits both parties, supports the EU's green agenda, and aids global climate change efforts.

Regarding the EU's history of employing trade measures against biodiesel from various countries since 2008, including the USA, Canada, Indonesia, and Argentina, Shu Jueting, the spokesperson for China's Ministry of Commerce, highlighted China's stance against misuse of trade remedies and opposition to protectionist actions. China will closely observe the EU's subsequent steps.

China Chamber of Commerce to the EU (CCCEU) has already expressed concerns and strong dissatisfactions following the announcement of the investigation, particularly regarding the European Commission's decision to use "surrogate country" prices instead of Chinese domestic prices to assess the "normal value" of biodiesel.

CCCEU call on EU regulators and industry stakeholders to objectively consider China's biodiesel industry.

▶︎ Hot Topics

>>High level Chinese, Belgian diplomats meet

On December 18, 2023, China's Vice Foreign Minister Deng Li held a China-Belgium political consultation at the vice-foreign ministerial level with Secretary-General of the Belgian Ministry of Foreign Affairs Theodora Gentzis in Beijing.

Deng Li said that Belgium is an important cooperation partner of China in Europe. On the basis of mutual respect and win-win cooperation, China is willing to work with Belgium to promote exchanges at all levels, deepen bilateral practical cooperation, tap the cooperation potential in logistics, chemical industry, green development, port logistics and other fields, and expand two-way people-to-people and cultural exchanges. He expressed the hope that the two sides will take the Belgian presidency of the European Union (EU) in the first half of next year as an opportunity to strengthen communication and coordination between China and the EU and inject more stability into a volatile and intertwined world.

 >>Energy prices and security of supply: Council agrees to extend emergency measures

European ministers on Friday reached a political agreement on extending the period of application of three emergency Council regulations adopted under article 122 of the Treaty on the Functioning of the EU, designed for emergency situations. The emergency measures were adopted last year due to Russia's war of aggression against Ukraine, in order to enhance solidarity between member states, accelerate the deployment of renewable energy and protect EU citizens from excessively high energy prices

 >>EU governments clinch deal for more lenient fiscal rules

According to Reuters, EU finance ministers agreed on Wednesday the latest reform of the bloc's two-decade-old fiscal rules, allowing more time to cut public debt and creating incentives for public investment even during budget consolidation.The reform comes after national debt levels were pushed to record highs by pandemic recovery programmes and with the region needing to embark on new spending to keep its climate, industrial policy and security goals on track.

  >>EU, UK extend trade rules to avoid tariffs on electric vehicles

According to Reuters, the EU and Britain on Thursday agreed to give electric vehicle (EV) makers until the end of 2026 to comply with local content rules, delaying the imposition of tariffs on EVs traded with the UK.The extension from the previous 2024 deadline would save manufacturers and consumers up to 4.3 billion pounds ($5.45 billion) in additional costs, the British government said.

Britain and the EU are each other's largest market for exports of EVs, which are being encouraged as an alternative to carbon-emitting internal combustion engine vehicles powered by gasoline or diesel.

▶︎ What are experts talking about？

The EU Initiates Membership Negotiations with Ukraine and Moldova: What is the Significance?

Source: Modern Institute of Eurasian Studies

Author: Ye Tianle

On December 14, 2023, the European Council initiated talks for Ukraine and Moldova to join the European Union, granting candidate status to Georgia.

For Ukraine, the negotiations offer vital support amid internal and external challenges while driving necessary reforms aligned with EU standards. Moldova, seeking to improve its economic status, views EU membership as pivotal, especially after the 2014 Ukraine crisis.

However, both countries face formidable hurdles ahead, including aligning numerous legislations with EU laws and addressing complex issues like transportation, market access, and energy integration, making the path to EU accession challenging.

How Sensitive are Europeans to Income Losses Related to Climate Policies?

Source: Bruegel

Author: David Van der Duin, Francesco Nicoli and Brian Burgoon

The economic slowdown, unequal wealth distribution, and social class divisions in Western European countries have triggered structural adjustments in party politics, leading to the rise of populist parties. Among them, right-wing populist parties have gained support from many voters through anti-immigrant and anti-globalization policies, framed as an “us versus them” narrative. In recent years, these parties have expanded their agenda to the socio-economic realm, proposing ‘welfare chauvinism' policies that exclude immigrants from social protection, further meeting the demands of the middle and lower classes for the expansion of redistribution systems for their own nationals. The welfare chauvinism stance of right-wing populist parties is linked to their strategy of responding to voter concerns through elections and seeking governance or coalition formation based on identity politics. As these policies compete with those of mainstream parties, mainstream parties have made moderate policy adjustments to prevent voter loss. Despite widespread attention, the development of right-wing populist parties faces a series of challenges.

Please note: the English version of this issue is slightly different from our Chinese one. The views and opinions expressed in this article do not necessarily reflect the official position of the CCCEU.

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