EU opens investigation into U.S. bioethanol subsidies

BRUSSELS | Fri Nov 25, 2011 5:11am EST

(Reuters) - The European Commission launched an investigation on Friday over complaints that U.S. bioethanol exporters are using unfair state subsidies to sell their fuel to Europe at illegally low prices, a statement in the EU official journal showed.

The investigation follows a formal complaint by EU bioethanol industry association ePURE in October, which alleged that tax credits in the United States allow its exporters to cut their EU selling price by about 40 percent, EU diplomats said.

If the EU authorities find evidence of unfair trade practices, it could result in import tariffs on millions of liters (gallons) of bioethanol imports from August 2012.

"The EU has today initiated anti-subsidy and anti-dumping investigations into imports of bioethanol from the USA in order to establish if U.S. imports of bioethanol have an adverse effect on the European bioethanol industry," EU trade spokesman John Clancy said in a statement.

"These investigations are based on a complaint lodged by the European bioethanol industry. Provisional findings are due by August 24, 2012," the statement said.

Industry group ePURE, whose members produce 80 percent of Europe's bioethanol and include Germany's CropEnergies and Spain's Abengoa, requested the investigation in October, saying "massive and sudden imports" of U.S. bioethanol are damaging EU producers.

Europe used about 5 billion liters of bioethanol in 2010, with about 12 percent imported from the United States and Brazil, according to industry estimates. The percentage is expected to rise as EU producers struggle with colder weather and smaller fields than their rivals in those countries.

In a similar case, the EU imposed tariffs in 2008 of up to 400 euros ($530) per tonne on U.S. biodiesel and extended them to Canada in 2009.

(Reporting by Charlie Dunmore; editing by Rex Merrifield)