Thursday, 26 February 2009

EU’s biodiesel tax move raises concern

Thursday February 26, 2009 The Star, Malaysia

KUALA LUMPUR: Malaysia and Indonesia expressed concern over a plan by the European Union (EU) to impose import taxes on US biodiesel, potentially damping the outlook for alternative fuels made from vegetable oils and grains.

Plantation Industries and Commodities Minister Datuk Seri Peter Chin said yesterday he had written to Germany on the matter. Half of Europe’s biodiesel is produced and consumed in Germany.

The EU also requires a company to be certified as producing palm oil, which can be used as an alternative fuel, in a sustainable manner before the commodity can be shipped and used in the 27-member bloc.

Palm oil has halved in value from a year earlier as the global recession curbed consumption amid record output and stockpiles while slumping crude oil prices eroded demand for biofuels.

These restrictive policies had created an unlevel playing field and depressed the prices of palm oil compared to soybean and rapeseed oil, Chin and Indonesia’s Agriculture Minister Anton Apriyantono told reporters. — Bloomberg

Indonesia and Malaysia, the world’s two biggest producers of palm oil, teamed up in November to reduce output of the edible oil after prices slumped.

The two countries agreed to replant old estates, cutting annual production by as much as 800,000 tonnes.

Chin expects Malaysia’s palm oil production this year to be static or lower, than last year’s 17.5 million tonnes, while Apriyantono reiterated an earlier target of 19 million tonnes.