Germany Says U.S. Must Cut Biofuel Subsidies to Help Rainforest

The U.S. is encouraging deforestation and pollution by offering incentives for plant-based oils grown in South America, German Environment Minister Sigmar Gabriel said, urging the government to stop subsidizing biofuels.

“We’re struggling with the U.S. government to cut these subsidies,” Gabriel said today in an English-language interview in Berlin.
Palm and soy-bean oil is regularly grown for the international market in former rainforests in countries including Brazil, Gabriel said, adding that the world needs to implement standards to stop the practice.

The U.S. pays as much as a $1 for each gallon of fuel blended with diesel as part of a push to reduce dependency on oil and gas, according to the Senate Committee on Finance. The subsidy applies also to importers who often add small quantities of diesel and ship the resulting mix on to Europe, where more subsidies are available — a practice known as “splash and dash.”

The EBB wants the European Commission, the EU’s executive body, to take action against what it says is subsidized dumping of U.S. biodiesel. European producers’ margins are shrinking as the cost of feedstock including rapeseed and corn advance and the price of the alternative fuel drops, it says.

“As European producers, we are not responsible for deforestation in Brazil and deforestation in Asia,” said Claus Sauter, chief executive of German biofuel maker Verbio AG.

Even so, the practise is unlikely to stop anytime soon, said Vince Ng, an analyst with Kaf-Seagrott & Campbell Bhd in Kuala Lumpur.

“The conversion of agricultural land often takes years and as long as there’s a subsidy as an incentive, this will keep happening,” Ng said in an interview.

Bloomberg