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EU biofuel imports drop as pandemic recovery draws on stocks

European Union imports of biofuel are expected to drop by a quarter this year as the bloc draws on large inventories to meet growing demand after the easing of coronavirus restrictions, the European Commission said.

Rebounding demand for biodiesel and bioethanol in 2021 is projected to exceed the level before the COVID-19 pandemic, with higher government blending targets adding to momentum from recovering transport activity, the Commission said in a report.

“Due to abundant unused stocks, imports of biofuels are expected to decline in 2021 by about 25% to 3.0 billion litres for biodiesel and 1.0 billion litres for ethanol,” it said in its short-term outlook for agricultural markets.

Lower fuel demand had already pushed down EU biodiesel imports in 2020.

However, imports of used cooking oil from China and other Asian countries for producing biodiesel increased by over 30% last year, and the share of this feedstock was expected to continue growing in 2021, the Commission said.

Biodiesel produced from used cooking oil is considered an advanced form and counts double towards biofuel mandates within the EU.

Biofuels have traditionally been made with crops, such as sugar and corn for ethanol and virgin vegetable oils for biodiesel, but some states have been encouraging food waste and non-food biomass to boost sustainability.

The EU notably plans to phase out use of palm oil in biofuel due to deforestation concerns, leading to tensions with top producers Indonesia and Malaysia.

EU ethanol imports had risen by over a third last year during the pandemic, driven by a late wave of cheap shipments from Brazil, the Commission said.

The bloc’s biofuel imports have also fluctuated in recent years due to tariffs targeting major suppliers, such as Argentina.

Rebounding foodservice activity should boost demand for agricultural products, including meat and wine this year, while Chinese demand would support further growth in pork exports, the Commission said in the report.

But the effects of a bird flu epidemic would cut poultry production and fruit frost damage would cut the supply of peaches to a record low, it added.
Source: Reuters (Reporting by Gus Trompiz; editing by Barbara Lewis)

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