UK to exclude SAF from China biodiesel investigation

The UK has proposed revising the scope of its an anti-dumping investigation into China-origin biodiesel and hydrotreated vegetable oil (HVO) to explicitly exclude sustainable aviation fuel (SAF).

The investigation, which was launched on 5 June, was never intended to include SAF, but the UK's Trade Remedies Authority (TRA) subsequently asked interested parties for feedback on whether it should be included after it was brought to its attention that SAF could be considered to fit the description in the initial notice.

That notice stated that the inquiry would cover "fatty-acid mono-alkylesters or paraffinic gasoils obtained from synthesis or hydrotreatment of non-fossil origin, in pure form or as included in a blend" in the period from 1 April 2023 to 31 March 2024.

The TRA has now proposed amending the description to explicitly exclude "sustainable aviation fuel, in pure form or as included in a blend". But there will be no change to the commodity codes as a result of the revision. The written scope of the investigation is the primary focus at this stage, with the commodity codes serving merely as reference points and not binding criteria, according to the TRA.

SAF should be excluded from the investigation because it has distinct production processes and raw materials compared to HVO and fatty acid methyl esters (Fame), limited interchangeability with road transport fuels, a higher selling price and a different regulatory framework under the UK's SAF mandate starting in January 2025, the TRA said. SAF also benefits from a tax rebate for aviation use, making it economically unviable for road transport use, and has a different customer base, it said.

Interested parties have until 21 August to submit any comments, after which the TRA will make a final decision on the scope of the investigation.

The investigation follows an application by the Renewable Transport Fuel Association (RTFA) on behalf of UK biofuels producers Argent Energy and Olleco, which alleged that exports from China to the UK were below market value, adversely affecting the UK biofuels industry.

The RTFA advocated for including SAF, HVO and Fame in the investigation, citing their potential interchangeability and the minimal amount of investment needed to increase production of HVO and SAF in the UK. But Chinese biofuels producer Ecoceres argued that SAF should be excluded, arguing that it is not interchangeable with Fame and there is limited supply-side substitutability.

Ecoceres also pointed out that the UK did not have a domestic SAF industry during the period under investigation, which means that imports from China could not have caused injury. The airline group IAG also supported excluding SAF, emphasising the aviation industry's reliance on imports due to limited global production capacity.

The UK government officially confirmed last month that subject to parliamentary approval it will introduce a SAF mandate starting next year. Obligated suppliers will have to deliver a 2pc share of SAF in 2025, increasing to 10pc in 2030, 15pc in 2035 and 22pc in 2040. The obligation will remain at 22pc from 2040 "until there is greater certainty regarding SAF supply", the government said.

Under the mandate, hydrotreated esters and fatty acids (HEFA) SAF can be used to meet 100pc of SAF demand in 2025 and 2026, but it will be capped at 71pc in 2030 and 35pc in 2040. HEFA is the most common type of SAF today, and is expected to account for over 70pc of global production by the end of the decade, according to Argus data.

By Evelina Lungu