Market Research and Insight

D1 Oils, a UK producer of biofuels, is set make a round of redundancies. Roughly 30 job cuts hit the firm as a reaction...

d1.jpegD1 Oils, a UK producer of biofuels, is set make a round of redundancies.

Roughly 30 job cuts hit the firm as a reaction to cheap the US-export of biofuel, which is making it difficult for European companies to get a foothold in the industry, the company says.

“We are entering into consultation with our staff,” said Graham Prince, communications director for the company. “The main purpose is to cut costs. There will be redundancies as a result.

“The main cause is not the backlash against biofuels. It is really about the influx of heavily subsidised American imports.”

The company said the redundancies will be made at refinery plants in Middlesbrough and Bromborough. They affect 30 per cent of staff, sources suggest.

The oil known as B99 is called so because it is a diesel blend that contains 99 per cent biodiesel and one per cent petroleum diesel.

According to the Indpendent, the US B99 subsidy “allows US exporters to undercut European rivals by at least a quarter, forcing many to cut production and sell at a loss. The US “B99″ subsidy is controversial because it benefits exporters. In most of Europe, tax breaks are available only at the point of sale.”

The US virgin soya oil costs somewhere around $950 to $1000 a tonne. But European manufactuers are only able to sell at around $1400 a tonne.

“Then you’ve got refining process,” adds Mr Prince. “It’s impossible to make money. The reaction was that our share price fell by 30 per cent on Friday. There is a negative sentiment to biofuel.”

Mr Prince adds that splash-and-dash oil, where you import the ingredients for biofuel from cheap countries but refine it in one place, is a popular way to manufacture biofuel.

“There are big questions over US-produced soya. You can take the [ingredients], refine it in the US and still claim the subsidy. Splash-and-dash accounts for about 10 per cent of the trade.”

The company along with other European biofuel companies are lobbying the EU to make changes to their biofuel tax subsidies.

Tax subsidies on biofuel open a whole can of worms when it comes to the food vs. biofuel debate. But perhaps that’s one for another post…

Dan Ilett