The government has decided not to apply an ‘anti-subsidy measure’ to hydrotreated vegetable oil (HVO) sold in the UK that originates from the USA, even though the UK Trade Remedies Authority (TRA) concluded that the US imports are subsidised and made a recommendation that anti-subsidy measures be applied.
The Secretary of State rejected the recommendation, saying it was not in the public interest to accept it – a conclusion that was supported by the TRA itself, which said the measure it was required to propose would not be in the UK’s economic interest because it would severely limit UK supply options.
The TRA investigated HVO (which is obtained from synthesis of oils and fats of non-fossil origin and is used in green diesel or biodiesel) originating in the USA. The main use for HVO is road transport fuel.
The investigation was triggered by an allegation lodged by the Renewable Transport Fuel Association (RTFA), Greenergy Fuels Limited, Argent Energy Limited and Olleco in November 2024. The RTFA said by using domestically sourced, renewable biofuels, the UK can reduce its dependence on volatile global energy markets, ensuring a stable and resilient energy supply. But it alleged that US HVO is subsidised and causing injury to the UK’s own green diesel industry.
The TRA agreed. It found UK prices were being depressed by cheaper prices from the US, and UK producers were having to reduce their domestic sales prices in order to remain competitive within the domestic market. A planned UK biodiesel plant had not broken ground and investment is currently paused. TRA said, “The pausing of such investment is an indication of material injury.”
The TRA recommended that the Secretary of State impose a fixed duty for five years of around £265 per tonne. However the TRA also said that “applying a countervailing amount in accordance with the TRA’s recommendation would not meet the Economic Interest Test (EIT).”
TRA said the aim of the EIT is to determine whether applying its proposed countermeasure is in the wider economic interest of the UK. In a mainly forward-looking assessment of the broader economic impact of the proposed measure, the TRA said that the negative impacts are disproportionate to the benefits in removing the injury. US suppliers, who supply over half the UK market, are likely to exit it and UK consumers of HVO would have a very limited range of alternative suppliers. TRA said since the UK does not have domestic HVO production, losing US suppliers “risks leading to acute negative impacts for UK consumers given the very concentrated nature of the market for HVO in the UK this would create”. A measure would “generate benefits for UK producers and UK upstream suppliers but would impose larger costs on downstream businesses, importers and consumers”.
