Environmentalists say the damage caused by the production of palm oil, a common ingredient of biodiesel, is unacceptable (CHAIDEER MAHYUDDIN)

Brussels (AFP) – The European Union has imposed duties on imports of subsidised biodiesel from Indonesia in order to level the playing field for EU producers, officials said Tuesday.

The European Commission, the EU’s executive arm, imposed temporary duties ranging from eight percent to 18 percent but warned it could impose permanent measures by the end of the year.

A Commission investigation “found that Indonesian biodiesel producers benefit from grants, tax benefits and access to raw materials below market prices,” it said. 

“This inflicts a threat of economic damage to EU producers,” the commission statement said. 

The commission said its investigation focused on possible subsidies for biodiesel production, whether it involved palm oil or other, less-used, raw material.

It said the EU biodiesel market is worth an estimated nine billion euros ($10.1 billion) a year, with imports from Indonesia amounting to 400 million euros. 

Palm oil is the world’s most widely used vegetable oil and a key ingredient in a wide range of products from food to cosmetics.

But environmentalists say it drives deforestation, with huge swathes of Southeast Asian rainforest logged in recent decades to make way for palm plantations.

Indonesian trade minister Enggartiasto Lukita said last week he had told Indonesia’s dairy importers to look for new suppliers outside Europe, and threatened to hike existing tariffs on EU dairy products, which currently range from 5-10 percent.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.