Biodiesel: How the European Union could put Argentina’s production at risk

Argentina’s biodiesel industry has factories capable of producing far more fuel than it currently makes, but its main foreign market remains vulnerable to European regulatory changes. The issue took center stage at the Santa Fe Business Forum as Argentina’s Senate prepared to resume debate on a new Biofuels Law.

Most of the country’s biodiesel plants are concentrated in and around Rosario. Gustavo Idígoras, president of Ciara-CEC, said the area had the world’s largest installed capacity, yet only 15% was operating. “Rosario is the world capital of biodiesel, but today only 15% of its production capacity is being used. Eighty-five percent of production is switched off,” he said.

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Rosario is the world capital of biodiesel, but today only 15% of its production capacity is being used. Eighty-five percent of production is switched off.

The European Union is the industry’s biggest market. Argentine exports to the bloc could reach $1.5 billion a year, compared with roughly $500 million in recent years. But in January, the European Commission proposed a regulatory change that would classify soy as high risk in land use, potentially preventing Argentina from meeting the standards required to export biodiesel to Europe.

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Europeans specialize in harming efficient producer countries in Latin America, and Mercosur in particular. They spend 70% or 80% of their time at desks in Brussels figuring out how to harm the efficient production of our countries.

The European Parliament stopped the measure, and the Commission must now draft a new regulation on the use of this biofuel. The immediate threat has been halted, said Fernando Brun, secretary for international economic relations at Argentina’s Foreign Ministry, but the dispute is not over.

Brun said Argentina had negotiated tariff relief for its biodiesel under the Mercosur-European Union agreement. He described the fuel as highly competitive and said it was properly certified. “The Argentine soy we are exporting today has no connection with deforestation,” he said. Argentina, he added, had shown that soybean-growing acreage had remained unchanged since 2018, meaning exports could rise through higher yields rather than an expansion of cultivated land.

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The immediate risk has been halted, but the discussion is not closed.

Idígoras took a more confrontational view, telling attendees that Europeans spent much of their time devising ways to harm efficient producers in Latin America and Mercosur. His criticism drew applause at the forum.

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The Argentine soy we are exporting today has no connection with deforestation.