Country report: United States - IEA Task 40: Sustainable International Bioenergy Trade: Securing Supply and Demand

Jun 2009

The main barrier for biomass is sustainable production of feedstocks. While national assessments identify sufficient biomass resource to meet the production targets, much of that resource is inaccessible because of unfavorable economics that result from agronomic systems that are not designed for commercial-scale biomass production, material handling and environmental constraints, and limited market access.
Other countries that produce ethanol and import it into the United States may be subject to import tariffs or duties, depending on trade agreements. A general ad valorem tax of 2.5% is assessed on imports.
Two other trade policies affect imports. Some countries can import ethanol without a tariff as long as they import less than the quota set by the U.S. International Trade Commission each year. In addition, a tax of $0.1427 per liter, or $0.54 per gallon, is assessed on imports that are not exempt from the tariff or that exceed the limits allowed by other countries. Brazil, a large producer and exporter of ethanol, is subject to the tariff, thus the tariff is frequently called the Brazilian ethanol tariff. The U.S. International Trade Commission has estimated that these assessments amounted to approximately $252.7 million in 2006.
However, some imported ethanol from Caribbean Basin Initiative (CBI) countries can enter the United States without paying duties, even if the ethanol was actually produced in a non-CBI country.
Ethanol can be dehydrated in a CBI country and then shipped to the United States to avoid the duty. In addition, current law allows duties that are paid when ethanol is imported to be refunded if a related product (e.g., jet fuel) is exported. This is called “duty drawback.” There are no data regarding the amounts subject to this drawback, but there are tax proposals at the federal level to repeal the exemption for ethanol-related export refunds.
Almost every major oil-consuming country around the globe has projections for future ethanol consumption. Projected consumption, coupled with an increasing demand for a gasoline-type fuel, are expected to expand the international market for biofuels greatly over the next few decades. The major players in international trade of ethanol to meet these demands are the United States (USA), the European Union (EU), Japan, China, Brazil, and the “Rest of the World-Brazil” (ROW-BR). While Brazil is not a one of the leading consumers of gasoline, it will be a major ethanol producer. Other countries that have similar production capacities (ROW-BR) will also have a significant role in biomass trade.

By: J. R. Hess, J. J. Jacobson, R. Nelson, C. Wolf

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