The Australian Customs and Border Protection Service is investigating a complaint by Biodiesel Producers Ltd that American biodiesel is being dumped onto the Australian market, undercutting local producers.

The US subsidises biodiesel, which is commonly made from food crops there. Last year the European Union imposed anti-dumping import duties on biodiesel from the US.

Chris Attwood, general manager of Biodiesel Producers, said that "We are hoping the Australian government will prevent imported biodiesel from, if you like, double dipping on subsidies since they are getting a subsidy in the U.S. and then they are arriving here in Australia and also getting a subsidy under the cleaner fuels grant."

Biodiesel producers in the US get a tax break worth about 30 cents a litre while Australia’s cleaner fuels grant provides a tax break of about 40 cents a litre.