I wrote recently about the problems associated with biodiesel – but today’s Guardian has uncovered a trend that makes a mockery of any supposed environmental benefits of biofuel.

In two articles here and here the newspaper explains how unscrupulous biodiesel producers are shipping biodiesel to the US, blending it with 1% mineral diesel and then shipping it to the Europe, where it can be sold more cheaply than fuels blended in Europe. This wheeze is known as ‘splash and dash’ and is thought to account for as much as 10% of fuel imports from the US to Europe.

The reason for this is the 11p per litre US government subsidy available on biodiesel that’s blended in the US. By shipping cheap biodiesel to the US and blending it there, agricultural trading companies can reap a massive windfall on a tanker full of biodiesel, which is then shipped back to Europe and sold below market prices, undercutting the more environmentally-responsible UK biodiesel producers – some of whom are now struggling to stay in business.

It’s inevitable that big businesses will try to exploit the subsidies and price differences available in a global marketplace (a technique known as arbitrage), but you’d think that the UK government might be interested in stopping this.

Consider: the RTFO scheme becomes a legal requirement this month – fuel suppliers are required to include 2.5% biodiesel in all of the forecourt petrol and diesel. At the same time, the government appears to be completely unconcerned about where all this biodiesel is coming from – and at what environmental cost.

Ship it twice across the Atlantic for a subsidy dodge and threaten to put responsible UK biodiesel producers out of business – no problems.

Chop down a few thousand acres of rainforest in Brazil to grow biofuel crops – nevermind.

It doesn’t seem like joined-up government, does it?