European Government Support Growing for Biofuels

BRUSSELS, Belgium, August 21, 2001 (ENS) - The European Commission is preparing to propose a strategy that would boost the European biofuels industry. It includes a European Union framework for tax incentives and obligations on the 15 member countries to achieve mandatory minimum market shares.

Biofuels are derived from agricultural crops, and the initiative is aimed at reducing greenhouse gas emissions and fossil fuel dependence.

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European Transport and Energy Commissioner Loyala de Palacio (Photo courtesy European Commission)
Produced by Commissioner Loyala de Palacio's transport and energy directorate, the two proposals are still undergoing internal consultation but are understood to be close to agreement and could be formally proposed in September.

Under the tax proposal, the directorate wants to amend the 1992 fuel excise duty law, known as a directive, to give EU member states a free hand to introduce tax breaks of up to 50 percent on biofuels and additives such as biodiesel and agriculturally derived ethanol.

Currently, all such moves by member states require European Union clearance on a case-by-case basis.

According to the second draft proposal, member countries would have to implement a two-phase timetable to hike the proportion of biofuels used in road transport.

Initially they would have to ensure that biofuels represent at least two percent of petrol and diesel sold by 2005, rising to 5.75 percent by 2010.

While these early targets would mostly boost the use of biofuels in small numbers of dedicated vehicle fleets, longer term take-up will require blending with conventional petrol and diesel, says the directorate.

Most European Union vehicles could accommodate mixtures, and the draft proposes setting minimum biofuel content at one percent in 2009, rising to 1.75 percent in 2010.

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Dynamotive Europe plant in the UK produces BioOil using patented technology that converts forest and agricultural wastes into a liquid fuel. (Photo courtesy Dynamotive Europe)
The biofuels package was highlighted as an important potential European Union instrument by the recent European climate change program.

Since biofuels release none of the greenhouse gas carbon dioxide, their use is in theory climate neutral. In fact, growing and processing the biofuel results in fossil emissions, but the directorate nevertheless predicts that a shift to biodiesel would prevent up to 2.5 of the 3.2 tonnes of carbon dioxide released for every 1,000 litres of conventional diesel road fuel.

The strategy was also foreseen in last year's policy paper on the security of energy supply, which set a non-binding target for 20 percent biofuel penetration by 2020.

Biofuels production and use is strongest in France and Austria. The most common fuel, biodiesel, still costs over twice as much as its conventional counterpart, but several countries have already moved to introduce fiscal incentives, including the United Kingdom and Italy.

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