Biofuel incentives set for UK and Germany

Germany and Britain are to receive a boost in their promotion of biofuels following a decision taken by the European Commission this month.

In the UK, excise duties on bioethanol will be reduced. The reduction will be granted automatically to any producer or importer of the fuel in the UK for five years starting form next January.

Germany, later in the month, was granted its request for a total exemption of excise duties on mineral oils used in the production of pure and blended biofuels, which has been valid from the start of this year through to late 2009.

"These positive decisions in favour of excise duty exemptions for renewable energy sources should come as no surprise as the Commission and the Council, since 1985, have consistently encouraged the development of renewable energies, especially biofuels," the Commission said in a statement.

The decisions were made on the back of the EU guidelines relating to state aid for environmental protection. On this basis, aid can cover the difference between the cost of production and the market price of renewables. This means that companies who wish to invest in renewable energy can receive up to 50% state aid.

An EU directive to promote the use for biofuels for transport has set a target for these fuels to be placed on the market at 2% for 2005 and 5.75% for 2010.

By Sorcha Clifford



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