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Biofuel in France

 
General


After the 2004 announcements for attaining the Directive 2003/30/CE objectives, an amount of ambitious measures were taken to encourage biofuel production and speed up its development. As a result, the objective of incorporating 5.75% biofuel in fuels, initially planned for 2010 in Directive 2003/30/EC, has been brought forward to 2008, and the objective for 2010 has increased to 7%.

Annual objectives for biofuel incorporation in France


France’s biofuel plan


 

2005

2006

2007

2008

2009

2010

Objectives (in net calorific value)  

 1.2% 

1.75%

3.50%

 5.75% 

 6.25% 

 7.00% 



By 2020, the State will ensure that suppliers reduce greenhouse gas emissions, produced over the whole fuel life cycle, by at least 6%, in compliance with Directive 2009/30/EC relating to fuel quality. This reduction is calculated compared to the average of European greenhouse gas emissions for 2010. Moreover, the Grenelle I law provides for several measures intended, firstly to reduce the use of fossil fuels and, secondly, to promote the development of transport methods using renewable energy sources.

Renewable transport: Biofuel


Incentive measures


General incentive measures have been put in place to promote the replacement of fossil fuels by renewable energies.
In addition to the Domestic consumption tax on petroleum products which falls within the context of Directive 2003/96/EC of the Council of 27 October 2003 "restructuring the community framework for the taxation of energy products and electricity", France supports the implementation at European level of a climate contribution system, which will subject all fossil fuels to taxation.

To permit the achievement of ambitious targets for the inclusion of biofuels, four types of measure have been implemented:
•    the increase in inclusion percentages in fuels distributed, with in particular the launch on 1 April 2009 of SP95-E10 in the petrol sector;
•    the authorisation of fuels with a high biofuel content, with in particular E85 in the petrol sector and B30 in the diesel sector;
•    the introduction of double counting for biofuels resulting from waste in the 2010 Finance Law;
•    the accounting of biodiesels included in non-road diesel, a fuel which will be launched in summer 2010, and which will permit the reduction of emissions by the engines using it. In addition, fiscal incentives have been put in place:
•    an additional levy of the general tax on polluting activities (TGAP) must be paid by operators (refiners, supermarkets and independents) who make available for consumption fuels containing a proportion of biofuels lower than the national targets for inclusion set since the 2005 Finance Law (Article 32). The amount of this levy is highly penalising and de facto incites operators to achieve the annual target.
•    a tax exemption through the partial exemption of the Domestic consumption tax (TIC) for biodiesel and bioethanol and a total exemption for pure vegetable oils used as fuel in agricultural and fishing. This tax exemption enables the compensation for the extra manufacturing costs of biofuels compared to fossil fuels. It only applies to biofuels produced by units having been approved after a call for tenders published in the Official Journal of the European Union. This exemption amounted to 500 million euros for 2007, 720 for 2008 and 521 for 2009. The amounts are adjusted each year in the Finance Law to take into account the development of economic conditions. The 2009 Finance Law therefore set the unit amounts (€/hl) of the tax exemption until 2011, with a progressive decrease in the tax exemption, with a view to an eventual reform following the recasting to come from Directive 2003/96/EC on energy taxation.



Changes in rates of tax exemption set under the Finance Act are shown below:


 

  Diesel oil

Petrol

 

VOME biodiesel

Synthetic biodiesel 

VOEE biodiesel

Ethanol 

ETBE

 2004 

  €33/hl  

 

 

  €37/hl 

€38/hl

2005

€33/hl

 

 

€37/hl

€38/hl

  2006  

€25/hl

   €25/hl

€30/hl 

  €33/hl  

  €33/hl

2007

€25/hl

€25/hl

€30/hl

  €33/hl

  €33/hl

2008

€22/hl

€22/hl

€27/hl

€27/hl

€27/hl

2009

€15/hl

€15/hl

€15/hl

€21/hl

€21/hl

2010

€11/hl

€11/hl

€11/hl

€18/hl

€18/hl

2011

€8/hl

€8/hl

€8/hl

€14/hl

€14/hl

2012

0

0

0

0

0



For ETBE (ethyl tert-butyl ether), only incorporated ethanol benefits from tax exemption
VOME: vegetable oil methyl esters
VOEE: vegetable oil ethyl esters



It should be noted that the double accounting of biofuels produced from used oils and animal fats has been introduced in the Finance Law for 2010.
Finally, a certain number of measures have been put in place in order to promote the renewal of the automobile stock and thus to replace heavily-consuming vehicles by new, more economical vehicles:

•    The scrapping premium of 1 000 euros in 2009 is revised downward in 2010 with 700 euros in the first half year, then 500 euros thereafter. It will be removed in 2011.
•    The ecological bonus promotes the purchase of a more economical vehicle. In 2010, the bonus ranges from 100 to 1 000 euros for vehicles emitting less than 155 gCO2/km. It reaches 5 000 euros for the purchase of a vehicle emitting less than 60 gCO2/km2 (hybrid or entirely electric vehicle).


General tax on polluting activities


Under France’s Finance Act (Article 32) of 2005, to encourage the incorporation of biofuels in diesel oil and petrol, all operators (refineries, supermarkets and independent sellers) who sell consumers fuel containing a proportion of biofuel which is less than the national incorporation objectives must pay additional general tax on polluting activities. The rate is decreased by the portion of biofuel marketed in % net calorific value, both for superfuel and for diesel oil.

In order to achieve these ambitious objectives, the French government has maintained the system of partial exemption from the interior consumer tax which compensates the extra costs of biofuel production in relation to fossil fuels. This tax exemption is allowed for biofuels produced by production plants that have received approval after an invitation to bid published in the official gazette of the European Union. The rates are adjusted every year as part the Finance Act to take into account any changes in economic conditions.


Future programme changes expected

The government is considering the possibility of delete gradually the system of partial exemption before 2012.


Sources


National action plan for the promotion of renewable energies
2009-2020 In accordance with Article 4 of European Union Directive 2009/28/EC

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Last update:  March 2011