French law and biofuels

Increase in the quantities of biofuels benefiting from a reduction in the domestic consumption tax on petroleum products and relaxation of the approval procedures for the production units concerned

Comments: this article increases the quota, provided for by article 265 bis A of the customs code, for the production of biofuels benefiting from reductions in internal tax on petroleum products. It also provides for the possibility of globalization of the approvals of production units of the same operator.

Note the flagrant absence of measures on Pure Vegetable Oils.

I. THE SYSTEM VOTED BY THE NATIONAL ASSEMBLY

This article was inserted into the 2005 finance bill following the unanimous vote, by the National Assembly, of an amendment by our colleague Gilles Garrez, general rapporteur for the Budget and several of his fellow deputies, who had received an "extremely favorable" opinion from the government.

The purpose of this amendment was twofold, it aimed at:
- on the one hand to increase, for 2005, the total quantities of biofuel benefiting from a reduction in internal tax on petroleum products;
- on the other hand, to authorize the transfer of part of an approval, issued to a production unit of an operator, to another of its approved production units.

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A. THE INCREASE FOR 2005 IN THE QUOTA OF TAX-ASSISTED BIOFUELS

The article plans to increase by 140.000 tonnes (to be divided between the two sectors of products based on ethanol or vegetable oils), the quota, for 2005, of biofuels to which a reduction in the domestic consumption tax is granted on petroleum products, the prices of which are currently, per hectolitre, of:

- 33 euros for the EMHV *; 38 euros for ETBE *; 37 euros for ethanol.

The current approvals relate to:
- 387.000 tonnes of EMHV; 219.000 tonnes of ETBE; 103.000 tonnes of ethanol.

The increase in the tax-assisted quota would therefore be around 20%.

B. EASIER MANAGEMENT BY THE OPERATORS OF THEIR APPROVED PRODUCTION UNITS

Article 265 bis A, cited above, of the customs code, provides that biofuel production units, in order to benefit from the planned reductions in internal consumption tax on petroleum products, must be approved by the Minister responsible for the budget, after consulting the one in charge of agriculture, following a call for candidates procedure published in the official journal of the European communities.

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It is proposed that with the agreement of the customs administration, an operator can transfer the approvals which have been issued to him, from one of his production units to another.

This measure corresponds to a request from refiners, mentioned by our colleague Alain Marleix, in his June report 2004 (*) on biofuels, and considered by him, as legitimate.

Indeed, if the production of one of an operator's production units were to slow down or stop, that of another unit could increase so that the overall authorized quantity is respected.

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II. THE POSITION OF YOUR COMMISSION

Any measure likely to increase French production of biofuels, the current level of which is far removed from Community objectives, can only be welcomed.
Relaxing the conditions imposed on operators for the management of their approved manufacturing units is also a welcome step.
However, as your general rapporteur pointed out in his recent information report on the evolution of compulsory levies (*), France is the only country in Europe to limit the quantities of these products benefiting from tax advantages. (except Italy and Sweden).

In addition, the fixed quotas are never fully respected, any excess being financially sanctioned, which testifies to the Malthusian character of a system which must be profoundly reformed.

Decision of the committee: your committee proposes that you adopt this article without modification.

* EMHV: Methyl esters of vegetable oil or "Diester".
* ETBE: Ethyl Tertio Butyl Ether: mixture of ethanol and isobutene, residue from the refining of petroleum products.
* Information report n ° 1622 (XIIth legislature).
* 52 number (2004-2005).

According to the website of www.senat.fr

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