The Pan-European policy in the field of biofuel production

In 1993, it was decided to introduce a system of tenders. Now the EC requires from the countries to establish national levels for biofuel production and announces international tenders to meet these levels. To date, France and Italy have set such quotas. Quotas for the production of biodiesel are shown in the table below.

Mixtures of biofuel are inadmissible in Germany. Net biofuel is not taxed, because biodiesel is not recognized as fuel. Austria and Sweden have developed a special legislative framework for biofuels. Also, the UK introduced a partial exemption from taxes for biofuels from April 1, 2002, according to which the tax is reduced by 0.3 euro / liter. This directive has already led to the initiation of a significant number of projects for the production of biodiesel.

Only a few countries produce biofuels, while the rest of the countries abstain, mainly due to the lack of financial incentives. Nevertheless, in these countries, researches are under way to improve the processes for production of biofuels.

The EU White Paper on Energy Strategy (1997) indicates the need to increase the share of biofuels in transport. It is necessary to ensure the supply of additional liquid biofuels, since oil prices are unpredictable and in the long run fossil fuels will end. Therefore, the priority was to reduce the cost of biofuel production in Europe. Another area of action was to develop tax incentives and subsidies for the production of biofuels.

The EU Green Paper (2000) stressed the importance of biomass for ensuring the reliability of energy supply. It was recognized that the huge potential of forestry and agriculture is not used. The use of biomass reduces greenhouse gas emissions by 40-80% compared to fossil fuels, improves local environmental conditions and creates additional jobs. The final report on the Green Book (2002) added that in the long term it is technically possible to replace 20% of diesel fuel and gasoline with biofuels by 2020, if appropriate policy measures are taken.

In 2003, the Directive was adopted setting the goals of replacing liquid fuels with biofuel - 2% by 2005 and 5.75% by 2010.

The EU White Paper on Energy Strategy (1997) indicates the need to increase the share of biofuels in transport. It is necessary to ensure the supply of additional liquid biofuels, since oil prices are unpredictable and in the long run fossil fuels will end. Therefore, the priority was to reduce the cost of biofuel production in Europe. Another area of action was to develop tax incentives and subsidies for the production of biofuels.

The EU Green Paper (2000) stressed the importance of biomass for ensuring the reliability of energy supply. It was recognized that the huge potential of forestry and agriculture is not used. The use of biomass reduces greenhouse gas emissions by 40-80% compared to fossil fuels, improves local environmental conditions and creates additional jobs. The final report on the Green Book (2002) added that in the long term it is technically possible to replace 20% of diesel fuel and gasoline with biofuels by 2020, if appropriate policy measures are taken.

In 2003, the Directive was adopted setting the goals of replacing liquid fuels with biofuel - 2% by 2005 and 5.75% by 2010.

The European policies to stimulate the production of biofuels

France

France is one of the leaders in the production of both biodiesel and bioethanol. Since 1992, France has established 100% exemption from taxes on biodiesel production and 80% exemption from tax - on ethanol for pilot projects. However, when production approached 420000 tons in 2000, this could not already be called as a pilot project. Therefore, the EC banned such benefits in France. The quotas for biofuel production were set at 317,500 tons.

Germany

Germany is one of 6 EU countries that produce biofuel on a commercial basis. Germany and Austria have no restrictions on the production of biofuels. The law on excises on oil and oil products ('Mineralolsteuergesetz') regulates the national biofuel policy in Germany. However, this is an indirect legislation for biofuels, since the law does not have a separate section on biofuel. Alcohol and fuel from vegetable oil are not mineral fuels, and therefore are not subject to this law. Also, the law states that fuel from alcohol or vegetable oil with a maximum hydrocarbon content of 3% is eligible for exemption from taxes.

However, strictly speaking, biofuels do not have the right to any exemption from taxes. This situation may change, as the government decided to extend the exemption from taxes on all biofuels as part of the planned addition to the Law on excises on oil and oil products.

Spain

In Spain, the biofuel policy can be divided into national and regional policies. At the national level, there are not so many rules for a country that produces biofuel on a commercial basis. There are fiscal measures that guarantee tax deductions for investment in new vested capital that will use RES. Tax deductions account for 10% of investments. Processing of agricultural and forestry materials in biofuel (biodiesel and bioethanol) and petroleum products used in such processing fall under this law on deductions.

The development of biofuels is also covered by Royal Decree 1165/95 on financial privileges. This decree provides reduced excise taxes. In addition to this decree, there is another Decree 1729/99 on the Quality of Fuel, according to which the quality of biofuel must be checked. Currently, this Decree applies only to fossil fuels. Standards for biofuels have not yet been determined.

Other privileges at the national level have the form of subsidies and are stated in Decree 615/1998. Benefits exist for projects for the production of fuel from wood, agricultural and industrial waste. The level of subsidies is set at 30%.

Italy

Italy has been producing biofuel since 1991. Biodiesel is distributed to municipalities, private transport companies and local municipal departments. Therefore, the White Book of Italy on the development of renewable energy (1999) describes the goals for the use of biodiesel for the purposes of heat supply and for public transport. The government's active position on biofuels has led to the fact that Italy now has a mature biofuel market.

Italy is one of the 4 countries where certain levels of biofuel production are set. The country has a quota of 320,000 tons (2001).

Moreover, Italy is allowed to reduce excise taxes on fuel containing 5 to 25% of biodiesel. Italy also had a tax exemption for biofuel production until its level reached 300,000 tons. Currently, the excise tax on diesel fuel is € 381.70 per 1,000 liters. The excise for fuel with a biofuel content of up to 5% is € 362.60 per 1,000 liters, and € 286.30 per 1,000 liters with a biofuel content of about 25%. In addition to the biodiesel policy, there is legislation on ethanol and bio- ethanol (Legislative Decree 280 of 1994), which regulates the mixing of these biofuels with gasoline.

Sweden

The Swedish government has adopted legislation to reduce the use of fossil fuels and increase the share of RES and, in particular, biofuels through tax and administrative mechanisms. The most important measure is that biofuels are exempt from energy taxes, environmental taxes and charges. Two taxes from which biofuels are exempt are taxes on CO2 emissions and on sulfur emissions. Both taxes are covered by the Act on the Taxation of Energy (Act 1994: 1776).

In addition to direct tax privileges, the production and use of biofuels is also supported through indirect mechanisms - the so-called "green taxes". For example, the tax on CO2 has led to an increase in the use of biofuels. It should be noted that this increase was mainly due to the use of biofuels for heating needs. There are no subsidies for the use of biofuels in Sweden.

Austria

Austria has no restrictions on the production of biodiesel. The production of rapeseed decreased in the late 90's, but this trend was broken with the introduction of a new policy, called OPUL. It is aimed at the use of renewable materials, which led to an increase in the production of such materials. For example, farmers receive money for growing energy crops (for example, rapeseed) on steam lands.

Another measure is tax credits for biodiesel fuel in the following amount:

• using biodiesel in its pure form - 100%,
• with a fossil fuel content of up to 5%, the tax credit applies to all biofuel components,
• when the fuel content is more than 5%, there are no tax deductions.

In addition, the production of biodiesel at small plants belonging to agricultural cooperatives is exempt from taxes on mineral fuels, provided that the fuel will be used only for domestic needs of the farms.

Similar mechanisms are applied in other countries - in Belgium, Finland, Denmark, Greece, Ireland, Holland, Great Britain. The situation with the use of biofuels in Europe once again shows that the development of renewable energy is not an economic and a geographical issue. The determining factor is the availability of mechanisms for stimulating the use of RES. When there is the governmental political will, the emergence of economic mechanisms is a natural consequence.