July 4th 2002

• Strong political support for the Pure Plant Oil Approach from the European Parliament.
• Germany continues and enlarges the tax exemption on biofuels.
• Denmark still rejects biofuels. 

Strong political support for the Pure Plant Oil Approach from the European Parliament.

On July 2nd, the European Parliament voted almost unanimously for (540 for, 1 against) the report from the Committee on Economic and Monetary Affairs regarding the Commission's proposal on an amendment of the mineral oil directive (92/81/EEC). The mineral oil directive has hitherto formed the strongest barrier towards the utilisation of biofuels as engine fuel, as basically biofuels shall be taxed corresponding to the fossil fuel which they are replacing.

On 7 November 2002 the Commission proposed a directive (COM (2001) 547) which would allow the member states to give up to a 50% tax reduction on biofuels in relation to the corresponding fossil fuels. This proposal encouraged centralised large-scale production and mixing of biofuels with fossil fuels. The proposal totally ignored the possibility of using Pure Plant Oil as engine fuel.

In contrast to the original proposal from the Commission, the Committee on Economic and Monetary Affairs emphasises in their report that Plant Oil is the best long-term solution with the largest economic, social and environmental benefits. The Committee calls for a clear distinction between The Pure Plant Oil (edible) and the chemically modified vegetable/animal oil, and suggests differentiated taxation where the Pure Plant Oil should get full tax exemption because of its obvious advantages. Furthermore the Committee suggests that the Pure Plant Oil should receive additional encouragement due to greater initial obstacles.

The most environmentally friendly biofuels should obtain the greatest advantages. Aspects as such as consideration of environmental impact by cultivation, energy demand and environmental impact in connection with the manufacturing process of the final biofuel, as well as the value of by-products such as protein oilcakes from rape seed should be included.

Read the report from the Committee on Economic and Monetary Affairs and the comments from 3 advisory Committees online, or download the report in PDF format in the following languages

English , German , Spanish , French , Italian , Dutch , Portuguese , Finish , Swedish , Danish , Greek

Related links:

• The original proposals for directives from the Commission, November 7th 2001.
• Other manifestations on the proposal from the Commission.

Germany continues and enlarges the tax exemption on biofuels.

Germany, having occupied the leading position on biofuel technology, recently decided to continue the full tax exemption on biofuels until 2008. This happened on June 7th, when the German Parliament adopted the 2nd law for amending the mineral oil taxation law, which was presented by SPD and the Green Party. The law also includes biogas as a fuel, which is produced and fed into the gas network at a different location from  where the energy is used.

In the Explanatory Memorandum, the advantages and problems are pointed out and explained.

• Consequently the use of biomass will lead to a CO2 reduction depending on the applied biomass and method for production. The CO2 reduction from Pure Plant Oil is accentuated as far greater than the CO2 reduction from Biodiesel.
• Biofuels substantially increase the security of fuel supplies.
• Production of biofuels will lead to increased employment in the range of 16-26 new jobs per 1000 tons of petroleum equivalent per year. Taking Biodiesel production as an example, it will create 50 times more jobs than the corresponding amount of fossil fuel.
• Full tax exemption is necessary if the biofuels should be competitive on the fuel market. Partial tax exemption can be introduced later when the price on fossil fuels as expected will rise as a result of shortage, and when the production price for biofuels will drop because of more effective production.
• The environmental impact of cultivation should be taken into consideration, and the most environmentally friendly cultivation methods should be preferred.
• Utilisation of biomass originating from maintenance of nature and countryside conservation areas, will create new jobs and ensure a budget-independent financing of the countryside maintenance measures.
• As a rule, the emissions from biofuels are less than from the fossil fuels. Biofuels are practically free of sulphur, and when biofuels are used in optimised engines, better results are expected.
• Production of biomass from short cycle forestry creates a relatively low environmental impact as there is no use of chemical fertiliser, pesticides etc.
• Anyone who works in the field of alternative fuels will find that enormous markets are waiting. Like the German Feed-in law on electricity from Renewable Energies, the present act will create the basis for the technological development of biofuels and a leading role for Germany in a market for future technology. Technical development can be expected on three levels at once: in the cultivation of vegetable raw materials, in conversion into biofuels and in propulsion technology.
• The demand on biofuels will create a market for innovative agro-technical products. This new market will create new opportunities for countries acceding to the EU, some of which have a strong agricultural sector. This will also lessen the pressure of competition on the German farmers from the farmers in the acceding countries.

The above mentioned advantages on the new markets is naturally also valid for other countries which open up for the new opportunities in time. In contrast, if countries consciously obstruct the new technologies, they will be overtaken and sidetracked.

Extracts of the new act and the explanatory memorandum concerning biofuels are available in German and English.

Read also the press release from EUROSOLAR.

Denmark still rejects biofuels.

Denmark is still rejecting biofuels for transportation. The new government has inherited well known counterarguments such as

• Replacement of fossil fuels with biofuels is an expensive method to reduce the CO2 emission.
• Biomass should be reserved for co-generation because this is the cheapest way of utilising biomass in Denmark.
• The proposal from the EU will probably not increase the employment.
• The proposal can be considered as an attempt to indirectly support the agricultural sector.
• Utilisation of biofuels for transportation will lead to higher costs for transportation.
• Increased cultivation of biofuels on set-aside land will lead to negative impact on the environment.
• The improvement of security of fuel supplies will be limited.

These arguments appear in an answer from the Danish Minister of Tax to the Committee of Tax in the Danish Government.

As it appears, the Danish Government disagrees with its European colleges. The argument that biomass should be reserved for co-generation is a very narrow consideration, and the point in this is first of all that coal based power production with low efficiency are replaced by power and heat production from co-generation with high efficiency. But biomass covers a wide range of solutions, and many different technologies are necessary for utilising the different biomass product for the purpose which is most practical and reasonable seen in an overall perspective. As an example, Pure Plant Oil can be used directly in its natural form to substitute fossil diesel fuel, and the straw can be used for co-generation. In contrast, it is very extensive to convert the straw to engine fuel.  

Folkecenter for Renewable Energy

 

 

Kammersgaardsvej 16, DK-7760 Hurup Thy, Denmark

Web : www.folkecenter.dk , email : energy*folkecenter.dk

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