French law and biofuels

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Increasing amounts of biofuels benefiting from a reduction in domestic consumption tax on petroleum products and easing approval procedures of the production units

Comments: this article increases the quota provided for in Article 265 A bis of the Customs Code, production of biofuels benefiting from reductions in domestic tax on petroleum products. It also provides for a possibility of globalization of the amenities of the production units of the same operator.

Note the conspicuous absence of measures on Pure Plant Oils.

I. THE DEVICE VOTED BY THE NATIONAL ASSEMBLY

This article was inserted in the Finance Bill for 2005 following the unanimous vote by the National Assembly, an amendment of our colleague Gilles Garrez, general rapporteur of the budget and several of his fellow members, who had received notice "extremely favorable" government.

The purpose of this amendment was twofold, it was:
- Firstly to rise, 2005, the total quantities of biofuels benefiting from an internal tax reduction on oil products;
- Secondly, to authorize the transfer of part of an authorization issued to a production unit of an operator to another of its approved production units.

A. INCREASE FOR THE QUOTA 2005 BIOFUELS TAX ASSISTED

Article plans to raise 140.000 tonnes (divided between the two branches of ethanol products or vegetable oils), the quota for 2005, biofuels which are granted domestic consumption tax reduction on petroleum products, whose rates are currently, per hectolitre, for:

- 33 euros for FAME *; 38 euros for ETBE *; 37 euros for ethanol.

Current approvals include:
- 387.000 tonnes of FAME; 219.000 tons of ETBE; 103.000 tons of ethanol.

The increase in the tax helped quota would be about 20%.

B. FLEXIBLE MANAGEMENT BY TRADERS OF THEIR UNITS APPROVED PRODUCTION

Article 265 bis A, above, of the Customs Code provides that biofuel production units to benefit from the discounts provided to domestic consumption tax on petroleum products, must be approved by the Minister for the Budget, after consulting the one in charge of agriculture, on nominations to appellate procedure published in the Official journal of the European communities.

It is proposed with the agreement of the customs administration, an operator can transfer the licenses which were issued to him, one of its production units to another.

This measure corresponds to demand from refiners, raised by our colleague MP Alain Marleix in its June 2004 (*) on biofuels, and regarded by him as legitimate.

While the production of one of the production units of an operator were to slow down or to stop, that another unit could rise so that the overall amount authorized to be respected.

II. THE COMMISSION OF YOUR POSITION

Any measure likely to increase French production of biofuels, the current level is very far from the Community objectives can only be welcomed.
The relaxation of the conditions imposed on operators for the management of their manufacturing units approved also timely provision.
However, as your general rapporteur has argued in his recent information report on the evolution of tax burden (*), France is the only country in Europe to establish limits on the amounts of these products with tax benefits (except Italy and Sweden).

Moreover, the quotas are never fully met, any excess being financially penalized, reflecting the Malthusian nature of a system that needs major reforms.

Decision of the committee: your commission proposes to adopt this article without modification.

* FAME: Methyl esters of vegetable oil or "Diester".
* ETBE: Ethyl Tertiary Butyl Ether: mixture of ethanol and isobutene, residue of the refining of petroleum products.
* Information Report No. 1622 (XII legislature).
* No. 52 (2004-2005).

According to the site www.senat.fr

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