Commission calls for tax breaks on green ‘bio-fuels’

Date: 08/11/01

By Peter Chapman

The European Commission has unveiled a blueprint for boosting the use of crop-derived 'biofuels' as petrol and diesel substitutes - shrugging off claims from green groups that producing the fuels will hurt the environment.

The measures launched yesterday by Energy Commissioner Loyola de Palacio and single market chief Frits Bolkestein would force EU member states to increase the market share of 'natural' transport fuels such as agriculturally produced 'bio-ethanol' to 2 in 2005, rising to 5.75 by 2010.

Another directive would also allow governments to cut excise duties on the fuels.

The proposals are accompanied by a broader action plan designed to promote not only biofuels - seen as the best short-term solution - but also natural gas and hydrogen fuel cells in the medium to long term.

It says each of these energy forms has the potential to represent 5 or more of total consumption over the next two decades.

De Palacio said: "The transport market is today almost entirely dependent upon oil-based fuels," adding that the plan would "tackle this over-dependence, which is a significant source of environmental and supply concerns for the EU".

Bolkestein said the directive on reduced duties would "introduce an important incentive for economic operators to turn towards products which promote sustainable development". This is because taxes make up a relatively large proportion of the retail price of energy products.

The European Environmental Bureau warned last month that the production of biofuels would end up consuming more energy, generating more of the greenhouse CO2 emissions they were designed to save.

De Palacio maintains the cuts in CO2 emissions delivered by biofuels will outweigh the risk to biodiversity. Meanwhile, Farm Commissioner Franz Fischler said the production of bio-energy would offer new sources of income for farmers. At the same time, he said it could become of model of new forms of "sustainable, multifunctional agriculture". But green groups say the proposals would damage natural habitats as farms turn over set-aside land to the intensive production of fuel crops.

Experts say green fossil fuel substitutes are most suitable for use in agricultural or public transport vehicles. Biofuel-powered buses are already operating in parts of Sweden.

The European Commission has unveiled a blueprint for boosting the use of crop-derived 'bio-fuels' as petrol and diesel substitutes, despite claims from green groups that producing the fuels will hurt the environment.