France Says “Non” to Biofuel Tax Breaks
Citing higher oil and grain prices, the French Government said it will phase out tax breaks for biofuels by 2012.
“The cost price of biofuels is no longer structurally disconnected from those of standard fuels. Tensions affecting agricultural raw materials have reached levels that no longer justify tax exemptions on the grounds of helping to provide outlets for farm production.”
In other words, the French government thinks that the rising price of oil and corn and grain has made the biofuels industry profitable enough to stop the tax breaks.
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In response, Philippe Tillous-Borde, head of Sofiproteol stated, “This will favor imports from non-EU countries like the U.S. and Argentina. In addition, he pointed out, “The planned measures ignored biofuels’ contribution to the environment compared to standard fuels.”
The government had planned to reduce tax breaks for biofuels, but the size and timing of the cuts represents a setback for the biofuels sector as it faces mounting criticism over its environmental impact and contribution to rising food prices.
Alain Jeanroy, coordinator of a French ethanol industry group, said “In the future ethanol would be taxed much more heavily than petrol given that more ethanol is needed to travel the same distance.
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Source: The Guardian
Photo: freefotouk via Flickr under a Creative Commons License
With a falling price of oil, this could kill ethanol sales and burn anyone who participated in developing the infrastructure.
Killing the infrastructure could hurt cellulosic ethanol’s ability to take off commercially, even if it delivers $1 ethanol in a few years.
JPM,
It’s Ethanol itself that is causing countries to stop the tax breaks. As more ethanol grade corn is grown, it drives up the world wide price of food grade corn and grains. The price of oil is cyclical, but the overall trend is up, and oil costs will continue to rise, which will push the rise of biofuels. Biofuel company’s may complain about not getting the tax breaks they want, but they won’t stop production of their product.