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.

On Friday the French government dropped the hammer on companies like Sofiproteol — who owns the country’s largest biodiesel maker, Diester Industries. In a statement the government they said:

“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

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