Proposal for a Council Decision authorising the United Kingdom to apply a differentiated rate of excise duty to fuels containing biodiesel in accordance with Article 8(4) of Directive 92/81/EEC
Date: 2002-03-18
Institutions: European Commission
Subjects: United Kingdom, diesel fuel, excise duty, fiscal policy, motor fuel

C 181 E/280

EN

Official Journal of the European Communities

30.7.2002

Proposal for a Council Decision authorising the United Kingdom to apply a differentiated rate of
excise duty to fuels containing biodiesel in accordance with Article 8(4) of Directive 92/81/EEC

(2002/C 181 E/12)

COM(2002) 144 final

(Submitted by the Commission on 18 March 2002)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Directive 92/81/EEC of 19 October
1992 on the harmonisation of the structures of excise duties
on mineral oils (1), and in particular Article 8(4) thereof,

Having regard to the proposal from the Commission,

Whereas:

(1) The United Kingdom has applied for a differentiated rate
of excise duty to be authorised on biodiesel used as road
fuel either as pure fuel or blended into diesel fuels up to 5
per cent volume in accordance with EN590.

(2) The other Member States have been notified of

this

request.

(3) The development of renewable energies and biofuels in
particular has been encouraged in the Community since
1985. Lastly, on 7 November 2001 (2), the Commission
adopted an action plan and two proposals for directives
on encouraging the use of substitute fuels in the transport
sector, starting with regulatory and tax measures designed
to promote biofuels.

(4) The derogation requested by the British authorities is
therefore
in line with the Community's policy of
developing the biofuel sector, in the interests of protecting
the environment and ensuring security of energy supply.

(5) The rate for biodiesel would be set at 20 pence per litre
(ULSD). This
for ultra-low sulphur diesel
below that
equates to an excise duty of 25.82 pence (41.4 eurocents)
per litre of biodiesel at current rates. Furthermore, the
reduction in excise duty proposed by the United
Kingdom is proportional
to the percentage of biofuel
contained in the final product.

(6) The effective rates of excise duty are higher than the
applicable Community minimum rates,
in accordance
with Council Directive 92/82/EEC of 19 October 1992
on the approximation of the rates of excise duties on
mineral oils (3):

Community minimum
(per 1 000 l)

ULSD

Pure biodiesel

245 euros

734,3 euros (*)

413,8 euros

458,2 GBP

258,2 GBP

(*) Average exchange rate in December 2001 is 0.624 GBP for one euro.

(7) The requested reduction should concern biodiesel, a fuel
made from biomass within the meaning of Article 2(b) of
Directive 2001/77/EC of the European Parliament and of
the Council of 27 September 2001 on the promotion of
electricity produced from renewable energy sources in the
internal electricity market (4), or made from used fried
oils, to be used as a road fuel.

(8) The differentiated rate would apply to pure biodiesel at
the point of production or import. The biodiesel can then
be used either as pure fuel or be blended into diesel fuels.
Duty on imported blends would be payable at the appro-
priate rates for the constituent parts in the relevant
proportion.

(9) Production costs of biodiesel exceed those of conventional
diesel, and its retail price would therefore be uncom-
petitive without the duty reduction. The duty reduction
is intended to offset the additional production costs. It will
enable biodiesel to be sold at a similar pump price to
conventional diesel.

(10) The government of the United Kingdom should annually
review the production cost of biodiesel and thus monitor
that no overcompensation takes place.

(1) OJ L 316, 31.10.1992, p. 12. Directive as last amended by

(3) OJ L 316, 31.10.1992, p. 19. Directive as last amended by

Directive 94/74/EC (OJ L 365, 31.12.1994, p. 46).

(2) COM(2001) 547 final, 7.11.2001.

Directive 94/74/EC.

(4) OJ L 283, 27.10.2001, p. 33.

30.7.2002

EN

Official Journal of the European Communities

C 181 E/281

(11) The accorded authorisation should apply for a period of

five years.

present in the products referred to in paragraph 1 eligible
for the reduction.

(12) The Commission regularly

reviews

and
exemptions to check that they do not distort competition
or hinder the operation of the internal market and are not
incompatible with Community policy on protection of the
environment, energy and transport,

reductions

HAS ADOPTED THIS DECISION:

Article 1

The United Kingdom is authorised to apply differentiated
1.
rates of excise duty to road fuel containing biodiesel and on
biodiesel used as pure road fuel.

Biodiesel is a fuel made from biomass, within the meaning of
Article 2(b) of Directive 2001/77/EC, or made from used fried
oils to be used as a road fuel.

3.
The rates of duty applicable to the products referred to in
paragraph 1 must comply with the terms of Directive
92/82/EEC, and in particular the minimum rate laid down in
Article 5 thereof.

Article 2

Based on an annual review by the United Kingdom,
the
reduction in excise duty shall be adjusted to avoid over-
compensating for the extra costs involved in the manufacture
of biofuels.

Article 3

This Decision shall expire on 31 March 2007.

Article 4

2.
The reduction in excise duty shall not be greater than the
amount of excise duty payable on the volume of biodiesel

This Decision is addressed to the United Kingdom of Great
Britain and Northern Ireland.