Legislation for biofuels, tax to move ahead
November 6th, 2006 by admin
The Czech Republic is likely to come closer to being able to fully use biofuels in transport. The process of approving rules for production and sale of gasoline mixed with bioethanol will take off this week, with the lower house voting on a bill determining whether biofuels will be subject to excise tax or not.
Although the Chamber of Deputies is split over this issue, and the bill’s final approval might face many hurdles, observers say the country is finally taking steps to be in line with most European Union states, which have already set up rules that have allowed biofuel production and use to flourish.
While bioethanol producers and farmers argue that there should be no excise tax on biofuels, the Cabinet is pushing through a bill that doesn’t include such a tax exemption. “[Introducing an excise tax on bioethanol] is nonsense … in most EU states bioethanol is exempt from the excise tax,” said Oldшich Reinbergr, general director of the largest Czech sugar refinery and the only bioethanol producer in the country, Cukrovary TTD.
If the excise tax on biofuels is passed, the price of bioethanol will be too high, and the Czech Republic will lose its competitiveness on the European market, said Jan Veleba, president of the Czech Agrarian Chamber (AK ИR), a nonprofit lobby group for farmers.
But if the bill exempting biofuels from excise tax were passed, the Cabinet would have to prepare a new program for introducing biofuels in transport and notify the European Commission (EC). This process would delay the June 2007 launch of biofuels that is already scheduled for the the country, said Tбтa Krбlovб, spokeswoman of the Ministry of Agriculture, which drew up the current program for introducing biofuels.
The program, which the Cabinet approved in September, suggests introducing biofuels without any state incentives. “This is the easiest way without [EC] notification [and it] excludes any possibility of corruption,” Krбlovб said. She referred to the scandal that has contributed to postponing the adoption of biofuels in the country. Last year the Social Democrat (ИSSD) Cabinet wanted to regulate the market and license only some companies to produce bioethanol. The nontransparent system was eploited by high-ranking politicians for personal gain and was later abandoned, but this caused the process to be delayed.
Little too late
In September, the Cabinet finally approved the full use of biofuels in the Czech Republic, which should have gone into effect from January 2007, but the government’s inability to prepare adequate legislation has pushed the starting date to June 2007. This delay has angered farmers and bioethanol producers who say they’ve been losing money ever since the country was set to adopt biofuel rules three years ago.
Counting on the legislative framework going into effect in time, Cukrovary TTD has invested Kи 660 million (Ђ 21.4 million) into the construction of a new bioethanol distillery; the distillery went into operation last month and, by the year’s end, will produce 200,000 hectoliters of bioethanol that will be sold to Germany. Reinbergr said that when the distillery achieves full capacity next year, it might not have enough customers to get a return on the investment. “[The lack of Czech customers] is a big problem for us. … We should have waited with construction of the distillery,” he said.
Czech farmers have been waiting three years for bioethanol producers to start buying their grain, corn and sugar beet surplus, Veleba said. The surplus is about 600,000 tons of grain per year but, due to the lack of biofuel legislation, farmers are losing money, he said.
Although the bill on excise tax is already expected to be the most difficult for passage, there are yet two more sets of Cabinet-issued regulations that will outline the technical requirements producing, storing and processing ethanol, as well as technical specifications for the derived fuel products. The Ministry of Industry and Trade oversees the entire process for creating and approving the biofuel legislation.
Farmers and bioethanol producers say they hope this process won’t take too long, and all legislation will be in effect as planned in mid-2007. “I only wish that we [Czech bioethanol producers and farmers] could have the same conditions that other EU countries have - as soon as possible,” Reinbergr said.
Leave a Reply
You must be logged in to post a comment.