Planned cut in UK bio-ethanol duty seen too little
LONDON - A proposed cut in bio-ethanol duty in Britain falls short of trade expectations and could jeopardise the development of the sector, industry officials said.
Britain\'s Chancellor of the Exchequer Gordon Brown, in his annual pre-budget report, said that subject to discussion on timing, the government will lower the duty rate on bio-ethanol by 0.20 pence ($0.309) per litre.
The development of bio-ethanol has been seen as an environmentally friendly alternative to traditional fuel and is derived from agricultural crops such as sugar and cereals.
Trade sources said the cost of producing bio-ethanol in Britain remains steep without a duty cut of more than 30 pence per litre due to costs involved in investment and equipment.
They said that to date no biofuel had been produced in Britain but potential industry players were seeking government support. Trade officials said the use of biofuels instead of carbon fuels saves about 50 per cent of carbon emissions. Fuel companies are most likely to blend the new green fuel with traditional petrol and diesel supplies - a move that would allow everyone to contribute to a clean air policy.
\"We are pleased the Chancellor has recognised bio-ethanol and its environmental benefits but we are disappointed that he hasn\'t recognised our sound commercial case for a 30 pence reduction and we will be discussing that further in the coming months,\" a British Sugar spokesman told Reuters.
\"We don\'t believe a 20 pence reduction will allow a viable business. We don\'t believe that we can make a business out of bio-ethanol at that level,\" he added.
The spokesman said bio-ethnaol industries based on sustainable agricultural crops were already moving ahead in Europe.
EUROPE GOES AHEAD
\"The rest of Europe is already getting ahead and many European governments have already recognised the need to support those industries and are already doing so, particularly in Spain, France and Germany,\" he said.
In recent months talks have been conducted between Britain\'s National Fermers Union and British Sugar over turning home-grown crops like sugar beet, cereals and oilseed rape into renewable fuels for the future.
Meetings have also been held with agri-food business Cargill on the further production of biofuels from home-grown grain and oilseeds.
But industry sources have sought a clear commitment from the government to the industry.
\"This is a classic government tax reduction that sounds good but is all but meaningless,\" NFU Alternative Crops Chairman Rad Thomas said in a statement.
\"It is insufficient to encourage meaningful production and investment. Ultimately the Government\'s lack of support for this industry will constrain it to the level of recycling chip shop oil and nothing more,\" Thomas said.
\"What the country needed was the Government to take the lead and deliver an environment that encouraged growers to produce bio fuel crops and the private sector to invest in processing facilities. It has failed to do so.\"
The British Sugar spokesman said: \"There is already 20 pence reduction in bio-diesel introduced at the last budget and there has been no movement as yet in the bio-diesel industry.\"
\"A 20 pence reduction does not make a viable business. It is okay for making diesel out of cooking oil but not out of sustainable agricultural crops. This is the same situation with bio-ethanol.\"
British Sugar manages the processing of the country\'s eight million tonnes of sugar beet each year.
REUTERS NEWS SERVICE
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