France plans to end biofuel tax breaks by 2012

PARIS, Sept 26 (Reuters) – The French government said on Friday it will phase out tax breaks for biofuels by 2012, arguing that higher oil and grain prices have removed the need for fiscal support.

In its draft 2009 budget, the government said it will remove in stages from January reductions given to biodiesel and ethanol on France’s national fuel tax (TIPP).

“The cost price of biofuels is no longer structurally disconnected from those of standard fuels,” the government said, stressing that crude oil prices will remain high.

“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,” it said.

The government also argued that the continuation of a penalty on fuels that do not meet national targets for biofuel incorporation would maintain support for biofuel production.

Guardian