Treasury estimates costs of increasing biofuels duty differential
Fri 09 March 2007
View all news
The cost of raising the fuel duty discount for biofuels to 30 pence a litre, from the current 20ppl, would be £50m in 2007-8 and £125m in 2008-9 according to John Healey, the Financial Secretary to the Treasury.
In answer to a parliamentary question by Paddy Tipping MP, Mr Healey said that biofuels currently constitute 1 per cent. of the main road fuel market in 2007-08 and that the duty rate on biofuels is guaranteed to be 20ppl below the main road fuel rate until at least 2008-09. The total cost of the duty discount is projected to be £100 million in 2007-08 and £260 million in 2008-09, when biofuels will constitute 2.5 per cent. of the main road fuel market.
The Government has come under some pressure to raise the duty differential in favour of biofuels to encourage sales and local production. Mr Healey said that if the duty differential were raised to 25ppl, this would have an additional cost of £25 million in 2007-08 and £65 million in 2008-09. If the differential was raised to 30ppl, this would have an additional cost of £50 million in 2007-08 and £125 million in 2008-09.
Related Links
< Back to news list