§ The Earl of Mar and Kellieasked Her Majesty's Government:
Whether duty other than VAT can be charged on organic and non-fossil fuels; whether such duty is charged in other European Union member states such as Germany; and whether they would consider it appropriate to charge such duty in the United Kingdom. [HL3602]
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§ Lord McIntosh of HaringeyThe European Directive on mineral oils duties structures requires organic and non-fossil fuels used as road fuels to be taxed at the same rate as the mineral oil for which they are substituting. The UK already charges excise duty on organic and non-fossil fuels for use as a road fuel but, where it judges there are sound environmental reasons for doing so, it takes advantage of the option of derogation to introduce duty incentives to promote the development and use of alternative fuels. For example, in Budget 2001 the Government announced a new lower rate of duty for biodiesel, to be set at 20p per litre lower than mineral diesel from later this year. In Pre-Budget Report 2001, the Government announced excise duty exemptions for pilot projects involving biogas, hydrogen and methanol.
Other member states are also subject to the same requirements as the UK but similarly are free to seek derogations from the European directive on mineral oils duties structures to apply lower rates of duty or exemptions for organic and non-fossil fuels.