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Biodiesel Duty

Volume 405: debated on Thursday 22 May 2003

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To ask the Chancellor of the Exchequer if he will develop the tax derogation on biodiesel to support the rural economies. [114795]

The Chancellor reviews all taxation policies taking account of relevant economic, social and environmental factors in forming his Budget judgment.

To ask the Chancellor of the Exchequer if he will publish the calculations which he used to determine that £0.2710 shall be the biodiesel duty rate. [112891]

[holding answer 13 May 2003]: The new biodiesel rate of 27.10 pence per litre was chosen to maintain the 20 pence per litre duty differential with ultra-low sulphur diesel. The Government offers lower duty rates for less environmentally-damaging fuels by offering duty differentials relative to the main road fuels. These differentials are intended primarily to reflect the relative environmental benefits of the fuels in question. In determining the size of the duty incentive for biodiesel, the Government has taken into account principally the environmental benefits of the fuel, which amount to approximately 55 per cent. carbon emissions savings on a lifecycle basis, as well as a range of other benefits offered by the fuel, including fuel security benefits and the potential to encourage the recycling of waste products.