Energy Grants (Cleaner Fuels) Scheme

Source: IEA/IRENA Renewables Policies Database
Last updated: 3 December 2019

This Act established the cleaner fuels grants scheme for importers and manufacturers of cleaner fuels. The Bill is associated with the long term reforms to the excise treatment of fuels outlined under Fuel Tax Reform for the Future. The Bill and the Energy Grants (Cleaner Fuels) Scheme (Consequential Amendments) Bill 2003 set up the machinery for the grants scheme.The objective of the Energy Grants (Cleaner Fuels) Scheme is to provide grants to (1) fully offset any excise duty or customs duty payable in relation to the manufacture or importation of biodiesel for which a provisional entitlement arises during the period starting on 18áSeptember 2003 and ending on 30áJune 2011; (2) fully offset any excise duty or customs duty payable in relation to the manufacture or importation of renewable diesel for which a provisional entitlement arises during the period starting on 1áJuly 2006 and ending on 30áJune 2011; (3) partially offset any excise duty or customs duty payable in relation to the manufacture or importation of biodiesel, CNG, ethanol, LNG, LPG, methanol or renewable diesel for which a provisional entitlement arises during a transition period starting on 1 July 2011 and ending on 30 June 2015; in the aim of (4) encouraging the manufacture and importation of low sulphur fuels.Production grants for fuel ethanol commenced in September 2002 and were extended in 2004 for a further eight years to June 2011. Grants in relation to biodiesel will apply from 18 September 2003, and will become available for ethanol manufacture and importation once existing ethanol subsidy arrangements expire in 2008.  Grants will be available in relation to the manufacture and importation of low sulphur fuels from 2006 and low sulphur diesel from 2007. As of 2006, grants were 38 cents per litre for ethanol and biodiesel.As detailed in the record of Fuel Tax Reform, these arrangements ensure that the effective rate of excise tax for biofuels is zero until 1 July 2011.

The cleaner fuels grants scheme encourages the manufacture or importation of fuels that have a reduced impact on the environment. If you manufacture or import cleaner fuels that meet the relevant fuel quality standard under the Fuel Quality Standards Act 2000, you may be entitled to a cleaner fuels grant.

Eligible cleaner fuels are: biodiesel and renewable diesel.

There is no cleaner fuel grant for fuel ethanol, however there is a production grant for domestic production of fuel ethanol. This grant is administered by the Department of Industry. The Australian Government is proposing to index excise duty rates for fuels every six months. If this occurs there will be a corresponding increase in the cleaner fuels grants scheme

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