Subsidies for biodiesel production

Since 1997, a biodiesel blend containing 31% rapeseed oil methyl ester (RME) by volume has been commercially available in the Czech Republic. The biodiesel is produced for the domestic market according to the national standard CSN 656508 and to the European standard for fatty acid methyl ester EN 14214, and is distributed separately from conventional diesel at petrol stations. The development of this biodiesel blend was kick-started by the "oil programme" (oleoprogram) which provided EUR 21.7 million in refundable grants to establish manufacturing capacity for RME between 1991 and 1995. Since 1999 various subsidy schemes have been initiated to ensure the competitiveness of biodiesel, keeping its cost 10% cheaper than that of conventional diesel. Between 1999 and 2001, direct subsidies were offered to manufacturers of RME and biodiesel. Between 2001 and 2004, these took the form of rebates on the price of rapeseed oil grown on land set-aside for this purpose that was sold to RME manufacturers. The State Agricultural Intervention Fund (SZIF) purchased rapeseed cultivated on set-aside land, ensured its storage, and sold it to RME producers for a defined price. The SZIF also provided direct subsidies to RME producers for processing rapeseed oil for non-food uses. In addition, distributors received subsidies for the blending of RME, and sellers received tax exemptions for the sale of biodiesel. The subsidy scheme changed again in 2004 with the Czech Republics accession to the EU. This took the form of lower excise tax for biodiesel (see separate entry), along with a direct non-reimbursable subsidy provided to RME producers depending on the quantity produced. The subsidy was initially of EUR 257 per 1000 litres (EUR 292 per tonne) of RME to producers located in the Czech Republic, subject to a cap of 113.6 million litres (100,000 tonnes). This scheme was revised in 2005 when the Commission authorised a non-reimbursable grant of EUR 232.90 per tonne of RME. In addition, rules for calculating subsidy calculations and applications from producers were simplified. The eligible quantities for the subsidy (125,000 tonnes instead of 100,000 tonnes) were modified in 2006. The subsidy scheme terminated at the end of 2006.

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