Sometimes the French are ahead of the times, … even in the area of privatization! They are looking at pushing baby biofuels out of the nest to learn and grow on its own. Maybe the US should could learn something from France

Fraternatie, Egalatie ,Liberte! Viva le Sarkozy!

GasMan

INTERVIEW: Subsidy cuts would wreck French ethanol sector

By Valerie Parent

PARIS, Nov 19 (Reuters) - France’s nascent ethanol sector could collpase if the French government goes ahead with plans to slash subsidies key to the survival of the sector, a top industry official said on Monday.

Ethanol, a combustible fuel largely made from sugar beet and cereals for blending with conventional fuel, makes up just under a third of French biofuel production.

The rest comes from biodiesel, mainly derived from crops like rapeseed.

The French ethanol sector is heavily reliant on subsidies in the form of a lower TIPP fuel tax, that makes the fuel competitive with gasoline at fuel pumps.

“The talks (on upping the TIPP tax) are well advanced in the framework of inter-ministerial discussions and are causing great concern,” said Alain Jeanroy, co-ordinator of the ethanol industry group.

No one from the relevant ministries was immediately available to comment.

Biofuels, hailed for reducing reliance on crude oil and helping slow down climate change, are coming under closer scrutiny.

In a recent report on the impact of biofuels, the Organisation for Economic Cooperation and Development (OECD),urged governments to cut their subsidies for the sector and instead encourage research into second generation biofuels.

Ethanol currently benefits from a 0.33 euro per litre discount when sold at petrol pumps, but that amount could soon be halved, said other industry sources.

“When taking into account commitments taken with industrial investments of close to 1 billion euros and the recent start-up of production units, we would not understand (such a move),” Jeanroy said.

France produced 235,000 tonnes of ethanol and 631,000 tonnes of biodiesel in 2006, the French farm ministry said.

France decided to go beyond the EU target and incorporate 5.75 percent of alternative fuels by end-2008, seven percent by end-2010 and 10 percent by end-2015.

(Additional reporting by by Mathilde Cru and Muriel Boselli; writing by Muriel Boselli, Editing by Peter Blackburn)