Ethanol Production Grant and Concessional Excise Treatment of Biodiesel

A key component of the current support for alternative fuels is the concessional excise treatment. Alternative fuels are currently not subject to fuel tax (for example, LPG and other gaseous fuels) or are effectively excise free (for example, ethanol and biodiesel).

This is made possible via excise offsetting grants under the Ethanol Production Grant (EPG) program and the Energy Grants (Cleaner Fuels) Scheme for ethanol and biodiesel respectively and the excise free status for gaseous fuels.

AusIndustry administers the Ethanol Production Grants program on behalf of RET and the Australian Tax Office administers the Energy Grants (Cleaner Fuels) Scheme.

Alternative fuels were scheduled to begin incurring fuel tax from 1 July 2011 under a policy announced in 2004.

On 24 January 2011, the Assistant Treasurer released exposure draft legislation for public consultation and announced the deferral of the commencement date to 1 December 2011. The 2011 Budget provides a five month extension of the Ethanol Production Grant Program until 30 November 2011.

On 12 May 2011, the Assistant Treasurer introduced a package of four Bills to Parliament to implement the longstanding alternative fuels taxation policy. The legislation proposes to phase in the taxation arrangements for liquefied petroleum gas (LPG), liquefied natural gas (LNG) and compress natural gas (CNG) over five years and continue the current taxation arrangements for renewable fuels (ethanol, biodiesel and renewable diesel) for the next 10 years.

(Source: 2011