European Commission Changes Classification of Ethanol-Gasoline Blends

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Researched by Industrial Info Resources Europe (Galway, Ireland)--The European Commission has published a customs regulation to standardize the classification of ethanol-gasoline (petrol) blends that are imported into Europe. From April 3 onward, all imported ethanol-gasoline blends that contain 70% ethanol blended with 30% gasoline must be classified by European Union (EU) customs authorities as "denatured ethanol."

Since 2010, ethanol imports to Europe from the U.S. have increased significantly, from 13 million litres in 2009 to more than 1.1 billion litres in 2011. Every litre of ethanol that the U.S. exported was classified as denatured ethanol when the product was exported. However, 99% of this ethanol entered the EU market classified as a chemical product, which was subject to a lower import duty, meaning that the EU has lost out on millions of euros worth of tax revenue.

ePURE (Brussels, Belgium), the European Renewable Ethanol Association, welcomed this regulation as it finally closes a loophole which had costly consequences for the European ethanol industry. The new classification rules mean that ethanol blended with less than 30% gasoline can no longer be classified as a chemical product and can no longer be eligible for a much lower import duty of 6.5%.

At present, importers must pay 6.5% of the price of the product in import duty, which equates to around €32/cubic metre. The approved regulation hikes the import duty for ethanol blended with up to 30% of gasoline to a flat rate of €102 ($140) per cubic metre, effectively tripling the amount of import duty payable.

"For too long, ethanol has been entering the EU market under the wrong custom classification, and this has had an extremely damaging effect on our industry," said Rob Vierhout, the secretary general of ePURE. "Market actors have been deliberately shipping wrongly classified ethanol into Europe in order to avoid duty payments."

In addition to the loss of tax revenue, the impact of the increased imports has driven down market prices substantially and undercut European ethanol producers. "The past two years have been extremely difficult for our industry, but we are confident that this regulation will be a watershed," Vierhout said. "The closing of this loophole gives the European ethanol industry a real boost and a fair chance to be competitive on global markets."

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