The EU's Customs Code Committee approved Wednesday a draft regulation to raise import taxes for high ethanol blends, a source close to the matter told Platts.
The decision could result in increased domestic prices for renewable fuels as it would make imports of ethanol-gasoline blends less attractive to European consumers, industry experts say.
The approved regulation hikes the import duty for ethanol blended with up to 30% of gasoline to a flat rate of Eur102/cubic meter ($140/cu m). At present, importers must pay 6.5% of the price of the product in import duty, or around Eur32/cu m Wednesday.
One-third of member states voted in favor of the new regulation, while another third opposed and the remainder abstained, the source said.
The recommended changes would tackle what many industry experts have described as a loophole, with companies importing large amounts of ethanol-gasoline blends from the US and thus avoiding the higher duties incurred on unmixed biofuel.
The new regulation will enter into force 20 days after its publication in the EU's official journal, which is likely to happen in the beginning of November, the same source said.
Companies holding binding tariff information codes, or BTIs, at the member state level will have the right to invoke the 6.5% duty for another 90 days, under the regulation.
Since the start of the 2011, European fuel blenders and fuel traders have ramped up imports of E90 -- a mixture of 90% ethanol and 10% gasoline -- from the US to take advantage of a double benefit.
E90 produced in the US is entitled to a $0.45/gallon tax break that puts the product at a large competitive advantage to regular ethanol.
In addition, E90 incurs lower import duties than unmixed ethanol in the EU as it is considered under the bloc's customs code to be a chemical product rather than a biofuel.
This has allowed companies to import around 60,000-80,0000 cu m/month of E90 at a discount of around Eur40-60/cu m to domestically produced ethanol, industry sources said. While large imports of E90 have provided a cheaper alternative to blenders than more expensive European ethanol, it is challenging for domestic producers amid rising feedstock costs and stricter sustainability criteria, sources said.
