The European Commission Tuesday published a customs regulation that will hike import taxes for ethanol blends containing up to 30% gasoline to a flat rate of Eur102/cubic meter ($134/cu m).
The new customs code means that fuel ethanol blended with as much as 30% gasoline will no longer be eligible to pay 6.5% ad valorem taxes, or around Eur35/cu m Tuesday.
The change tackles what European ethanol producers have described as a loophole in the harmonized code system for commodity classification, allowing refiners and fuel blenders to import ethanol-gasoline blends as a chemical product rather than a biofuel.
Ethanol lobby group ePURE welcomed the the new regulation.
"For too long ethanol has been entering the EU market under the wrong customs classification and this has had an extremely damaging effect on our industry. Market actors have been deliberately shipping wrongly classified ethanol into Europe in order to avoid duty payments", Rob Vierhout, ePURE's secretary general said in a statement.
The regulation puts ethanol with up to 30% gasoline under chapter 22 of the international harmonized code system, bringing it line with the classifications of denatured and undenatured ethanol.
So far, some ethanol-gasoline blends have been classified under chapter 38, used for miscellaneous chemical products.
"Market actors have been deliberately shipping wrongly classified ethanol into Europe in order to avoid duty payments," Vierhout said.
Official figures show that imports of ethanol blends have soared to a record high of 1.1 billion liters in 2011, or around 17% of European ethanol demand, compared to 13 million in 2009.
The Netherlands, the UK and Finland were the biggest European importers in 2011, respectively.
According to ePURE, the inflow of ethanol blends have helped drive down market prices and squeeze European ethanol production margins.
The EU's decision contrasts with the end of a 54 cents/gallon ($142/cu m) import duty on ethanol charged by the US until the end of December last year.
The regulation is binding to all member states and will enter into force on April 3, according to the EU official journal.
Companies holding binding tariff information codes, or BTIs, issued by customs authorities of member state can continue to invoke the 6.5% duty for another 90 days, the EU said.
