Biofuels Law (in relation to Directive 2003/30/EC)

In March 2006, Decree Laws 62/2006 and 66/2006 were passed, transposing into Portuguese law EU directive 2003/30/EC on the promotion of the use of biofules or other renewable fuels for transport. The law established indicative consumption targets on the use of renewable sources as a percentage of petrol and diesel. These were 2% in 2006, 3% in 2007, and 5.75% in 2008 and through to 2010. Decree Law 66/2006 allowed for approved biofuel producers to benefit from reductions or exemptions from petroleum taxes by EUR 280-300 Euros per 1000 liters for fuel destined for the commercial market. Small producers, those producing less than 3000 tons per year, petroleum taxes are completely waived. Voluntary agreements on the use of biofuels in public passenger and goods transport fleets, with over 10% incorporation of biofuels into fossil fuels, were also established. The Decree law also provided for the possibility of imposing a quota for biofuels in transport fuels, in cases where their incorporation in the preceding year was less than the figure laid down. With Decree 1391-A/2006, the Government set the maximum ceiling on which the tax exemption can apply at 100 000 tons per producer. Each producer will be allocated a quota for the tax-exempt production based upon factors such as the source of the raw materials and location of the production In September 2008, Portugals Cabinet approved a rule extending the existing tax exemptions for small biofuel producers to local governments. The rule will allow local government entities and companies to produce biofuels, with the final product to be used exclusively for the producers own transport fleets or the fleets ofnonprofit entities.

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