Dáil Éireann Debate, Tuesday - 13 February 2024
241. Deputy Matt Shanahan asked the Minister for Finance the reason HVO is unable to be competitive against kerosene in terms of fuel substitution; the reason HVO is not classified as a biofuel in the Finance Act; the reason it cannot trade BOC certs as it can do with the transport fuels obligation scheme; the reason it is not supported in any subsidy as in, for example, being funded by carbon tax; and if he will make a statement on the matter. [6580/24]
View answerFinance Act 1999 provides for the application of excise duty in the form of Mineral Oil Tax (MOT) to liquid fuels used for motor or heating purposes. MOT comprises a carbon and a non-carbon component. The carbon component, or carbon charge, is more commonly referred to as carbon tax. The non-carbon component of MOT is often referred to as “excise”, “fuel excise”, “fuel tax” or “fuel duty”. It is important to note that both components of MOT are excise.
MOT law specifies excise duty rates for certain liquid fuels such as petrol, auto-diesel, kerosene and marked gas oil (MGO). Fuels used for propellant purposes (e.g. for powering motor vehicles) are subject to standard rates of MOT, whereas fuels used for non-propellant purposes, such as heating, are subject to reduced MOT rates. MOT rates are published on the Revenue website at www.revenue.ie/en/tax-professionals/tdm/excise/excise-duty-rates/energy-excise-duty-rates.pdf.
Any liquid fuel which is not specified in MOT law is regarded by that law as a “substitute fuel” and it attract the MOT rate applicable to the specified fuel for which it is substituted. This means that a substitute fuel used in place of auto-diesel attracts the auto-diesel rate of MOT, the petrol rate of MOT applies to petrol substitutes, and substitute fuels which are used for reduced rate purposes (e.g. heating) attract the MGO rate of MOT.
MOT law defines “biofuel” as any substitute fuel made from biomass. “Biomass” is further defined as the biodegradable fraction of products, waste and residues from agriculture (including vegetable and animal substances), forestry and related industries, as well as the biodegradable fraction of industrial and municipal waste. The legislation does not specify different types of biofuels, such as hydrotreated vegetable oil (HVO), as this is not necessary; any liquid fuel that meets the criteria of being produced from biomass is treated as a biofuel for MOT purposes, and on these grounds, HVO is taxed as a biofuel.
Section 100(5) of Finance Act 1999, which has been in place since 2012, provides that all biofuels are fully relieved from the carbon component of MOT, which means that the law applies zero carbon tax to HVO. The table below summarises current MOT rates applicable to biofuels (such as HVO) and for comparison, the rates applicable to non-biofuels.
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MOT rates per 1,000 litres effective from 11 October 2023 |
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Fuel type/use |
Non-carbon component |
Carbon component |
Total MOT |
|
Petrol |
€476.80 |
€129.59 |
€606.39 |
|
Biofuel used instead of petrol |
€476.80 |
Fully relieved |
€476.80 |
|
Auto-diesel /kerosene used as propellant |
€376.94 |
€149.89 |
€526.83 |
|
Biofuel used instead of auto-diesel/ kerosene used as propellant |
€376.94 |
Fully relieved |
€376.94 |
|
Marked Gas Oil used for non-propellant purposes (e.g. heating) |
€17.62 |
€131.47 |
€149.09 |
|
Kerosene used for non-propellant purposes (e.g. heating) |
€0.00 |
€122.83 |
€122.83 |
|
Biofuel used for non-propellant purposes (e.g. heating) |
€17.62 |
Fully relieved |
€17.62 |
As can be seen from the table above, biofuels (including HVO) qualify for a substantially lower MOT rate than the fossil fuels for which they are substituted.
The Renewable Transport Fuel Obligation (RTFO) is administered by the National Oil Reserves Agency and my colleague, the Minister for Transport, has responsibility for the overall oversight of the RTFO scheme.
