DETERMINING EFFICIENT BIO-FUEL TAX EXEMPTION POLICY IN FRANCE FOR GREENHOUSE GAS EMISSION ABATEMENT - Economics of Sustainable Energy in Agriculture - page 223

Cost effective tax credits have been determined varying around
220 FF for ester and 300 FF for ethanol when trying to find
simultaneously a compromise among all objectives. When public
expenditure is the first priority, tax credits vary around 180-190 FF for
ester and 280-300 FF for ethanol. When GHG minimal levels are
imposed whereas the earmarked budget is spend entirely, efficient
configurations propose higher levels of activity for the RME chain as its
performance is better in terms of GHG emission abatement but also of
surplus generated for the agricultural sector. All the above values prove to
be consistently lower that those currently granted by the government (tax
exemptions actually amount at 230 FF for ester and 330 FF for
ethanol), especially regarding the ethanol chain. Thus, economic analysis
of the bio-fuel sector (simulating conditions in the year 2002) suggests that
there is margin for efficient policies that could be the result of a consensual
interactive process.

ACKNOWLEDGEMENTS

The authors are grateful to the editors and two anonymous referees for valuable comments
on the manuscript. This study has been financed by the European Commission (DG VI,
FAIR BM 98-5316).

NOTES

1 Art. 92, Finance law voted by the French parliament in 1992, has established tax
exemptions from the I.T.P.P. (Interior Tax to Petroleum Products) for bio-fuels set at 230
FF for methyl esters and 329.5 FF for ethanol used in ETBE providing for
production agreements of 3 or 9 years for fixed quantities of bio-fuels.
Art. 32, Finance law has rectified, in 1997, the law of 1992 suppressing the obligation of
the bio-fuel industry to use energy crops cultivated in land set-aside. However, in practice
the supply of energy crops is related to the percentage of arable land to obligatory set-aside.
3 Tax exemption levels are currently under revision by an expert commission (Levy-
Couveinhes) upon request of the French government.
4 efficient or non-dominated solutions : feasible solutions such that no other feasible
solution can achieve the same or better preformance for all the criteria under consideration
and strictly better for at least one criterion.
5 Models are written in GAMS code use BDMLP and OSL2 (MILP) solvers (Brooke et al.
1998).
6 trade-off: the trade-off between two criteria means the amount of achievement of one
criterion that must be sacrificed to gain a unitary increase in the other one.
7 ideal point: the solution where all the objectives achieve their optimum value
8 The user can use an interface built in Excel spreadsheet calling Visual Basic procedures to
select an aspiration point then project it onto the efficient frontier and eventually visualize
the solution in horizontal scroll bars in a dialog box (interface description in Rozakis et al.
2001).

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