Australian government to remove ethanol subsidy

Australia's government plans to remove its ethanol production subsidy, ceasing the Ethanol Production Grants Programme on 30 June, 2015.

The government's decision to eradicate the ethanol subsidy was made in its 2015-16 budget announcement.

From 1 July, 2015, the fuel excise on domestically produced ethanol will be lowered to zero and then increased each year for the next five years by 2.5 cents per litre until it hits 12.5 cents per litre.

The excise equivalent customs duty for ethanol will remain at 38.143 cents per litre.

Information released as part of the 2014-15 budget suggests that the end of the Ethanol Production Grants Programme will save the government approximately $120 million (€88 million) over the next six years.

The government also looks set to gain a net saving of $156 million over the next four years on biodiesel, by reducing rates made under the Cleaner Fuels Grant Scheme to zero and reducing the excise of biodiesel to zero starting on 1 July, 2015. From 1 July, 2016, the excise rate for biodiesel will be increased every year for five years until it reaches 50% of the energy content equivalent tax rate.