Frequently Asked Questions (FAQ) Relating to Biofuels Scheme II

Q1. Please confirm the following: In year 2008 (for example) 60m litres of blended biofuels are allowed in compliance with EN590. Is this 60m litres of biofuel (5%) blended with 1140m litres (95%) of mineral diesel / Or is it 3m litres of biofuel (5%) blended with 57m (95%) litres of mineral diesel to make 60m litres of blend.

A. The answer to your query is 60m litres of biofuel (5%) blended with 1140m litres (95%) of mineral diesel . The excise relief is on the biofuel component of the fuel.

Q2. On page 2 it states - the volumes anticipated in each category are as follows: the table lists volumes for the different categories for the coming years. What does anticipated volumes mean - is it production volumes or volumes allocated for derogation? Is this a definite figure or could it change depending on the relative volumes of biodiesel or bioethanol applied for?

A. The volumes anticipated are the volumes allocated for derogation. This figure could change depending on the relative volumes of biodiesel or biothenaol applied for. So, for example, if applications in one category do not reach the maximum volume allocated to that category, DCMNR may consider a recommendation that the volume in question be transferred to another category.

Q3. On page 4 one of the categories referrs to biofuels used in identified captive fleets requiring engine warranties for the vehicles in question cover the use of the specified biofuels at the specified blend levels. This, I assume, refers to blends above 5%? Also what is the situation after two years when the warranty expires on most engines?

A. The Biofuels Used in Captive Fleets refers to blends above 5% or other biofuels which might require specific engine types or are not covered by all engine warranties. This could mean biodiesel in blends above 5% or any other biofuels as detailed in the Biofuels Directive. The purpose of requesting engine warranties is to ensure that the engine of the vehicle will support the use of the biofuel in question. If the warranty has expired, it will be sufficient to show the expired warranty, which provides evidence that the particular engine supports the use of the blend proposed.

Note that 5% blends of biodiesel and bioethanol in diesel and petrol can conform to normal petrol and diesel standards and are therefore covered by all engine warranties and subject to separate categories in the scheme.

Q4. Page 4 - MOT relief will be made by way of MOT remission by the Revenue Commissioners. What will be the timings of the payments - monthly, bimonthly ..?

A. MOT relief is not made by way of any payments. It is an excise "relief" and as such, succesful applicants will not be liable to pay excise on the volumes approved. The administration of the excise relief to succesful applicants will be a matter primarily for the Revenue Commissioners.

Q5. Is the biodiesel plant regarded as a bonded warehouse. If so would excise duty have to be paid if the biodiesel is exported?

Q6. Page 18 of the application form - specify the minimum volume on which you require excise relief in order for your project proposal to remain viable. What does viable mean in this case?

Q7. Page 8 - section 5.10 can you clarify the 40% 'rule'? Is it 40% of the capital cost of the project?

A. This is a precautionary provision reflecting the aid intensity provision notified in the Community guidelines on state aid for Environmental Protection (2001/C 37/03) (paragraph 32) which makes provision for an aid intensity contribution of 40% of eligible costs, as detailed in the following link:
http://europa.eu.int/eur-lex/pri/en/oj/dat/2001/c_037/c_03720010203en00030015.pdf

Q8. As regards the project management section – does the project refer to the conception, building and commissioning of the biodiesel plant or the management of the plant when it is in full production?

A. The "project" refers to the management of the plant when in production and if appropriate to the project in question, the conception, building and commissioning of the plant. Applicants should provide as much detail as possible on all aspects of the management of the project.

Q9. What is the minimum amount of biodiesel that must be produced per year to qualify for this scheme?
What is the maximum amount of biodiesel that must be produced per year to qualify for this scheme?

A. The minimum and maximum amounts of biofuel which could receive excise relief under the Biofuel Mineral Oil Tax Relief Scheme II are set out in paragraph 2 of the Guidance Note for Applicants on Application Procedure. In order to be considered for excise relief under the Scheme, producers must produce at least the minimum amount specified in a particular category. Producers are not limited to any maximum production limit but excise relief generally is only available up to the maximum volume specified in each category. Any production in excess of the specified maximum would be liable for excise duty.

Q10. Can you please tell me can a private individual apply for tax relief for using bio fuel in their car?

I read this document below but does this apply only to people manufacturing bio fuels?

BIOFUELS MINERAL OIL TAX RELIEF SCHEME II

A. The Biofuels MOT Relief Scheme II is the only scheme currently available that allows mineral oil tax relief on biofuel. It applies to projects that are approved following application in accordance with paragraph 4 and assessment in accordance with paragraph 5 of the Guidance Note for Applicants. Applicants must place a minimum volume of biofuels on the market in order to qualify to be considered under the scheme. Individuals can purchase biofuels placed on the market under this scheme and in such instances the biofuels will have already been excise relieved. In Budget 2006, in order to complement the introduction of the biofuels excise relief scheme, the Minister for Finance provided for a 50% VRT relief on cars capable of using biofuels of at least 85% blend (flexible fuel vehicles) for the years 2006 and 2007. The Finance Act 2006 also provided for the extension of the current 50% VRT relief for hybrid electric cars to end 2007.

Q11. The table shown in the "Introduction" section on page 2 mentions 2006 volume of 44 million litres. With less than half year remaining in 2006, is this volume going to be reduced? If it will be reduced will the extra volume be added to future years?

A. In paragraph 1.1 of the Guidance Note for Applicants on Application Procedure it states that "In the event that amounts of biofuels production cannot be achieved in the earlier years of the scheme the Minister for Finance may at his sole discretion consider rolling over volumes into the following year as appropriate."

A decision on this issue will be made, if required, in the future.

Q12. What is the current rate of Mineral Oil Tax?
How much would exemption from excise be worth on 1 million litres of Biodiesel?

A. A table of the current rates of Mineral Oil Tax is available on the Revenue Commissioners website at http://www.revenue.ie

If used in a car, truck, bus etc biodiesel is liable at the rate of €368.05 per 1,000 litres.

Q13. Are we eligible for excise tax relief due to the recently announced scheme for biodiesel manufactured in Northern Ireland but sold south of the border? or does the manufacturing facility need to be located south of the border?

A. With regard to your query you are eligible to apply for excise relief under the Biofuels MOT Relief Scheme II.

Q14. We believe that including tallow as a product will distort existing markets and render existing capital investment redundant while providing no additional benefit to the environment and increase costs to the tax payer. We believe tallow should be excluded from this scheme.

A. Article 2 of Directive 2003/30/EC of 8 May 2003 on the promotion of the use of biofuels or other renewable fuels for transport states the following:

“1. For the purpose of this Directive, the following definitions shall apply:

(a) “biofuels” means liquid or gaseous fuel for transport produced from biomass;

(b) “biomass” means the biodegradable fraction of products, waste and residues from agriculture (including vegetal and animal substances), forestry and related industries, as well as the biodegradable fraction of industrial and municipal waste;……”

In the circumstances tallow is therefore an eligible feedstock that can be used for biofuel production and as such can be considered under the MOT Relief Scheme II. This is an issue for the market to decide.

Q15. I would like clarification of the relationship of an end user of pure plant oil to the excise duty law. Is such a user allowed to consume this product, free of excise duty, if the destination of the product is a commercial road vehicle? Would agricultural machinery be eligible to consume this product from an excise duty point of view?

The term “Feedstock”, is that the raw oil seed rape?

Excise relief under the Biofuels MOT Relief Scheme II applies to biofuel placed on the fuel market. Individuals can purchase biofuels placed on the market under this scheme and in such instances the biofuels will already have been excise relieved.

In the PPO category the biofuel can be used in modified diesel engines in any category of vehicle as a 100% pure biofuel.

The term feedstock means the raw material being used to produce the biofuel.

Q16. In terms of sensitive information such as financials, offtake and supply agreements can you confirm that this information and any other which the applicant deems sensitive, will not be made available to the public?

A. There is a paragraph on page 17 of the Application Form relating to Disclosure of Information - Freedom of Information Acts where applicants are requested to indicate whether or not they deem any of the information being supplied in their application and any supporting documentation to be confidential or commercially sensitive and if it may, or may not, be released in response to an FOI request. Under the FOI Acts the Department is obliged to consult with the applicant prior to a decision being made on the release of information deemed confidential/commercially sensitive.

Q17. Could you please clarify what is meant by the term "identified captive fleet". Does this mean all vehicles associated with a specific organisation or company?

A. The term relates to use of biofuel in dedicated vehicle fleets where it is established that the engines of the vehicles are capable of running on the biofuel or biofuel blend proposed. The fleet can be any type of vehicle fleet i.e. company cars, haulage companies, bus companies, County Council vehicles etc.

Q18. We are looking into the possibility of using biodiesel in our fleet of vehicles and I was wondering if we need to apply for relief from Mineral Oil Tax through the Biofuels Mineral Oil Tax Relief Scheme II?

A. If you plan on just using biofuels then you need not apply under the scheme. The scheme is for those producing biofuels and applicants must place a minimum volume of fuel on the market in order to be considered under the scheme. Individuals can purchase biofuels placed on the market under the scheme and in such instances the biofuels will have already been excise relieved.

If not do we need to register under this scheme as users of Biodiesel in case we are stopped by Customs and Excise.

You should take up this issue with your local Revenue Office.

Q19. Today I was talking to some people and they mentioned that pure Biodiesel can be easily manufactured from Rape Seed Oil and can be used in standard diesel engines without modification, while meeting standard EN 14214. However a number of car and truck manufacturers do not recommend this (hence no warranty), this in spite of evidence stating that these vehicles can use this without problems and there are also instances where the vehicles are too old to be covered under warranty. Is there a category to suit the above situation under the four categories mentioned under the scheme.

A. Pure Plant Oil can be used only in modified diesel engines as a pure 100% biofuel. I would refer you to a previous question (Q3 ) on the FAQ section of our web page on the Biofuels MOT Relief Scheme II which outlines the issue regarding warranties.

Q20. Under this scheme would any imported biodiesel be eligible for the MOT relief? For example could somebody buy biodiesel from outside Ireland, import it to Ireland and then blend it with diesel receive the MOT relief?

A. Yes imported biodiesel for use in blending with diesel would be eligible for MOT relief under the scheme.

Q21. Could you please clarify that Rape seed can be sourced from both the Island of Ireland and outside of Ireland.

A. Rape seed can be sourced both within and outside Ireland.

Q22. If a business is awarded an exemption from excise duty under the Biofuels Scheme 2 (Biofuel Blends Section), may that business supply a blend of 20% Biodiesel and 80% mineral diesel for use in a roadgoing vehicle with the 20% biodiesel component of the fuel exempt from excise duty? I would be obliged if you could clarify this for me please with background and supporting information/references.

A. If you are applying under the Biofuels Blends complying with EU Diesel Standard EN590 category only blends up to 5% can be considered for excise relief. One of the other categories in the scheme i.e. Biofuels used in identified captive fleets, allows for blends of biofuels, including high blend biodiesel, for use in dedicated vehicle fleets. The excise relief in all cases is on the biofuel component of the fuel.

Q23. Is there any particular reason as to why the scheme restricts the use of biofuels to a B5 blend only in order to qualify for excise relief? Why are B10, B20 and B100 even not being allowed as fuels that qualify for the relief if the biofuel in question complies with EN14214?. Surely the choice of what blend to use is a consumer issue and any engine warranty issues are purely a matter between the consumer and his vehicle dealer/manufacturer and not something the government should be regulating? If the consumer chooses to run on B100 why does the fuel not qualify for excise relief?

In relation to captive fleets it appears that blends up to B100 are to be allowed, why is it being restricted to captive fleets? Surely, this is anti-competitive under EC rules as one specific group of consumers is being given an unfair advantage over another?

A. Pure plant oil blends may be supplied at up to 100%. Biodiesel blends higher than 5% are accommodated under the captive fleets category. Here the minimum consumption for the fleet must exceed 100,000 litres per annum. This category was included in response to ongoing consultations with industry and also to cater for a growing sector of vehicle fleet operators who wish to switch to high blend or pure biofuels. Excise relief is provided to the producers of biofuels. The largest market for biodiesel concerns vehicles operating on the 5% blend. The 5% category is therefore given a large allocation of excise relief in order to effect the largest deployment of biodiesel onto the market.

Q24. There is no European Bio-Ethanol Fuel Standard at present, only an American ASTM standard. In the absence of a known European standard, and in light if the fact that the US ASTM standard is for E10 Blends and not E5 as is more likely for the EU, can we use the ASTM standard as a starting point for our quality assurance scheme?

A. If the fuel is for open distribution where a 5% blend is chosen, then the applicant must show that the selected blend will meet the customer's need without infringing any relevant warranty criteria. For higher blends, the applicant must indicate which vehicles are targeted and indicate that the standard chosen will be acceptable to the vehicle supplier.

Q25. If blending to comply with EN590, must the blending take place in the same location as the Biodiesel (EN 14214) production site -"Project Location"? If blending can take place at a site other than the Biodiesel (EN 14214) production site, are there any specific requirements under this scheme?

A. This would be a matter for the Revenue Commissioners to determine and in that regard you should contact your local Revenue Office directly.

Q26. Can you clarify if the category "Biodiesel / other biofuels blended with diesel in compliance with EN590" from 1.1 of the Guidance Notes refers to 100% biodiesel (EN 14214), as well as 'other biofuels blended with mineral diesel in compliance with EN590', or must biodiesel (EN 14214) be blended with mineral diesel to produce EN590 under this category.

A. EN590 is an industry standard for diesel fuel and is acceptable to vehicle manufacturers. In this category only 5% of EN14214 standard biodiesel or any other biodiesel standard which when added to fossil diesel meets the requirements of the standard definition for EN590 diesel fuel may be used.

Q27. What is the rationale for focussing on process quality (e.g. ISO 9001) rather than product quality (e.g. EN14214)?

A. The programme focuses on product and process quality. The first category for biofuel blends requires compliance with EU Diesel Standard EN 590. Compliance with diesel standard EN590 requires that any biodiesel blended with the diesel in question complies with biodiesel standard EN14214. In the category of biofuels used in identified captive fleets, if biodiesel is proposed, this biodiesel must comply with the biodiesel standard EN14214 but not with EN590 as the blend envisaged would be higher than 5%. Product quality is of primary importance. ISO standards are not mandatory requirements of the competition but applicants should ideally seek to obtain or hold these standards as they concern Management and Environment standards which are indicative of good business practice.

Q28. Can you confirm that all grades of tallow will be acceptable as feedstocks?

A. All feedstocks which produce fuels which comply with the EU Directive definition of biofuels are acceptable. The applicant will also be responsible to ensure that all relevant environmental and waste measures and other legal obligations are observed in relation to the process. Specified risk materials may not be used as feedstock materials.

Q29. For the production of biodiesel, will any feedstocks be favoured over other feedstocks? For example, will Irish rapeseed oil be favoured over imported soya oil or palm oil? If yes, what criteria will be applied?

A. No one feedstock will be favoured over another.

Q30. Can you describe how it will be determined that excess excise duty is being granted? What criteria will be taken into consideration?

A. It is assumed that this question relates to calculation of production costs to ensure that there is no over-compensation viz-a-viz fossil fuels. Production costs will be calculated on a six-monthly basis based on reports from successful applicants and any other relevant information, and on this basis excise relief will, if appropriate be adjusted.

Q31. Can you give a worked example of how the 40% funding limit will be applied? If the capital cost of a plant is €10 million, will the maximum excise relief granted be €4 million? If the plant is already in existence and the additional plant modification cost to produce biodiesel is, for example, €1 million, will the excise granted be €400,000?

A. Please refer to Question 7 on the FAQ section of our web page on the Biofuels MOT Relief Scheme II.

Q32. The DCMNR website makes reference to the EU State Aid Guidelines (2001/C 37/03). Can you confirm what sections are most relevant? Is it the case that section 60 contradicts the applicability of the 40% rule?: “Unlike most other renewable sources of energy, biomass requires relatively less investment but brings higher operating costs. The Commission will, therefore, be amenable to operating aid exceeding the amount of investment where Member States can show that the aggregate costs borne by the firms after plant depreciation are still higher than the market prices of the energy.

A. Section E offers the main guidelines. The costs for each applicant will vary, therefore the relative aid intensity will vary. State aid intensity will be assessed on a case by case basis and in consultation with the Commission if necessary. The level of MOT will be adjusted to reflect the Government’s requirement to remain within the approved terms of state aid approval for excise relief.

Q33. It is assumed biodiesel producers supplying to EN 590 standard will have bonded warehouses and sell to oil companies; assuming product volumes are kept within the allocated duty free limit , will there be restrictions on selling biodiesel to distributers, retailers, hauliers or other private companies for blending to 5%?

A. All successful applicants under the scheme will have to comply with requirements laid down by the Revenue Commissioners. Excise duty is normally applied when the fuel leaves the bonded warehouse, which is the last point before the fuel is sold to consumers. Excise relief is therefore applied at this point.

Q34. Can you please help clarify the requirements for the format of application. Must the exact pages as shown in Appendix III be used (i.e., filling the boxes provided only and providing additional information in appendices) or can an applicant create a separate proposal document that follows the same format (i.e., same title headings but providing more space for incorporating diagrams etc.)?

A. There is no requirement for text to physically fit the boxes. If applicants find the boxes set out under each question for a response too small then they can print out additional copies of the same page and complete them as a follow-on for that particular section so that the structure of the application form is continuous.

Q35. If a UK company supplied fuel blended with biofuels from the UK to a fuel marketing company in Ireland please advise as to whether:

i the UK company could claim excise relief on the biofuels component of the fuel supplied to the Irish fuel marketing company; and

ii the Irish fuel marketing company would pay excise duty as though the fuel did not contain any biofuels component.

A. Excise duty is normally applied when the fuel leaves the bonded warehouse, which is the last point before the fuel is sold to consumers. Excise relief is therefore applied at this point and in the example quoted would be applied to the entity delivering fuel to the forecourt..

Q36. What kind of information do we need to provide for the following item in Part 1: "AUDITED ACCOUNTS FOR LAST 3 YEARS". Do we need to attach detailed audit results or just mention that we have them available for future inspection?

A. Applicants should provide copies of annual accounts for the relevant years as an appendix to their application form.

Q37. In Appendix III Application Form Page 3, the form refers to "Audited Accounts for last 3 years". What is to be filled in here? Is it "Yes and refer to attached accounts as an addendum to this application"? Is it the name of the auditing accounting firm? Please elaborate on what's required in this box on Page 3.

A. Applicants should provide copies of annual accounts for the relevant years as an appendix to their application form.

Q38. Can you explain the over compensation clauses in section 1.3 and 2.2? Specifically can you explain the following sentence from 2.2 "Based on the six monthly reports, and in accordance with EU requirements, DCMNR will review the scheme annually and assess projects to ensure that the excise relief does not lead to over-compensation vis-à-vis fossil fuels." How will this section be implemented?

A. Please refer to responses to previous questions (Question 7 and Question 30) on the FAQ section of our web page on the Biofuels MOT Relief Scheme II regarding issues of over-compensation.

Q39. Is there a web site available that explains the Article 16.3 of the Council Directive 2003/96/EC?

1. Applicants could check the official website of the European Commission www.europa.eu

Q40. Can users whose vehicles are not part of a captive fleet avail of biofuel blends > 5% and allow the producer/distributor qualify for excise relief on the total biofuel component of the blend?. In my opinion, if relief is allowed for captive fleets, it is anti-competitve to not allow it for non-captive fleets. This requires urgent clarification and I would greatly appreciate it if you could answer the question I have asked.

A. It is open to any vehicle owner to request to be included in the “captive fleet” of a biofuel producer in this category. The purpose of seeking engine warranties is to safeguard against any potential of perceived damage to engines whose warranties are not covered by higher blends. This is particularly important to build market confidence in the early stages of development of the biofuels market in Ireland. It should be noted that under EU rules over-compensation of biofuels over fossil fuels, through any incentive measure is not permitted. There should not therefore be any competitive advantage for vehicle owners.

Q41. Under Captive Fleet what percentage of company vehicles are required to run on 100% biodiesel?.

A. There is no set percentage, it is up to applicants to determine how many vehicles owners they will be able to supply biofuel to.

Q42. Is there a minimum volume of production required within first 6 months, 12 months, 18 months etc?

A. There is a minimum project size per year specified in each category as per paragraph 2 of the Guidance Note for Applicants on Application Procedure.

Q43. Can you clarify what the category 'Biofuels used in identified captive fleets' is?

A. I would refer you to the answer to a previous question (Q17) on the FAQ section of our web page on the Biofuels MOT Relief Scheme II.

Q44. Is my understanding correct, that the application form needs to be sent in both hardcopy and electronic format? Does one also have to send in electronic format the other supporting documents like business plans, tax clearance certs, accounts, etc?

A. Paragraph 4 of the Guidance Note for Applicants on Application Procedure outlines the procedure to be followed. Paragraph 4.3 states that “Applications must be received in both hard copy and electronic form…..” Therefore applications must be in electronic and hard copy format. Where it is possible the electronic application should include all supporting documents but if supporting documents are not available in electonic format, the hard copies will be accepted as long as they are included in the original hard copy application.

Q45. Can you confirm that the proposed minimum production required under this section for transesterified plant oil at 5% blend is 10,000000 litres per annum or is it 10,000000 litres of blended product?

A. The excise relief is given on the biofuel component of the fuel under all categories in the scheme so therefore the minimum project size as defined in each category relates to the biofuel component of the fuel.

Q46. With regard to the answer to Q. 26, the IS EN 590 standard lists (Section 5.3) one standard for a biodiesel/biofuel component that can be blended with mineral diesel at up to 5% and that is EN 14214. Your answer states that there are standards other than EN 14214, with which the biofuel component can be compliant, and that can be blended with mineral diesel at up to 5% while still meeting EN 590. What standards are you referring to? A copy of the relevant section from IS EN 590 is presented below.

5.3 Fatty acid methyl ester (FAME)

Diesel fuel may contain up to 5 % (V/V) of FAME complying with EN 14214.

NOTE A suitable method for the separation and identification of FAME is given in EN 14331 [3].

A. Blends of biofuels with mineral diesel which comply with the standard EN 590 are acceptable. The applicant must provide evidence that the blend will comply with EN590. A blend of up to 5% biodiesel, which complies with EN14214, with mineral diesel complies with EN 590.

Q47. On page 11 relating to the use of Biodiesel in captive fleets there is a requirement for verification that engine warranties cover the biofuel or biofuel blend proposed.

In carrying out our research to date we have been unable to source any engine manufacturer who will give a warranty in respect of B100 standard.

The following is the closest we have come to finding a suitable warranty.

http://www.biodiesel.org/pdf_files/OEM%20Statements/2004_OEM_cummins.pdf

On the basis that our customers are willing to modify vehicle engines and use B100 Biodiesel, once manufactured to specified standards, is it acceptable to have written confirmation of this from the customer rather than an Engine Manufacturers Warranty (which only covers parts and workmanship regardless of what fuel is used at any time)?

A. In the event that the warranty is not specific in relation to the proposed blend of biofuel to be used, a letter from the vehicle manufacturer confirming that the vehicle can run on the proposed blend will suffice.

Q48. I would like to clarify what should be filled in in the box next to “Audited accounts for last 3 Years” on page 3 of the Biofuels Mineral Oil Tax Relief Scheme II application form. As I am assuming you would like to get the accounts for the company for the last 3 years as separate documents, I am a bit unsure about what exactly should be written in this box.

A. Please see previous questions (Q36, Q37 & Q44) on the FAQ section of our web page on the Biofuels MOT Relief Scheme II which outlines the issue regarding audited accounts. You should write in the box that you are providing the relevant documentation with the application.

A. It is up to each applicant to determine themselves how they will manage the blending of the product in consultation with their local Revenue Commissioners Office.

Q50. How will the MOT relief work. As a producer of Biofuels is the producer exempt from charging the duty or is it on a reclaim basis by the end user?

A. Please see answers to questions (Q4 & Q35) on the FAQ section of our web page on the Biofuels MOT Relief Scheme II which outlines the issue regarding MOT relief.

Q51. A company uses 25,000 litres of fuel would we be eligible? If not there is another company willing to pair up with us, their company uses 100,000litres of fuel. Is it possible for the two companys to apply together?

A. Please see answer to question (Q9) on the FAQ section of our web page on the Biofuels MOT Relief Scheme II which outlines the issue regarding minimum and maximum amount eligible. With regard to the second part of your question the scheme is open to entities forming a partenership for the purpose of proposing and implementing a Biofuels project.as stated in paragraph 3 of the Guidance Note for Applicants on Application Procedure.

Q52. Which party obtains the excise duty relief? The producer, the distributor, or both? If both, presumably the product must be handled under bond by both the producer and the distributor/marketer?

A. Please see answers to questions (Q4 & Q35) on the FAQ section of our web page on the Biofuels MOT Relief Scheme II which outlines the issue regarding MOT relief.

Q53. To qualify for the excise relief does the biodiesel have to meet EN 14214? If biodiesel produced does not meet this specification is there a claw back of excise for the quantities affected?

A. Please see answer to previous question (Q26) on the FAQ section of our web page on the Biofuels MOT Relief Scheme II which outlines the issue relating to biodiesel standards in relation to biofuels complying with diesel standard EN590. In the captive fleets category all biodiesel must comply with biodiesel standard EN14214. If an applicant submits a proposal which is not in compliance with the standards set out for the scheme then the application will not be considered eligible. If a project is approved and subsequently fails to meet the agreed requirements, including standards, excise relief may be withdrawn - see section 6.5 in the Guidance Note for Applicants on Application Procedure.

Q54. In the project feasibility / viability section an estimate of biofuel unit cost net of excise duty and vat (but including distribution, mark up and other costs) is required. Does the mark up refer to the mark up for the producer or the forecourt / retailer?

A. The mark-up refers to the producer but may include the forecourt/retailer also, as appropriate to individual applications.

Q55. If excise duty derogation was granted on a quantity of sourced biodiesel for say 2007 and we were unable to sell the full quantity in that year we would obviously loose the excise for the unsold volume for that year. Are there any other penalties for not achieving the quantities and would it affect the quantities granted for derogation in the following years?

A. Please see paragraphs 6.3, 6.4 & 6.5 of the Guidance Note for Applicants on Application Procedure which outlines the position on this issue.

Q56. Under Quality Assurance - What level of quality assurance is required? i.e., is there a need to employ a quality assurance team to ensure quality?

A. No. The reason for requesting the minimum amount viable is as specified in the answer to Q6.

Q58. Under the project feasibility / viability can you expand on what is meant by ‘financial robustness’ of the project.

A. The applicant should be able to demonstrate that the project has the financial resources/backing available to set up, if appropriate, and/or remain in operation. The information is required to provide the assessment panel with relevant assurances that the project will proceed as outlined.

Q59. Can you please clarify what is meant by PPO (pure plant oil) in the MOT relief scheme. Does this mean 100% biodiesel produced from rape seedoil or soyabean oil and used as 100% in suitable engines. Can the rape seedoil or soyabean oil be imported or does it have to be grown in Ireland?

A. Under the PPO category, oil which is made from crops such as oil seed rape and used in modified diesel engines as a pure 100% oil with no blend of fossil fuel. It does not apply to biodiesel. The scheme is not restricted to biofuels or feedstocks produced in Ireland.

Q60. In the FAQ Question 28, the answer seems to imply SRM material cannot be used as a fuel. In Commission Regulation No. 2067/2005 amending Regulation 92/2005 it clearly states that Category 1 Tallow can be used in Biodiesel. Can you confirm that Category 1 Tallow is a permissible tallow product for this scheme.

Category 1 tallow is permissible provided it is not derived from
(i) animals suspected of being infected by a TSE in accordance with Regulation (EC) No 999/2001 or in which the presence of a TSE has been officially confirmed,(ii) animals killed in the context of TSE eradication measures.

Q61. Under part 2 ‘project technical description’ it says where “biofuel production is an integral part of the project”, what is meant by ‘provide conversion plant details’? It is proposed to grow oilseed rape and to provide a new oilseed rape crushing plant to provide PPO, a new plant will be required, there is no plan to convert.

A. "Conversion" means the process by which a raw material is converted into a biofuel and applies to the production process itself. All relevant details should be provided.

Q62. In the case of the captive fleets and in the absence of engine warranties, is there any point in making any application for this scheme? What support letters can be provided to the department to indicate lorry owners are prepared to use this plant oil in the absence of engine warranties?

A. Please see answer to previous question (Q3 & Q47) on the FAQ section of our web page on the Biofuels MOT Relief Scheme II which outlines the issue regarding warranties.

Q63. I have reviewed the application process and it seems to require information on a biofuels project. We do not intend to invest in a new project as we would be capable of delivering at least 10 million litres of biofuel per year based on our current production. Therefore, we would be capable of providing thorough and precise information concerning our production facility, our raw material sources, quality assurance, management, etc. Would this be sufficient? Also, since we do not have audited financial statements for the past three years, would unaudited financial statements be satisfactory?

A. It is open to your company to apply for relief under the scheme even if the biofuels are produced from an existing plant. All available and relevant information, including that which you have specified, should be provided with the application.

Q64. We would like to use part of the biodiesel produced by our facility in a 5% blend to produce EN590 Diesel and part of it as 100% clean biodiesel for vehicles with converted engines. Under this scheme, we will have to submit two separate applications, one in the EN590 category and one in the Captive fleet category. Our problem is that the two applications are too interconnected to be separated. Both need to go through in order for the project to be economically viable. We would also like to have flexibility in varying the percentage of biodiesel that is used in each of the two categories (5% and 100%) so that we can vary it according to demand and market conditions. However, putting in two separate applications means that we will be committing ourselves to a specific percentage of our product going into each of the two categories. Is there any way we can avoid this, either by including everything in one application or allowing for flexibility in the numbers that we submit? Is there anything else that you might be able to recommend?

A. As you have proposals in two categories you must submit two separate applications. Please note also paragraphs 6.3, 6.4 & 6.5 of the Guidance Note for Applicants.

Q65. Can you please advise on the MOT relief available to participants in the Biofuels Scheme II.
The current MOT on diesel fuel is 36.805 cent/litre.
What will be the MOT relief on Biofuels approved under the new Scheme II.
As explained I have been told that the scheme will operate as follows:-
If say the current price of diesel is 86.805 cent/litre - the seller of the fuel pays MOT of 36.805 cent/litre to the revenue and is left with 50 cent/litre.
With the Biofuel Scheme II MOT tax relief - if the producers cost are 60 cent/litre he will then pay 26.805 cent/litre to the revenue giving a total sale price of 86.805 cent/litre which is the same as normal diesel.
I am not sure if the above is correct and your clarification on the matter will be appreciated.

A. Paragraph 2.2 of the Guidance Note for Applicants on Application Procedure explains how excise relief will be applied to ensure that over compensation vis-à-vis fossil fuels does not occur. Please see answers to previous question (Q30) on the FAQ section of our web page on the Biofuels MOT Relief Scheme II regarding issues of over-compensation.

Q66. Is there a minimum requirement of the number of cars or litres you need to produce for the market place to qualify for the Bio Fuels Scheme II?

A. Paragraph 2.1 of the Guidance Notes for Applicants on Application Procedure explains the minimum requirements in terms of litres in each category. Please also see answer to previous question (Q9) on the FAQ section of our web page on the Biofuels MOT Relief Scheme II. There are no specific limits on the number of vehicles which may use the biofuel produced.

Q67. Can someone apply for a grant under this scheme in the absence of obtaining any engine warranty? Would it be sufficient to demonstrate that PPO (OSR) has been used for the last two years in lorries without engine modification to qualify for grant application?

A. Engine warranties are not required in the PPO category. This category however relates to PPO used in modified diesel engines. In the captive fleets category where engine modification may not be required please refer to paragraph 2.1 of the Guidance Note for Applicants on Application Procedure and please see previous question (Q47) on the FAQ section of our web page on the Biofuels MOT Relief Scheme II in relation to engine warranties.

Q68. If an applicant proposes to produce PPO oil from oilseed rape and use it in their own fleet and also supply local hauliers with PPO under scheme 2 does the applicant apply under the 2 categories ‘PPO and Biofuels Used in Captive Fleets’?

A. If an applicant is applying for MOT relief under more that one category then a separate application form must be used for each category being applied for and this is specifically stated in paragraph 2.2 of the Guidance Note for Applicants on Application Procedure. It is open to an applicant to apply under both categories subject to the relevant conditions of the scheme. In respect of these conditions, please refer to paragraph 2.1 of the Guidance Note for Applicants on Application Procedures and to answer to previous questions (Q47 & Q67) on the FAQ section of our web page on the Biofuels MOT Relief Scheme II.

Q69. Under project funding (page 11): Is the grant application for 40% for the scheme to be included in this table under EU Commission and under “own resources” should we differentiate between equity and loans?

A. This table relates specifically to sources of funding, including public and private funding, which have already been obtained or have been agreed/planned for the project. The application for excise relief should not be shown in the project funding table. Yes you should where possible differentiate between equity and loans.

Q70. Section 2.1 states that “The minimum project size in this category is 10m litres of biofuel per year.” Section 5.9 states that “… applicants shall in addition to specifying the volume of production on which excise relief is sought, also specify the minimum volume for which they require excise relief in order for their project proposal to remain viable.“ Can apply state a minimum volume of less than 10m litres of biofuel per year?

A. The minimum volume on which a project requires excise relief in order to remain viable should be stated within the context of the scheme, as projects can only be considered which produce the minimum volume specified for each category (see paragraph 2.2 of the Guidance Note for Applicants on Application). Please refer also to previous question (Q6).

Q71. In relation to the stated minimum quantity, imagine two companies intending to build the same size plant and scoring equally in the evaluation. If one states a minimum of (say) 15 million litres per annum and the other a minimum of 30 million litres per annum, will they be awarded the same quantity or different quantities?

A. Please see answer to previous question (Q6). It is not possible to speculate on individual scenarios.

Q72. We feel that the application is unclear, what is the mechanism for protecting sensitive commercial information in our application. If we request that some information remains confidential, do we tick the, I disagree box and then note on a separate schedule what information should remain undisclosed?
Does requsting confidentialty adversely affect the application?

A. Please see answer to previous question (Q16) on the FAQ section of our web page on the Biofuels MOT Relief Scheme II which outlines the issue regarding sensitive information. If you consider that any of the information in your application is sensitive you should indicate that you disagree with the statement and attach a schedule of the information to which you are referring. If you request confidentiality it will not in any way affect the application.

Q73. With regard to the 40% de-minimis rule which states that the maximum amount of public aid permissable is 40% of the total cost of the project, will the 40% calculation be based on the initial capital cost of the plant only or the combined capital and operating costs of the plant over the five year period of the scheme?

TAKEN WITH

Q74. In relation to the 40% limit on reliefs for the project, which the document says includes excise duty relief, can you explain how we are to quantify the assistance received against the capital cost of the project. Can you comment on the simple example below

1. Capital cost €4,000,000, producing 10,000,000 litres of biodiesel p.a.. Excise relief is potentially 36.805c per litre, giving a max excise relief of €3,680.500 relief. Which is clearly greater than 40%. Will this project be capped at €1,600,000 relief, and is that on a per annum basis or in total for the project.

A. Clause 1.4 of the Guidance Notes puts applicants on notice that the terms and conditions of the scheme are subject to any modifications required to comply with any conditions in the associated Decision of the Commission of the European Communities (“the Commission”) under A88.3 EC i.e. state aids rules.

In order to guide applicants in advance of that decision, applicants are put on notice, in the first instance, that the state aid in any individual case includes any aid provided under any other support programme. Any such aid must be added to the relief provided in this scheme in order to comply with state aids rules on the “accumulation of state aids”.

The applicable guidelines are the “de minimis rule” and the “Community guidelines on State aid for environmental protection”.

The de minimis rule provides that aid granted below certain levels will not distort competition contrary to the common good see “Commission Regulation (EC) No 69/2001 of 12 January 2001 on the application of Articles 87 and 88 of the EC and Treaty to de minimis aid” (OJ L 10, 13.1.2001, p. 30)

In addition to the de minimis rule, the Community guidelines on State aid for environmental protection make provision for aid intensity up to 40% as notified in the guidelines.

The Department has therefore referred applicants to the 40%/de mimimis rules. However it is a matter for applicant to take their own professional advice on the proper interpretation of these guidelines pending a formal Commission Decision as provided for in paragraph 1.4 of the Guidance Note for Applicants on Application Procedure.

Q75. I am still not sure if biodiesel produced for 5% blends complying with EU Diesel standard EN590 has to meet the EN14214standard. If it is a requirement what are the consequences of not meeting the standard?

A. Please see response to previous question (Q46) on the FAQ section of our web page on the Biofuels MOT Relief Scheme II which answers your query.

Q76. Does the derogation on the excise duty once rewarded apply for the five years of the scheme?

Is there an opportunity for new parties to apply for excise relief within these five years?

A. As stated in the documentation provided for the scheme the excise relief runs for five years from 2006-2010. Please refer to paragraphs 5.11 and 6.5 of the Guidance Note for Applicants on Application Procedure which outlines the position on the issue of further calls for proposals.

Q77. Is the relief from mineral Oil tax a 100% relief?

A. The relief relates to exemption from MOT only and the excise exemption shall only apply to the biofuels component of the final product blend with excise tax continuing to be charged on the fossil fuel component of the fuel. Please refer also to Paragraph 2.2 of the Guidance Note for Applicants on Application Procedure which outlines the position on the issue of relief levels.

Q78. On page 2 of Appendix 1, four different taxes on mineral oil are listed. Is the relief only on Mineral Oil tax and are the biofuel subject to 100% of the other taxes listed, or is mineral oil a collective term for the various taxes?

A. The scheme relates to MOT only.

Q79. On the FAQ page on the Department of Communications, Marine and Natural Resources website there is a link to http://www.revenue.ie for a table of the current rates of Mineral Oil Tax. I had a brief look but was unable to find this table, currently the revenue website is inaccessible. If possible, could you forward me this table?

A. Your local Revenue Commissioners Office should be able to provide you with this information.

Q80. Would it be possible to tell me what denaturants are acceptable for bioethanols coming into Ireland. We have been asked to give prices for denatured ethanol but do not know what the parameters are for the blend.

A. Please refer to paragraph 2.1 of the Guidance Note for Applicants on Application Procedure. The category in question is bioethanol which consists of undenatured ethyl alcohol of 80% by volume or higher and is intended for blending with petrol.

Q81. What relief/incentive is given in the MOT relief Scheme to individuals/companies who are setting up plants (or who have set up plants) to produce biodiesel whose intention it may be to supply the biodiesel produced to the biofuel blenders?

A. Please refer to previous questions (Q33& Q35).

Q82. In relation to the Categories outlined in the application, the following are the categories outlined Biodiesel : Blend up to 5%
Bioethanol : Blend up to 5%
Pure Plant Oil : to be used with a conversion kit
Biodiesel for Captive Fleets : with allowance for Blends greater than 5% subject to Manufacturers Warranties.

We plan to properly produce a biodiesel which is in itself a finished product currently available at the pumps in Germany. This product when produced properly requires no conversion kits or blending with diesel. The application at present does not appear to have a category under which this would be placed.

Can you advise further on which category we need to apply under and what the excise relief position would be in relation to this type of product.

A. The biodiesel in question would appear to be relevant to the “Captive Fleets Category”. Please see response to previous question (Q47) on the FAQ section of our web page on the Biofuels MOT Relief Scheme II.

Q83. In relation to the conversion of Biodiesel from veg oil using methanol, is there an excise refund available on the excise paid for the purchase of the methanol used, in the process.

A. The Biofuels MOT Relief Scheme II specifically relates to excise relief on the biofuel component of the fuel and no other aspect of the process. You should take up this issue with your local Revenue Commissioners Office.

Q84. Where it is intended to provide PPO for identified captive fleets is it also necessary to apply under the section pure plant oil, where this is produced from oilseed rape?

A. It is up to each individual applicant to decide which category under the scheme is applicable to their project. It should however be noted that in the captive fleets category where engine modification may not be required, applicants must provide evidence of engine warranties. Please see answer to previous questions (Q47 & Q67) in the FAQ section of our web page on the Biofuels MOT Relief Scheme II. In the PPO category engine warranties are not required but this category relates to PPO used in modified diesel engines only.

Q85. Pure Plant Oil is a biodiesel plant from ONLY rapeseed oil?

A. Please refer to paragraph 2.1 of the Guidance Note for Applicants on Application Procedure of the Guidance Note for Applicants on Application Procedure.

Q86. Is biodiesel blended with EN590 the final product or is it possible to sell biodiesel pure in Ireland in order to make it be blended in Ireland?

A. Paragraph 2.1 of the Guidance Note for Applicants on Application Procedure gives details of the four categories of biofuel being considered under this scheme. Please see answer to previous questions (Q33&Q35) in the FAQ section of our web page on the Biofuels MOT Relief Scheme II.

Q87. Is biodiesel in Ireland without any tax or is it only reduced? If it exists how much is the excise?

A. The excise on diesel in Ireland is currently .36805 Euro cent. Please see paragraph 2.2 of the Guidance Note for Applicants on Application Procedure.

Q88. Can a company which produces biodiesel in Italy enter in the Irish biodiesel market for the next years ?

A. Yes the scheme is open to applicants in other EU countries.

Q89. If there is a max annual amount what is this amount, which quantity we can ask for?

A. Please see the answer to previous question (Q9) in the FAQ section of our web page on the Biofuels MOT Relief Scheme II. Please see also paragraph 2.1 of the Guidance Note for Applicants on Application Procedure.

Q90. If an applicant produces and sells only pure biodiesel, which is, in your opinion the right CATEGORY OF BIOFUEL to be asked for?

A. Based on the information provided you could be eligible to apply under the Biofuels used in identified Captive Fleets Category, subject to the conditions of that category.

Q91. Do you think it is possible to enter in the market if in this moment we have any biodiesel contracts?

A. Please refer to the sections on “Sourcing of Biofuel” on page 7 and "Access to Market" on page 9 of the Application Form at Appendix III of the Guidance Note for Applicants on Application Procedure and also refer paragraph 5.8 of the of the Guidance Note for Applicants on Application Procedure which relates to the scoring mechanism for the scheme.

Q92. Is biodiesel used at 100% or it is used only in blend?

A. Paragraph 2.1 of the Guidance Note for Applicants on Application Procedure gives details of the four categories of biofuel being considered under this scheme.

Q93. Part 1 of the Application form states that in the case of a partnership or grouping, each entity shall separately provide applicant / company details. If there are three separate entities and a new Limited company which will undertake the project will only be formed when the allocation is awarded how do we complete the first part of the form?

A. If it is proposed to set up a new company only if excise relief is awarded then you should still provide details separately of all those who will be involved.

Q94. Would it be acceptable for a biodiesel company to take over the responsibility of a vehicle warranty from the vehicle manufacturer for any damage potentially caused by the use of Biodiesel?

A. Please see answers to previous questions (Q3 & Q47) in the FAQ section of our web page on the Biofuels MOT Relief Scheme II where the position regarding engine warranties is clearly outlined.

Q95. Does the tax exemption only apply to captive fleets identified in the proposal submitted by the 28th August? Can captive fleets identified after this date be supplied with tax exempt biodiesel?

A. When submitting an application under the captive fleets category applicants must identify the captive fleet in question. Successful applicants could, over the lifetime of the programme add additional fleets / vehicles but subject to the specific conditions of the category in question.

Q96. Paragraph 2.1 refers to 'litres of fossil diesel equivalent'. What mechanism is used to calculate equivalence? Does it go by energy content or a straight litre to litre equivalence?

A. The mechanism to be used to calculate equivalence should be on an energy content basis. So for example, in the case of biodiesel, the minimum value would be 109,890 litres.

Q97. Applicants are requested to detail any public funding/aid, as EU state aid rules allow a maximum of 40%. Should the combination of public aid and proposed excise relief exceed 40%, the applicant may be offered a partial relief of excise to ensure the 40% rule is not exceeded.

Public Funding/Aid available:
(1) Where would one seek public funding/aid may be available to such