PER - Biofuels

The biofuels regulatory framework aims to encourage the production of biofuel on a commercial scale by establishing transparent criteria for selecting biofuel manufacturing projects. To achieve a 2% penetration of biofuels into the local transport fuel pool, an incentive scheme was announced in 2013 that will provide a guaranteed return on assets of 15% to an efficient biofuels producer. It is hoped that the commercial production of biofuels will stimulate significant economic development and employment in the agricultural sector. The fiscal production incentive for biofuels will be funded by a biofuels levy on all petrol and diesel sold for domestic consumption. The level of the incentive required to generate the 15% return on assets in an indicative efficient biofuels plant will be determined on a monthly basis via a biofuels incentive model. Should a biofuels manufacturer’s return on assets exceed 20%, a ‘claw-back’ would come into effect, in terms of which it would pay the ‘excessive’ profits back to the subsidy scheme