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With the amendment of 23 March 2007 of the Mineral oil taxation Law (Limpmin) [1], the Federal Council has decided to exempt renewable fuels from the mineral oil tax, provided that they prove to have a positive global ecological balance and to be produced in a socially acceptable way.
With the amendment of 30 January 2008 the Mineral oil taxation Ordinance (Oimpmin) [2], the Federal Council has regulated the tax reduction applicable to renewable fuels. Article 19b Oimpmin sets the minimum requirements of a positive global ecological balance.
These minimum requirements are considered to be fulfilled for fuels produced out of wastes or biodegradable residues from the manufacturing or processing of agricultural or forestry products, if they were manufactured according to the latest technologies. In this case, no specific evidence of positive global ecological balance is required. A study by EMPA [3] on behalf of Federal authorities has shown that this type of fuel resulted in savings of greenhouse gas emissions of more than 40% with respect to fossil gasoline and that the associated environmental impacts were not much larger, and even mostly weaker, than those of fossil gasoline. The Directorate General of Customs and FOEN define all fuels considered as being obtained from waste or residues.
For all other fuels from renewable raw materials, proof of a positive global ecological balance must be provided so they can benefit from tax reduction. It is considered that biofuels from palm oil, soybeans or cereals do not comply with the minimum requirements. However, if the importer or manufacturer believes that a fuel produced from such materials would satisfy the requirements, they may however submit it to the global ecological balance procedure.
The Biofuels life-cycle assessment Ordinance (OEcobiC) [4] defines the terms of proof in accordance with Art. 19c, al. 5 Oimpmin. The information below is mostly taken from the explanatory report on the draft Ordinance in June 2008 [5], adjusted to the final text of the Ordinance.
Principe
As a general rule, fuel manufacturers or importers must report and demonstrate two aspects.
First, they describe the entire process of fuel production, from cultivation of raw materials to the distribution of fuel at the service station. The aim is to determine the flow of energy and materials throughout the life-cycle of fuels. On this basis, and assuming average values for the utilization of fuels, the FOEN evaluates the greenhouse gas and global ecological balances by means of a life-cycle assessment. The FOEN checks if the minimum requirements for a positive global ecological balance are met, i.e. a reduction of GHG emissions by at least 40% and associated environmental damages that are not much larger than those of fossil gasoline. It also takes potential environmental benefits into account, in particular those effects which can not be directly quantified in the ecological balance.
Second, manufacturers or importers must demonstrate that the cultivation of raw materials does not endanger either the rainforest (or other ecosystem functioning as CO2 sink), or biodiversity. On this basis, the FOEN checks if the minimum requirements for a positive global ecological balance are met.
The most significant aspects of the Biofuels life-cycle assessment Ordinance are presented below. The information and cited articles are provided for information purposes and one shall refer to the official documents.
Requirements regarding the proof of positive aggregate environmental impact
Article 2. Principle
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To furnish proof of positive aggregate environmental impact, the applicant must provide information on:
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the types of fuels (Art. 3);
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the threats to rainforests and biological diversity (Art. 4);
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the entire fuel production chain from feedstock cultivation to receipt of fuels by consumers (Art. 5–7).
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The information stipulated in paragraph 1 must be comprehensible, traceable and verifiable.
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The applicant must provide documentation that proves the accuracy of the information. The Federal Office for the Environment (FOEN) may demand that independent third parties which it has approved verify and confirm the accuracy of the information.
Article 3. Types of fuels
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The applicant must provide information on:
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the designations of the fuels;
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the quality of the fuels, taking account of recognised standards;
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the designations of the renewable feedstocks used to produce the fuels.
Article 4. Threats to rainforests and biological diversity
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The applicant must provide information on:
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the origin of the feedstocks used, including the exact name and a characterisation of the sites where they are cultivated;
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the use of the cultivated area between 1 January 2004 and the date of feedstock cultivation or, as of 1 January 2014, in the ten years preceding feedstock cultivation;
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the environmental regulations applicable to the area where the feedstocks are cultivated, including those concerning air pollution control, protection of soil, water, groundwater and biological diversity and protection against invasive species, as well as information on compliance with these regulations;
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the observance of good agricultural practices in feedstock cultivation, particularly information on the careful use of plant protection products and fertilisers, on the cultivation and harvesting techniques employed, including crop rotations to maintain soil quality and prevent erosion, and on the selection of appropriate soils and crop species for cultivation.
Article 5. Feedstock cultivation
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The applicant must provide information on:
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the crop rotation employed in the cultivated area;
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the quantitative and economic yields of the crop species used;
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the types and quantitative and economic yields of the by-products and wastes generated during harvesting;
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the cultivation and harvesting techniques, stating machine usage and energy sources used;
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the types and quantities of fertilisers and plant protection products used;
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the irrigation techniques employed, as well as the quantity of water consumed and the type of water resource used.
Article 6. Fuel production
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The applicant must provide information on:
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the technology used to produce the fuels;
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the types and quantities of energy consumed in the process;
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the types and quantities of auxiliary substances used;
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the types and quantities of products and by-products generated during the production process;
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the energy and economic yields of the products and by-products;
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the types and quantities of wastes generated in the production process as well as their management;
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the greenhouse gases and environmental pollutants released during production of the fuels.
Article 7. Transport
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The applicant must provide information on:
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the processing sites;
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the means of transport and distances travelled from the feedstock cultivation site to the site where consumers receive the fuels.
Article 8. Specific ecological benefits
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In addition, the applicant may provide information on specific ecological benefits of the production process, particularly on measures that:
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enhance biological diversity;
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enhance soil fertility;
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protect non-renewable water resources.
Article 9. Presentation of information and documentation
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The information stipulated in Articles 3–8 must be presented on the official form published by the Directorate General of Customs (Oberzolldirektion, OZD).
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The documentation proving the accuracy of the information must be enclosed with the official form.
Article 10. Simplified procedure
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The FOEN may release the applicant from the obligation to provide information stipulated in Articles 3–7 if the applicant can prove that the fuels were produced in accordance with a national law or a nationally or internationally recognised standard that is fully or partially equivalent to the minimum requirements for the positive aggregate environmental impact pursuant to Article 19b MinOTO. Applicants must enclose the relevant law or standard with their application.
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The FOEN is responsible for recognising equivalence pursuant to paragraph 1.
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If the applicant can prove that the fuels were produced in compliance with the requirements of the environmental performance record (ökologischer Leistungsnachweis, ÖLN) stipulated in Articles 5–16 of the Ordinance of 7 December 1998 on Direct Agricultural Subsidies [6], the FOEN generally releases the applicant from the obligation to provide the information stipulated in Articles 4 and 5.
Verification procedure
Article 11. Check of completeness
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The FOEN checks that the proof furnished is complete.
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If the applicant has requested that the simplified procedure under Article 10 be applied, then the FOEN checks whether the preconditions for the simplified procedure are given.
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The FOEN may request that the proof be completed or additional proof or information be submitted, if this is necessary for the assessment of the aggregate environmental impact.
Article 12. Assessment of threats to rainforests and biological diversity
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The FOEN assesses whether rainforests and biological diversity are endangered by the cultivation of the feedstocks.
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They are endangered in every case if:
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cultivation occurs within nationally or internationally designated protected areas;
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cultivation occurs in areas that were part of ecosystems of particular conservation value, such as forests, wetlands and grasslands of great biological diversity, provided the conversion into a cultivated area occurred after 1 January 2004 or, as of 1 January 2014, in the ten years preceding the cultivation of the feedstocks;
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the environmental regulations applicable to the area where the feedstocks are cultivated, in terms of Article 4 letter c, are not complied with; or if
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the good agricultural practices in terms of Article 4 letter d is not observed in the cultivation of the feedstocks.
Article 13. Greenhouse gas and environmental impact inventories
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The FOEN compiles greenhouse gas and environmental impact inventories, based on the information presented in accordance with Article 9 and applying standard reference values for the consumption phase of the fuels.
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To compile its inventories, the FOEN uses in particular:
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datasets from the database maintained by the Ecoinvent Centre [7] or from databases of comparable quality in terms of their verifiability, traceability and third-party verification;
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the ecological scarcity method [8] or other methods of comparable quality in terms of verifiability, traceability and completeness.
Article 14. Comparison of greenhouse gas emissions with those from fossil fuels
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Based on the greenhouse gas inventory (Art. 13, para. 1), the FOEN assesses whether the fuels give rise to at least 40% less greenhouse gas emissions than petrol of fossil origin.
Article 15. Comparison of environmental impacts with those of fossil fuels
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Based on the environmental impact inventory (Art. 13 para. 1), the FOEN assesses whether the fuels do not give rise to substantially greater environmental impact than petrol of fossil origin.
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In general, environmental impact, as determined by the ecological scarcity method (Art. 13 para. 2 let. b), is deemed to be substantially greater if it exceeds that of petrol of fossil origin by more than 25%.
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The FOEN takes account of the specific ecological benefits of the production process presented by the applicant in accordance with Article 8.
Article 16. Assessment of aggregate environmental impact and assessment report
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On the basis of Articles 12–15, the FOEN assesses whether the aggregate environmental impact of the fuels has been proven to be positive. It may call on independent experts for that purpose.
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It summarises the conclusions of its assessment in an assessment report forwarded to the Directorate General of Customs (Oberzolldirektion, OZD).
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It supplements the report with an estimate of the maximum quantity of fuels that the applicant can be expected to produce based on the information provided.
Article 17. Timetable for assessment
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The FOEN generally completes the assessment within 60 days of receipt of all required information and documentation.
Entry into force
Article 18. Entry into force
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This Ordinance comes into force on 15 April 2009.
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Producers and importers of biofuels wishing to benefit from tax exemption must bring the proof of a positive global ecological balance. The terms of the proof are provided in the Biofuels life-cycle assessment Ordinance (OEcobiC) by the Department of the Environment, Transport, Energy and Communications (DETEC).
As mentioned in Art. 9, the information stipulated in Art. 3–8 must be presented on the official form published by the Directorate General of Customs (Oberzolldirektion, OZD) [9]. In this respect, it provides a synthesis document describing the minimum ecological and social requirements as well as the procedure to prove that these requirements are fulfilled [10].
Pilot and demonstration biofuel facilities (within the meaning of Article 35 Oimpmin) having an authorization and producing already biofuels with tax exemption, will be subject to the provisions of the revised Limpmin only after a transitional period, i.e. from 1 January 2012.
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