Everywhere in the world, except perhaps in Brazil, the economic viability of biofuels relies heavily on subsidies from the authorities and/or governments. This is the case in the United States and in most EU member states, but also in different countries on the Asian continent. Aids granted are often limited in time and can be direct (in the form of fuel tax exemption or reduction) and/or indirectly (aids to the agricultural sector).
The cost associated with the exemption or reduction of the fuel tax on biofuels, however, pushes some countries to define production quotas, corresponding to predefined budgets. This is particularly the case of France, Italy, Sweden and the Czech Republic. Biofuels thereby end up in a closed market where biodiesel and bioethanol are in competition. Spain and Germany (until 2007) have opted instead for a complete tax exemption without quotas, enabling both biodiesel and bioethanol to grow very rapidly.
The production cost of biofuels (in the order of 0,95-1,15 CHF/l in the EU) is still substantially higher than that of conventional fuel (i.e. about 0,65-0,70 CHF/l for diesel and 0,55-0,60 CHF/l for gasoline). However, the present context of tax reduction for biofuels leaves the possibility to benefit from alternative fuels, potentially more environmentally friendly.
In Switzerland, some industries and activity sectors benefit from a tax relief on conventional fuels [1]. This is the case in the sectors of agriculture, forestry, fisheries, but also of public transport (concessionary transport companies of the Confederation). At the current prices of fossil fuels, the use of biofuels generally goes together with an increase of fuel costs, in spite of the tax exemption granted to biofuels.
Fuel blends of up to 5% vol. biofuels such as B5 or E5, available in various service stations, are however generally offered the same price as conventional fuels. The price of such fuel blends are strongly associated with the price of diesel and gasoline.
