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This report analyzes the legislative and regulatory framework surrounding sustainability criteria for bio-fuels in Australia, France, Germany, and Switzerland, as well as proposals for related studies in those countries. The discussion covers taxation and grant incentive programs, quotas for the addition of bio-fuels, and European Union guidance on the topic, while referencing the specific laws and regulations of the countries surveyed.

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The Australian government has recently reviewed and amended its taxation and grant programs in relation to alternative fuels. The purpose of these amendments was to simplify and rationalize the taxation system. In effect the changes will gradually increase the amount of taxation paid on alternative fuels (although such taxation will still be less than traditional fuels).

There is no legislative requirement that alternative fuels preferenced through government taxation or grant programs be ‘environmentally sustainable,’ although several schemes that impact on alternative fuels have the stated intention of assisting in the reduction of greenhouse gas emissions. The Australian government has commissioned a report on the emissions (including upstream and tailpipe emissions).

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Growing concerns about the final environmental impact of bio-fuels has led the French government to require that the French environmental agency prepare a comprehensive and adversarial study on the ecological and energy effects of the first generation of agro/bio-fuels. This study will help decide the place of bio-fuels in France’s energy portfolio for the future and whether the French government must revise its present policy that strongly stimulates bio-fuel production and use for transportation. At the moment, there is no legislative action at the national level addressing sustainability criteria for bio-fuels.

The European Commission recently published a proposal for a Renewable Energy Directive that sets forth stringent environmental sustainability criteria for bio-fuels, a system to verify that Member States comply with such criteria and a method for calculating the greenhouse gas impact of bio-fuels.

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In 2006, Germany began a drastic reduction of the preferential tax treatment of bio-fuels and instead imposed mandatory quotas of bio-fuels that have to be added to gasoline and diesel. In 2007, Germany drafted a Biomass Sustainability Regulation that limits the inclusion of bio-fuels in the mandatory quota to those that save first thirty and, later, forty percent of greenhouse gas emissions as compared to the corresponding fossil fuel. The Draft Regulation requires these savings to be calculated according to prescribed methods or rigorous default values and also establishes stringent sustainability criteria. The Regulation is expected to be enacted in the spring or summer of 2008. In the long run, however, Germany may have to lower its standards to be in compliance with the a recently proposed European Union Directive that in its current draft form sets the emissions savings criterion at thirty-five percent but insists on lesser sustainability criteria.

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Switzerland is expected to publish a regulation on sustainability criteria and emissions savings requirements for bio-fuels early during the year 2008. Until now, it has not been published.

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Last Updated: 07/01/2015