Subsidy in Bio-fuels.

The growth of biofuels in recent years have been embraced by the governments of many developing countries in many ways by boosting up there domestic markets and there international trade. Bio-fuels have also been promoted to developing countries as opening new markets for the agricultural goods. In process of developing the growth of bio-fuel production in the countries governments have played a fundamental role in shaping domestic bio-fuel industries through subsidies, the development of bio-fuel in domestic markets and international trade was in pink, but I also attracted attraction for negative impact on food prices, environment and the subsidies rate given by the government. In my project paper I would first give a brief explanation what subsidies are how the role of subsidies are important, then I would discuss all materials in relation with the subsidies in bio-fuels.

UNITISATION Introduction. Government support in developing bio-fuel. Bio-fuels and environmental concerns. International bio-fuel trade and WTO. Conclusion.

INTRODUCTION The world in the 21 century has experienced changes in trends on many daily uses of man among them one is the change or shift from fossil fuels to bio-fuels which are the alternative for fossil fuels. Biofuels are one such alternative that has been emphasized by various countries and international institutions as fuels for the future. Biofuels are any fuel that is derived from biological sources. Wood, charcoal, dung and plant based oils are some examples of biofuels.

GOVERNMET SUBSIDIES Government subsidization for biofuels is significant, and these policies have played a major role in shaping domestic industries. The subsidies are the central reason for the rapid growth bio-fuel production. The European and the unitednations are the two countries who had concentrated on biofuels and its benefits. China and india are among the developing nations and are moving forward in the developing bio-fuels in there nations by providing subsidiesi would later highlight the bio-fuel policy in india. The top six major countries which promote biofuels are Usa,Brazil,Eu,China,Canada and India. The policies of these nations in developing the bio-fuels are continue to evole. The policies of all the major countries are similar like they have put up target to mandate the bio-fuels to replace petrol and diesels. And to provide fuel-tax reduction and other financial assistance. Subsidies to the bio-fuel agriculture product is a significant source of supporting in making agriculture policies. India have programme to develop the agricultural product of bio-fuel in increasing the production. The tax credits for the bio-fuel products. The granting of loans for the development of infrastructure, tax incentives to assist with infrastructure costs. Grants for the product development with no interest-free loans.

General agricultural subsidies for the feedstock(sugar and cane),and in-direct subsidies to the inputs such as fertilizers, water and seeds etc.

GLOBAL BIO-FUEL PRODUICTION,TRADE AND WTO. Despite the enthusiasm with which bio-fuels are been given the subsidies for the global production. The organisation for the economic co-operation and development (OECD) estimated that the bio-fuel production in 2010 was 62 billion litres that is equivalent of 18 percent of total global fuel consumption 1. However the bio-fuel production have increased rapidly in the recent years and it might take a boon in the world trade. WTO. At the time of the Uruguay round the bio-fuels had less window with few countries having the intrest. But the product have gained a greater significant I the doha rounds as the development of the product in the member countries have increased and as the trade is relatively low the major producing countries are worried about the subsidies. The credits and reduction to the bio-fuels are common form of support given by the government. The subsidies include transfer of funds from the government revenue and it is due to the government expenditure and which forgone or not collected. As to collect the due the tax is imposed on the taxpayers. In the case of bio-fuels the WTO panel has said that imposing the tax measures , it must frist be determined weather it was finical contribution . to decide this a benchmark must be established against which the measure can be assessed. The appellate body has said that an appropriate benchmark should be based on the tax rules of the WTO members. But here the national national regime comes in. BIO-FUEL PRODUCTION BY FEEDSTOCK USED and FEED STOCK SUBSIDIES. The cost of biofuel feed stocks is a major component of biofuel production costs. Accordingly, feedstock subsidies have the potential to have a significant impact on production costs and output. An examination
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www.oedc.com,

of subsidies at the agricultural producer level is therefore essential to any biofuel subsidy analysis. In developed countries, the share of vegetable oil based biodiesel over total biodiesel produced should decrease from 85% on average over the 2008-10 period to 75% in 2020. Biodiesel produced from non-agricultural sources such as fat and tallow, as well as from waste oils and by-products of ethanol production, should represent about 15% of total biodiesel produced in the developed world over the projection period. Second generation biodiesel production is expected to grow in developed countries from 2018 and to represent about 10% of total biodiesel in 20202.

BIO-FUELS SUBSIDIES AND THE IMPACT. The bio-fuels subsides have a great indirect impact on many products in the markets.as bio-fuels are important to every nations grants are given by the nation in developing the fuels in this process there is an impact on other products. It is argued that the rate at which the subsidies are given will decrease the food security in developing nations as the prices of the products increase and it becomes difficult to buy the daily needs. India is particularly vulnerable to food security issues. As of 2008, the United Nations Development Programme estimated that over 27% of Indians live below the poverty line and lack access to enough calories per day to sustain a healthy lifestyle. As recently as 2006, India imported 2.2 million tons of wheat in order to ensure food availability. If more food is siphoned off from the food markets into the energy market to grow the biofuel industry, it is likely that the food-versus-fuel conflict will come into play3.

http://www.agrioutlook.org/document/0/0,3746,en_36774715_36775671_47877696_1_1_1_1,00.html 3 http://biofuelsandthepoor.com/case-study-india/

World ethanol prices increased by more than 30% in 2010 in the context of a new commodity price spike of ethanol feed stocks, mainly sugar and maize, and firm energy prices. This situation contrasts with 2007/08 where ethanol price movements did not follow the pace of the commodity price increases and ethanol profit margins were reduced. The US became for the first time a net exporter of ethanol in 2010, while exports from Brazil were reduced significantly in a context of sky-high raw sugar prices and relatively more competitive corn-based ethanol when compared to the previous years 4. The costs of biofuel production and distribution are generally higher than of the fossil-fuels counter parts. The higher costs o f b i o f u e l p r o d u c t i o n ma y r e s u l t i n h i g h e r c o s t s t o c o n s u me r s , p r o mp t i n g g o v e r n me n t s t o o f f e r f u e l t a x r e d u c t i o n s t o c o mp e n s a t e f o r t h e a d d i t i o n a l c o s t s t o e n c o u r a g e c o n s u mp t i o n .

BIOFUELS-INDIA. I n d i a b e i n g a d e v e l o p i n g n a t i o n a n d b e i n g mo s t p o p u l a t i o n n a t i o n h a s a d o p te d f o r t h e d e v e l o p me n t o f b i o - f u e l s a n d p a s s e d a b i o f u e l p o l i c y o n 1 1 s e p t e mb e r 2 0 0 8 . T h e s a l i e n e t f e a tu r e s i n d i a b i o f u e l p o l i c y a r e . An indicative target of 20% by 2017 for the blending of biofuels bioethanol and bio-diesel has been proposed. Bio-diesel production will be taken up from non-edible oil seeds in waste / degraded / marginal lands. The focus would be on indigenous production of bio-diesel feedstock and import of Free Fatty Acid (FFA) based such as oil, palm etc. would not be permitted. Bio-diesel plantations on community / Government / forest waste lands would be encouraged while plantation in fertile irrigated lands would not be encouraged.
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Minimum Support Price (MSP) with the provision of periodic revision for biodiesel oil seeds would be announced to provide fair price to the growers. The details about the MSP mechanism, enshrined in the National Biofuel Policy, would be worked out carefully subsequently and considered by the Bio-fuel Steering Committee. Minimum Purchase Price (MPP) for the purchase of bio-ethanol by the Oil Marketing Companies (OMCs) would be based on the actual cost of production and import price of bio-ethanol. In case of biodiesel, the MPP should be linked to the prevailing retail diesel price. The National Biofuel Policy envisages that bio-fuels, namely, biodiesel and bioethanol may be brought under the ambit of Declared Goods by the Government to ensure unrestricted movement of biofuels within and outside the States. It is also stated in the Policy that no taxes and duties should be levied on bio-diesel5.

http://india.gov.in/, http://www.svlele.com/biodiesel_in_india.htm

CONCLUSION. My views of subsidies on biofuels are. Although bio-fuels technology was attracted and adopted by many counties it has got its share of negative effects. The government subsidies have played a great role in shaping the bio-fuels for the future use. The government apart from providing subsidies has also provided many incentives like interest free loans and lands for the infrastructure. Bio-fuels are developed as an alternative for the fossil fuels and the developing nations. Establishing bio-fuels units in the nations has provide employment for the rural people as it requires unskilled labour. But it has got its criticism Bio-fuels subsidies has given on major effect that Is the food security , due to the subsidies there are a great rise in the food prices and it becomes difficult for the common man.

PAPER PRESENTATION OF INTERNATIONAL TRADE LAW

ON SUBSIDIES ON BIOFUEL.

A.P.University of Law APRIL,2012.

BY ,
MITHUN SHASHANK.B,

2009-25.

ACKNOWLEDGEMENT
I owe a great many thanks to great many people who guided me through this project. My deepest thanks to lecturer M.Madavi mam the guide of my project who helped me choosing the project topic and by making corrections and guiding me through the material. And my gratitude to all my friends.

Thank you.

INDEX
INTRODUCTION GOVERNMET SUBSIDIES GLOBAL BIO-FUEL PRODUICTION,TRADE AND WTO. WTO. BIO-FUEL PRODUCTION BY FEEDSTOCK USED and FEED STOCK SUBSIDIES. BIO-FUELS SUBSIDIES AND THE IMPACT. BIOFUELS-INDIA. CONCLUSION.

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