UK government to implement ethanol tariff in no-deal Brexit

By Erin Voegele | October 09, 2019

The U.K. government announced Oct. 8 it will adjust tariffs on ethanol in the event of a no-deal Brexit in order to retain support for U.K. ethanol producers, noting the “supply of [ethanol] is important to critical national infrastructure.”

The announcement on ethanol tariffs was part of an update on the U.K.’s planned temporary tariff regime issued Oct. 8 that also addressed duties for heavy goods vehicles (HGVs) and clothing. The U.K. Department for International Trade initially published a document describing planned temporary import tariff rates and quotas for a no-deal Brexit in March. 

According to information posted to the U.K. Department for International Trade website, undenatured ethyl alcohol of alcoholic strength of 80 percent or more for use as fuel would be subject to a €19.2 per hectoliter (approximately $21.07 per 26.42 gallons) tariff. Undenatured ethyl alcohol and other spirits of any strength for use as fuel would be subject to a €10.2 per hectoliter tariff. Undenatured ethyl alcohol of an alcoholic strength of less than 80 percent by volume in containers holding more than 2 liters for use as fuel would be subject to a €1/%vol/hectoliter tariff. h

Citizens of the U.K. voted to leave the European Union in June 2016 referendum known as Brexit. Current U.K. Prime Minister Boris Johnson has committed to leaving the on Oct. 31 with or without a deal. Under a no-deal Brexit, the U.K. will essentially be left without agreements governing its interactions with other countries.

The U.K. Renewable Energy Association has issued a statement in support of the ethanol tariff announcement. “The decision to retain tariffs is excellent news for the bioethanol industry which is already facing difficulties due to the delay in the introduction of E10,” said Nina Skorupska, chief executive of the REA. “Exposing domestic manufacturers to additional competition though the removal of tariffs would have meant the closure of the remaining producer, the loss of around 100 direct jobs and huge damage to U.K. agriculture. In this time of uncertainty, it is encouraging to see HM Treasury take steps towards supporting the industry.”

UNICA, the Brazilian sugarcane industry association, however, is speaking out against the U.K.’s planned ethanol tariff. “The Brazilian Sugarcane industry association was both surprised and disappointed to learn about the United Kingdom’s decision to raise its intra-tariff quota rate for ethanol in the case of no deal being agreed with the European Union,” said UNICA in a statement.

“To achieve its goal of attaining net zero greenhouse gas emissions by 2050, the United Kingdom seems to have overlooked the essential contribution of imported sugarcane ethanol in industrial and transport policies,” UNICA continued. “Sugarcane ethanol reduces greenhouse gas emissions by 90 percent on average compared to petrol. This is the best carbon performance of any biofuel produced at commercial scale. Intra-tariff rate quotas would make access to ethanol more expensive for British producers and distributors, and lower the competitiveness of the British green economy.”

The U.S. exported significant volumes of ethanol to the U.K. between 2010 and 2012, including 2.84 million barrels in 2011 and 1.6 million barrels in 2012. That changed in early 2013, when the European Commission announced a €62.9 per metric ton duty would be levied to all imports of ethanol from the U.S. that were aimed at the fuel market for five years. Those anti-dumping duties were set to expire in February 2018. The commission, however, announced those duties would remain in place while it completed expiry review of the anti-dumping measures on imports of ethanol. The commission announced in May 2019 it would repeal the anti-dumping duties on European Union imports of U.S. ethanol. Following that announcement, the U.K. did resume importing modest volumes of U.S. ethanol, including 86,000 barrels in May, 38,000 barrels in June and 72,000 barrels in July, according to U.S. Energy Information Administration data.