Is the reduction in tax incentives for B100 justified?

During the budget debates on the 2026 Finance Bill, the issue of reducing tax incentives for B100 has sparked a wide range of reactions. As the debate intensifies, Carbone 4 offers an analysis to clarify the issues surrounding the taxation of alternative energy sources (particularly B100).

B100 is a biodiesel made from plant-based raw materials, produced primarily in France using French rapeseed. Using this raw material, it reduces emissions by 60% compared to fossil-based diesel, with a low risk of land-use change.^[1]. B100 is therefore indeed an alternative to fossil fuels because it has a lower carbon footprint, just like HVO100 (which is also biodiesel, but produced differently), provided it is sourced from sustainable raw materials such as French rapeseed. Nevertheless, as we explained in our January 2025 publication^[2], electricity will eventually become the dominant energy source, particularly for heavy-duty vehicles—whether for short- or long-distance travel—because sustainable resources for producing biofuels (B100, HVO100, bioNGV) are very limited. B100 can therefore only serve as a transitional energy source in the short to medium term.

In terms of taxation, B100 currently benefits from two forms of support.

The first is the TIRUERT tax (Incentive Tax on the Use of Renewable Energy in Transportation) which requires fuel suppliers to blend a certain percentage of renewable energy (currently around 9%). If this target is not met, they must pay the tax; if it is exceeded, they can sell certificates to other suppliers (thereby allowing them to avoid paying the tax). This mechanism helps reduce the retail price of B100 and supports its development. The same mechanism applies to other renewable energy sources used in transportation, namely: liquid biofuels (HVO, biodiesel, bioethanol), gaseous biofuels (bioNGV), hydrogen, e-fuels, and electricity from renewable sources (as opposed to that from the national grid).

The second source of support for the B100 comes from a reduction in the excise tax on energy products (formerly known as TICPE), which accounts for the bulk of fuel taxes (59.4 ct€/L for diesel). In energy terms, The excise tax on diesel is currently around 59 €/MWh (45 €/MWh, taking into account the partial refund of this excise tax for trucking companies), in the range of 19 €/MWh for GNR, in the range of 5 €/MWh for bioNGV and in the range of 13 €/MWh for B100. Some forms of energy are not subject to a specific excise tax, such as the HVO or thehydrogen For example, these are therefore subject to the same excise taxes as conventional diesel. Electricity in the transportation sector is exempt from excise tax but does not benefit from the TIRUERT if the electricity comes from the national grid.

Thus, the B100 (and bioGNV) benefits from two tax incentives; the TIRUERT and the energy excise tax (formerly TICPE). That is why the government has proposed reducing the tax breaks on B100 as part of the 2026 budget bill, given that the General Secretariat for Ecological Planning showed last January that, with an excise tax equivalent to that on diesel, B100 would remain competitive:

While B100 is intended to serve only as a short- to medium-term transition fuel relative to electricity, and its growth must be limited to avoid depleting sustainable resources, it seems justified and fair to provide it with only one form of tax support, such as that for HVO100 biodiesel, especially since it will remain more cost-effective than diesel. And the bulk of the tax support should go toward electric transportation, which will be the most sustainable alternative and which currently remains more expensive overall than diesel.