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Commission approves prolongation of Sweden's biofuels tax exemption

The European Commission (EC) has announced that it has approved, under EU State aid rules, the one-year prolongation of the tax exemption measure for biofuels in Sweden. The objective of the tax exemption measure is to increase the use of biofuels and to reduce the use of fossil fuels in transport.

A filling pump with different diesel options, regular fossil diesel, HVO100 and rapeseed derived biodiesel.

The European Commission (EC) has approved, under EU State aid rules, the prolongation of the tax exemption measure for biofuels in Sweden throughout 2022. The objective of the tax exemption measure is to increase the use of biofuels and to reduce the use of fossil fuels in transport.

Sweden has exempted liquid biofuels from energy and carbon dioxide (CO2) taxation since 2002. The measure has already been prolonged several times, the last time in October 2020. By today’s decision, the Commission approves an additional one-year prolongation of the tax exemption, from January 1 to December 31, 2022.

The Commission assessed the measure under EU State aid rules, in particular the Guidelines on State Aid for environmental protection and energy. The Commission found that “the tax exemptions are necessary and appropriate” for stimulating the production and consumption of domestic and imported biofuels, without unduly distorting competition in the Single Market.

In addition, the scheme will contribute to the efforts of both Sweden and the EU as a whole to deliver on the Paris Agreement and move towards the 2030 renewables and CO2 targets. The support to food-based biofuels should remain limited, in line with the thresholds imposed by the revised Renewable Energy Directive (RED).

Furthermore, the exemption can only be granted when operators demonstrate compliance with sustainability criteria, which will be transposed by Sweden as required by the revised Renewable Energy Directive. On this basis, the Commission concluded that the measure is in line with EU State aid rules.

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