Commission approves Swedish tax exemption for biogas and bio-propane
The European Commission (EC) has approved, under EU state aid rule, a 10-year prolongation of tax exemption measures for non-food based biogas and bio-propane used for heating or as motor fuel in Sweden. Under two separate schemes, Sweden exempts from energy and carbon dioxide (CO2) taxation (i) biogas that is used in heat generation (former scheme last prolonged in 2018) and (ii) biogas that is used as motor fuel (former scheme last prolonged in 2015).
With the decisions, taken on June 29, 2020, the Commission approves for both schemes a 10-year prolongation of the tax exemption (2021-2030), with two modifications: i) limiting the tax exemption to only non-food based biogas and ii) extending the tax exemption to non-food based bio-propane.
The objective of the tax exemption is to increase the use of biogas and bio-propane and to reduce the use of fossil fuels and their greenhouse gas (GHG) emissions while facilitating the transition towards advanced biofuels.
“Necessary and appropriate”
According to a statement, the Commission assessed the measures under EU state aid rules, in particular, the Guidelines on State Aid for environmental protection and energy 2014-2020. It found that the tax exemptions were “necessary and appropriate” for stimulating the production and consumption of domestic and imported biogas and bio-propane, without unduly distorting competition in the single market.
In addition, the schemes 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. On this basis, the Commission concluded that the measures are in line with EU state aid rules.
The decision has been welcomed by stakeholders and green gas trade bodies in Sweden.
It’s a very welcome message, and something we’ve been working on for a long time, commented Maria Malmkvist, CEO of the Swedish Gas Association.
Upgraded biogas – biomethane aka renewable natural gas (RNG) is commonly used as a renewable transportation fuel in public transport and Sweden can continue to exempt biogas for transport purposes.
This is an important step in the right direction to change to more sustainable transport. We keep passenger charges down in Swedish public transport at the same time as we become less dependent on fossil fuels, said Finance Minister Magdalena Andersson.