Sweden’s biogas tax exemption to undergo “in-depth” EC investigation
The in-depth investigation follows the General Court's annulment of two previous Commission decisions approving the tax exemptions.
Sweden has two schemes that enable exemption from energy and CO2 taxation: biogas and bio-propane used in heat generation; and biogas and bio-propane used as motor fuel.
The tax exemption schemes are designed to increase the use of biogas and bio-propane to reduce the use of fossil fuels, and the exemptions apply to both domestic and imported biogas and bio-propane.
The original schemes were first approved by the Commission under EU State aid rules in 2003 for the motor fuel scheme (SA.14126) and in 2007 for the heating fuel scheme (SA.22194).
In June 2020, the Commission approved these schemes' prolongation until 31 December 2030. It found both schemes compatible with EU State aid rules, and, in particular, with the 2014 Guidelines on State Aid for Environmental Protection and Energy.
However, last December the General Court annulled the two 2020 Commission decisions on procedural grounds.
The General Court concluded that the Commission should have opened a formal investigation procedure to assess whether the tax exemptions combined with support from other Member States, notably Denmark, led to the overcompensation of biogas producers.
Following the General Court's judgment, the Commission needs to open an in-depth investigation to re-examine the compatibility of the tax exemption schemes under EU State aid rules, and in particular the 2014 and 2022 Guidelines on State aid for climate, environmental protection and energy.
The Commission will now investigate further to determine whether the potential cumulation of aid may lead to overcompensation in favour of those producers when they sell biogas in Sweden.
The opening of the in-depth investigation gives Sweden and other interested parties the opportunity to submit their comments. It does not prejudge in any way the outcome of the investigation, according to the European Commission.