EU clears Swedish tax exemptions for biogas and bio-propane

Daniela Castillo Monagas

The European Commission has reaffirmed the compatibility of two Swedish tax exemption schemes for non-food-based biogas and bio-propane with EU State aid regulations. The schemes, which provide exemptions from energy and CO₂ taxation, were initially approved in 2020 but were annulled by the General Court in 2022.

The Commission’s investigation, which followed the annulment, concluded that the schemes align with EU guidelines on environmental protection and energy efficiency. The schemes aim to promote the development of renewable energy, address market failures, and incentivize the consumption and production of sustainable biogas and bio-propane.

The Commission found that the aid provided through these schemes is proportionate and does not exceed the difference between the higher costs of sustainable biogas and bio-propane and the costs of natural gas and liquefied petroleum gas. Additionally, the investigation did not find any evidence to suggest that the tax exemptions combined with support from other Member States, such as Denmark, led to overcompensation of biogas producers.

The Commission’s decision supports the EU’s commitment to promoting renewable energy sources and reducing greenhouse gas emissions. Margrethe Vestager, Executive Vice-President responsible for competition policy, stated, “Our investigation has confirmed that these tax exemption schemes comply with EU State aid rules. They support the transition to a net-zero economy.”

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