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On October 23, 2024, the European Commission approved Sweden’s tax exemptions for biogas and bio-propane. These exemptions, closely aligned to the 2014 EEAG and the updated 2022 CEEAG guidelines, have been confirmed to align with EU State aid rules.
Notably, a recent Commission analysis uncovered no overcompensation issues, even with additional contributions from Denmark.
Background
In June 2020, the European Commission initially greenlit an extension through 2030 for two Swedish tax relief initiatives to foster cleaner energy. One of these initiatives offered exemptions for biogas and bio-propane used as motor fuel, which meant earmarking €477 million to the fuel initiative.
However, in December 2022, these decisions were overturned due to procedural errors cited by the General Court.
The court suggested that the Commission should have launched a formal investigation to verify if the tax breaks, together with support from other countries such as Denmark, could lead to unfairly high compensation for biogas producers.
In response, the Commission opened a review in January 2024 to ensure the aid complies with the EU’s environmental and energy guidelines. One of the focus areas was whether these subsidies might result in disproportionately high profits for biogas providers in Sweden.
Positive reactions
Margrethe Vestager, Executive Vice President in charge of competition policy, commented on the approval: “Our in-depth investigation has confirmed that these tax exemption schemes for biogas and biopropane are in line with EU State aid rules. The measures support the consumption of sustainable fuels, thereby contributing to the transition towards a net-zero economy.“
Fredrik Svensson, Sustainability Manager at Sveriges Åkeriföretag, was favorable to the outcome: “This is obviously very welcome news for the haulage industry. Biogas’s role in the transition to fossil-free transportation is crucial, and we assume that the government will now act quickly to reinstate the tax exemption.”
Read the full press release from Sveriges Åkeriföretag.
What is Biogas?
Biogas is a renewable energy source that is derived from decomposing organic materials like food waste, animal manure, or sewage. When upgraded to natural gas quality, biogas can fuel heavy vehicles without depending on fossil fuels. While commonly used in buses and some cars, biogas is gradually being adopted in the freight industry, presenting a more sustainable truck alternative.
