Tax Exemption for Biogas in Sweden: A Deep Dive into the Current Situation
The tax exemption for biogas in Sweden has become a complex issue, both at the national and EU level. In summary:
Original Situation: In June 2020, Sweden was granted a tax exemption for biogas for the period 2021-2030.
Problem: The EU Tribunal invalidated this approval due to a procedural error on the part of the EU Commission, as among other things, a "detailed review" was not conducted.
EU's Group Exemption Regulation (GBER): New provisions in this regulation, which came into effect on 23 June 2023, allow the reintroduction of the tax exemption without approval from the EU Commission. However, this requires a change in Swedish law and a notification to the EU Commission. These new provisions came, independently of the tribunal's invalidation, as a response from the EU to the USA's Inflation Reduction Act (IRA).
Political Consensus: The Swedish government and parliament agree on reintroducing the tax exemption. The challenge lies in determining the quickest way to achieve this.
Detailed review: The EU Commission is now conducting a detailed review (previously lacking) of the tax exemption. If the review is positive, the tax exemption can be reintroduced until 2030. With strong Swedish lobbying, we have indications that this process might be faster than usual.
There are two main paths forward for Sweden:
Through the EU Commission: If the detailed review is positive and the EU Commission quickly approves the tax exemption for 2021-2030 again.
Through the EU's Group Exemption Regulation: Sweden can change the law and notify the EU Commission to reintroduce the tax exemption. If other obstacles emerge in the detailed review, this will also have implications here.
Tax exemption, regardless of how it is achieved, is not possible if there is overcompensation within the biogas sector. However, reports from the Energy Agency show that this is not the case in Sweden, even in 2022 when gas prices were unusually high.
Given that the EU Commission's detailed review seems to be moving faster than usual, the first route might be the quickest and safest. But if it takes longer, the second route through the EU's Group Exemption Regulation may be an alternative.
In both cases, it's clear that the tax exemption for biogas is viewed as essential by both Sweden and the EU. This will be a priority issue in the coming months.