Sweden has implemented tax exemption schemes aimed at promoting the use of sustainable, non-food-based biogas and bio-propane in both the transport and heating sectors. These exemptions apply to energy and CO₂ taxes, making renewable alternatives more competitive against fossil fuels.
Transport Sector
- Transport Fuel Scheme: Introduced in 2003, this scheme exempts sustainable, non-food-based biogas and bio-propane used as motor fuels from energy and CO₂ taxes. The exemption applies to both domestically produced and imported fuels, provided they meet sustainability criteria.
- Eligibility and Compliance: To qualify, fuels must comply with the sustainability and greenhouse gas (GHG) saving criteria outlined in the Swedish Act on sustainability criteria for biofuels, bioliquids, and biomass fuels. Beneficiaries are required to obtain certification from the Swedish Energy Agency confirming compliance.
- Beneficiaries: Fuel suppliers, importers, and producers who are liable for energy and CO₂ taxes can directly benefit from the exemption. The financial advantage is expected to be passed on to end consumers, such as transport companies and private individuals.
Energy Sector
- Heating Fuel Scheme: Established in 2007, this scheme provides tax exemptions for sustainable, non-food-based biogas and bio-propane used in heat generation. Similar to the motor fuel scheme, it applies to both domestic and imported fuels that meet the established sustainability criteria.
- Eligibility and Compliance: End users must ensure that the fuels used are certified as sustainable and non-food based. Certification from the Swedish Energy Agency is required to validate compliance.
- Beneficiaries: Companies operating in heating, district heating, and manufacturing sectors can benefit from the exemption. They may deduct the tax in their declarations or apply for a refund if taxes were initially paid.
Recent Developments
In December 2022, the European General Court annulled the European Commission’s 2020 decisions approving these tax exemptions on procedural grounds, citing the need for a formal investigation into potential overcompensation. Subsequently, the European Commission conducted an in-depth investigation and, in October 2024, concluded that the Swedish tax exemption schemes comply with EU State aid rules, allowing their continuation until December 31, 2030.