European Commission opens in-depth investigation into Swedish biofuel tax exemption schemes

In Belgium, the European Commission has opened an in-depth investigation to assess whether two Swedish tax exemption schemes for non-food-based biogas and bio-propane used for heating or as motor fuel are in line with EU State aid rules. The in-depth investigation follows the General Court’s annulment of two previous Commission decisions approving the tax exemptions.

In June 2020, the Commission approved the prolongation until 31 December 2030 of two schemes that exempt from energy and CO₂ taxation: (i) biogas and bio-propane that is used in heat generation and (ii) biogas and bio-propane that is used as motor fuel. The Commission found both schemes compatible with EU State aid rules, and in particular with the 2014 Guidelines on State Aid for Environmental Protection and Energy.

In December 2022, 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 accumulation of aid may lead to overcompensation in favor 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.