Tax exemption for biofuels in Sweden prolonged until the end of 2026

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The European Commission has approved the prolongation of a Swedish scheme to promote the use of pure and high-blended sustainable biofuels in the transport sector until the end of 2026.

Tax exemption for biofuels in Sweden prolonged until the end of 2026
Photo: Biofuel Express fuel station with fossil-free products in Arboga, Sweden - credits @ Biofuel Express (illustrative purposes)

The scheme was originally approved by the Commission in November 2003, prolonged several times, lastly in September 2021, and is set to expire on 31 December 2022.

The objective of the scheme is to increase the use of sustainable biofuels and to reduce the use of fossil fuels in the transport sector.

Under the scheme, the aid takes the form of a tax reduction for pure and high-blended sustainable biofuels, which can amount to a full exemption from CO2 and energy taxes.

Sweden notified the Commission of its intention to prolong the scheme until 31 December 2026, with an estimated budget of €662 million (SEK 7.2 billion).

“The Commission assessed the prolongation of the scheme under EU State aid rules, in particular, the 2022 Guidelines on State aid for climate, environmental protection and energy and found that the scheme continues to be necessary and appropriate to stimulate the production and consumption of pure and high-blended sustainable biofuels in line with the objectives of the European Green Deal, without unduly distorting competition in the Single Market,” the EC’s statement reads.

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