Policy status:Unknown
Date Effective:1994
Date Amended:


Policy Type:Economic Instruments>Fiscal/financial incentives>Taxes
Policy Target:Multiple RE Sources
Policy Sector:Framework Policy

This combined CO2 and energy tax was based upon the carbon and energy content of fuel. Renewable energy was exempt from this tax.


The Government changed the structure of energy taxes on fuel for transport and heat and power plants on 1 January 2011. The taxation now takes account of the energy content, carbon dioxide emissions and local/particle emissions that have adverse health effects.

The energy content tax has been adjusted to reflect the volumetric energy content of the fuel. The energy tax component is levied on both fossil fuels and biofuels, based on the same taxation criteria.

The CO2 tax is based on the CO2 emissions of the fuel in question. The weight of levies on carbon dioxide has been raised from their 2011 levels.

The evaluation of the CO2 content of biofuels is based on their treatment in the RES-directive. A flat rate tax reduction of 50 % is applied to all biofuels that meet the sustainability criteria of the RES Directive. The so-called second-generation biofuels, as defined in Art 21 (2) of RES-Directive (biomass originated from waste and residues), will be totally exempted from the CO2 tax. The CO2 tax does not apply to wood and other biomass (solid or gaseous) used in energy production.

C arbon dioxide levies for fossil fuels used in combined electricity and heat production are lowered by 50%. This was done to avoid overlapping carbon dioxide steering (taxation and ETS) and to improve the competitiveness in combined electricity and heat production relative to separate heat production.

A system of quality gradation has been introduced for transport fuels that create fewer local/particle emissions that are harmful to health than other fuels. In transport fuels, the quality gradation system will apply to second generation diesel. In the case of natural gas and biogas, the emission benefits to the local environment are taken into account in terms of a lower level of taxes on driving power.

The purpose of higher energy taxes and structural changes to the tax bases is to mitigate greenhouse gas emissions and enhance environmental integrity. The tax raises seek to encourage the saving of energy and to improve energy efficiency. The tax increases for fossil fuels and peat improve competitiveness and promote the use of renewable energy. The new tax structure is objective and neutral in technical terms. It fosters fuels and technological solutions that create lower emissions.

This record supersedes:CO2 Tax on Fossil Fuels

Last modified: Fri, 11 Sep 2015 11:59:44 CEST