Policy status:In Force
Date Effective:1999
Policy Type:Economic Instruments>Fiscal/financial incentives>Taxes
Renewable Energy Policy Targets:Bioenergy, Co-firing with fossil fuels, Bioenergy, Biofuels for transport
Policy Sector:Framework Policy
Climate Change Policy Targets:Energy Sector, Electricity Generation, Fossil fuels (Coal, gas, oil)
Agency:Federal Ministry of Economics and Labour
Renewable Energy Description:Following the introduction of the ecological tax reform in 1999, the decision was taken to continue the reform until 2003. In 2003, the Act on the Further Development of the Ecological Tax Reform entered into force, and the expansion to an ecological fiscal reform (EFR) was initiated. In early 2004, the expansion to an EFR was continued. A table with the most important taxation rates is included(however this table does not include permitted reductions); several exemptions were drawn, including reduced tax levels, compensation for energy intensive industry, commuters, and low-income households. Biofuels were exempt from the mineral oil tax from 2002 until the end of 2008. The law requires that the federal finance ministry (with the help of other relevant ministries) reports on the penetration of biofuels into the market, and the price developmentsof biomass, crude oil, and automobile fuels every two years. Since the law increased the price of fossil fuels, it enhanced the competitive position of renewable energy technologies in the heating sector and the transport sector. Biodiesel particularly benefited as taxes on transport fuels are regularly high. In order to avoid over-compensation of biofuels, the tax break was cut under the Act of the Regulation of the taxation of energy products and the amendment of the Act on electricity taxation, which entered into force in August 2006. This act completely phased out of the tax break, over the course of several steps until 2012, depending on the kind of biofuel. Another Act which has great influence on the further development of bio fuels is the "Biokraftstoffquotengesetz". This act, which came into force on December 18, 2006, replaces the tax break by a quota system. The quota sets a minimum percentage of biofuels which must be added to, or blended with, all fossil fuels. Thereby, a minimum market share of 5,75 % of biofuels shall be reached by 2010. Electricity generation from renewable energy does not directly benefit from the ecological tax because all electricity is taxed irrespective of the fuel type. However, eco-tax revenues from electricity generated with renewable energies are used to finance the Market Stimulation Program, the "Marktanreizprogramm" (Please see separate entry). Please see the following table for further detail on eco-taxes as of June 2007:
Climate Change Description:The German government has undertaken a three stage eco-tax reform plan in an attempt to reduce fossil fuel consumption. In the first stage, in 1999, there was a one-time tax hike of DM 0.06 per litre on gasoline, DM 0.04 per litre on heating fuel, DM 0.032 per kWh on natural gas, and DM 0.02 per kWh on electricity. In the second stage, covering 2000 to 2003, there were yearly tax increases of DM 0.06 per litre on gasoline and DM 0.005 per kWh on electricity. In the third stage, 2004 and after, the eco-tax remains level at its 2003 level. The federal government will conduct a comprehensive study on the effectiveness of the eco-tax in 2003. The German government has decided compensation for some groups hit hardest by its "ecological tax" on gasoline and heating fuel. For example, there are increased tax breaks for commuters. There are also exemptions to the tax. The manufacturing industry pays only 20 per cent of the tax on electricity, heating oil and gas. Energy-intensive industries can also get reimbursed for any payment of the tax above 120 per cent of the savings they achieve through lower employers social contributions. Oil and gas for power generation in industry are not taxed. There are also exemptions for third-party financing of cogeneration projects.

Last modified: Tue, 10 Jul 2012 15:43:35 CEST