Policy status:In Force
Date Effective:1999
Policy Type:Economic Instruments>Fiscal/financial incentives>Taxes
Policy Target:Energy Sector>Electricity Generation>Fossil fuels (Coal, gas, oil)
Agency:Federal Ministry of Economics and Labour
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