Policy status:In Force
Date Effective:2006
Policy Type:Economic Instruments>Fiscal/financial incentives>Tax relief, Regulatory Instruments, Economic Instruments>Fiscal/financial incentives>Taxes
Policy Target:Transport>Fuel
Agency:Ministry of Finance

In August 2006, Germany implemented a tax on coal, coke and lignite and rescinded tax breaks for biofuels. The tax fully exempts energy-intensive industries - glass, ceramics and cement - as well as domestic burning. The taxation law implements the European energy taxation directive as national law. Such implementation levies a tax on coal for the first time. Hard coal, lignite and coke are taxed when used for heating purposes. Taxes on natural gas are raised only as soon as the gas is delivered to the customer. Energy sources which are used for power generation are generally exempt from taxation, according to the federal Ministry of Finance. Under the law, biodiesel is now taxed at euro0.09 per litre, slightly lower than the government first planned. Taxation of biofuels will be extended and raised, reaching euro 0.45 per litre for rapeseed biodiesel and ethanol by 2012. To replace biofuel tax exemptions, the German government introduced an obligation on suppliers to ensure a 5.75% of motor fuels by 2010. Because zero tax incentives on coal and related products are to be abolished, combined cycle gas turbine plants (CCGT) are intended to play a more prominent role in the future, a spokeswoman for the environment ministry said. In contrast to coal or nuclear plants the gas for CCGT plants used to be taxed and only new, very efficient plants were promised an exemption. According to the current bill all input factors for CCGT plants will be tax-free. The German government hopes to reduce CO2 emissions while building capacity to replace nuclear power stations in supporting highly-efficienct CCGT plants. Installations with power-generating capacities below 2 MW remain exempt from power taxation. Combined heat and power installations also keep their tax exemptions. In February 2007, the European Commission decided that Germany's exemptions from energy taxation for dual use of energy products (such as in steel production, where the energy product is also used as a raw material) and for use of energy products in processing minerals (such as cement and glass production) do not constitute aid under EC Treaty state aid rules since they are a consistent part of the overall national tax system. According to the European Commission, "the German Energy and Electricity Tax Laws apply to the use of energy products for heating and motor fuel purposes. Non-fuel uses of energy products are exempt from taxation. In Germany, dual use of energy products and the use of energy products for mineralogical processes, and are considered equivalent to a non-fuel use and are therefore also exempted. The exemptions derive from and are consistent with the overall objectives of the national tax system and Germany applies them consistently to all mineralogical and dual use processes. The non-taxation of energy used in these processes therefore falls within the logic of the system and does not constitute state aid."

25 Energy Efficiency Recommendations Applied:Transport

Last modified: Mon, 22 Jun 2015 12:09:32 CEST