Eco-Tax Reform

Source: JOIN IEA/IRENA Policy and Measures Database
Last updated: 10 July 2012
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:

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