Response to interpellation 2022/23:199 on continued tax exemption for biogas
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
M wants to achieve continued tax exemptions for biogas as quickly as possible with the greatest possible legal certainty 1. M wants to do its utmost to accelerate the work with the commission 2, be proactive in both substance and process 2 as well as maintain a close dialogue with the industry and the commission 2. M also analyzes other possibilities to help affected companies 3 4 and will investigate forms of assistance that do not conflict with state aid rules 2. M does not accept that the tax exemption would fundamentally be illegal 4. S argues that biogas is important for the climate transition and that the judgment has devastating consequences with large cost increases. S wants the government to be more offensive and active in the EU 5.
Written by AI in advance and may contain errors. The numbers lead to the speech a statement builds on; check against the text below.
Finansministern Elisabeth Svantesson (M)
Mr. Speaker! Johan Löfstrand has asked me in what way I intend to strengthen the position of biogas if the tax exemption for biogas disappears following a new EU judgment. Furthermore, the interpellator has asked what analysis I am making regarding the judgment and any ripple effects to other tax reductions, and whether I intend to act to reduce any potential effects.
Just as the interpellator writes, I have expressed that the government is keen to achieve continued tax exemptions as quickly as possible with the greatest possible legal certainty for the industry's actors. The Commission will now, as the tribunal's judgment requires, conduct an in-depth review of the state aid that the tax exemptions on biogas constitute. The starting point is that the Commission shall, after this formal review, approve Sweden's tax exemptions again. The government will have a close dialogue with the Commission during the procedure. If the Commission ultimately reaches a different conclusion, the government will have to take a position on what alternative ways exist to support biogas.
The Government assesses that the possibilities of obtaining a changed judgment through an appeal of the tribunal's ruling are extremely limited. It was the Commission that was a party to the case, and the Commission has chosen not to appeal. The Government has also reached the same conclusion. An appeal risks prolonging the period of uncertainty as the legal effects of the judgment are not suspended by an appeal. The Commission must, under all circumstances, initiate the in-depth review. The Government will now focus on continued contacts with the Commission.
Regarding the interpellant's second question, this entire process shows that state aid aspects must always be considered very carefully when tax reductions are introduced or extended. I believe that the government at the time did what could reasonably be expected when extending these tax exemptions. Here, however, we see that a legal action from an individual company within the EU can complicate, delay, and create uncertainty for the actors.
Naturally, the government will minimize the risks by taking the state aid rules into account and adapting the legislation based on the conditions the Commission establishes. In its contacts with the Commission, the government will work to ensure that the effects of the judgment are limited as much as possible. The state aid rules shall not be able to prevent a Member State from applying general tax rules within the framework of the energy tax directive.
Johan Löfstrand (S)
Madam Speaker! I begin by thanking the Minister for Finance for the answer.
Biogas has an important role to play in the climate transition. Biogas is renewable and climate-neutral and can be produced locally from waste products from households and agriculture. From the waste products that result from biogas production, biogas fertilizer can be extracted, which can then go back to agriculture and in this way replace artificial fertilizer.
Sweden faces several major challenges today where biogas can play an important role in the transition. To meet the challenges we have for waste management both in Sweden and in Europe, we have agreed that food and kitchen waste shall be collected near the property from January 1, 2024. Today, food waste in many places in Sweden becomes biogas. The collection, which will now take place on a broad front in both Sweden and Europe, has the potential to increase the production of biogas and, in the long run, increase the possibility of creating biofuels for the future.
At the same time, Sweden is in the midst of an energy crisis. We are dependent on the import of fossil fuels. Even here, biogas has an important role to play. By producing biogas locally, we can actually solve some of the challenges that exist for preparedness issues.
Sweden and the transport sector face huge, gigantic challenges. Here, it is about converting the entire vehicle fleet, and even here, biogas has a role to play. In all these areas, biogas has a role to play in the transition, but for biogas to be able to take that role, it must be given good conditions. There must be a tax exemption or other types of incentives that enable us to succeed in working towards a transition.
At home in Östergötland - my constituency - many buses are run on biogas. For Östgötatrafiken - the actor that orders the bus traffic - the judgment will have devastating consequences. It is about cost increases in the magnitude of 40 million kronor per year. In the way the agreements are written, the cost will hit directly into Östgötatrafik's wallet, in the long run for the taxpaying public in Östergötland and for the passengers' costs for traveling.
The change hits the transport sector mercilessly. With increased costs for gas of approximately 10 kronor per mile with normal consumption for a truck, it will mean for a haulage company that the costs increase by approximately 150,000-200,000 kronor per truck and year. For a company that has decided to transition and invest, the costs become enormous.
Madam Speaker! Let me ask a few questions to the Minister for Finance. The Government chose today not to appeal the judgment. The effect of this means gigantic costs for the industry. In today's Svenska Dagbladet, it states that from today onwards, the Swedish Tax Agency will not approve any refunds or deductions, which means that the costs arise now.
How does the Minister for Finance believe that companies should survive when costs increase? How long does the Minister for Finance believe it will take for us to know how it will ultimately turn out?
Finansministern Elisabeth Svantesson (M)
Madam Speaker! I thank Member Löfstrand for the interpellation. It is a very important issue that Johan Löfstrand raises. I agree completely with the description of the problem and the significance that biogas has.
Let me start where the member ended. It is not that the tax exemption ceases depending on whether Sweden appeals or not, but it ceases regardless. I have seen and heard that image exists. The appeal does not affect the tax exemption. It is still important to know.
Let me go back to the situation that has arisen. I share Johan Löfstrand's view that we are now in an unfortunate situation. The Government is well aware of what consequences this has for companies in the form of increased uncertainty and in the form of increased costs. Furthermore, the transition is affected.
The government also has a great understanding that many feel anxiety. We are analyzing whether there are opportunities to help the affected companies in the meantime. First and foremost, we see a great need to place full focus on ensuring that the formal review that the commission is to initiate proceeds as quickly as possible. We intend to work closely with the commission, provide all information, and influence the commission in the direction that I believe a unanimous Riksdag wants it to go, namely tax exemption.
Madam Speaker! I want to point out once again that regardless of the appeal, it is the tax exemption that applies. I remind you that Sweden is not a party to the case, but the Commission is. It is the Commission that has lost. The Tribunal considers that an in-depth review – a scrutiny – should have been carried out, which was not done. This is what the judgment is about. Since the Commission is not appealing, the government chooses not to do so. This is because we believe that we have a greater opportunity to influence and accelerate the result by now focusing on ensuring that the Commission actually initiates the review so that we can once again obtain the tax exemption.
Johan Löfstrand (S)
Madam Speaker! I would like to thank the Minister for the answer. I still heard a hint that the Government Offices want to analyze how to support the industry in the future.
Madam Speaker! The point I have is that when the conditions for an entire industry are completely overturned, the government must take the issue seriously. For every month that passes now, several companies are bleeding due to the increased costs. It is those companies that have led the way, that have transitioned and that have taken responsibility in the transition that was so much needed in Sweden and in the rest of the world.
Sweden and the EU have jointly stated that food waste should be collected and recycled. There is a clear goal to transition the vehicle fleet. This is something we agree on. Therefore, I think it would be reasonable for the government, instead of just sending a letter to the Commission, to be more forward-looking and more offensive in these issues.
We must work more actively with these issues in the European Union. We must ensure that the food waste that we have collectively decided shall be collected and processed. In that regard, biogas production is one of the absolute best ways to carry out this processing.
We have also said that we will transition our vehicle fleet. There, we will of course need a number of different measures. Electrification is important, but it will not be enough; instead, we must use more instruments. There, biogas production will be an important part.
We must continue to work on the development in the long term. For several years, there has been a great interest in investments in biogas, while the policy has not quite landed on which steering instruments should apply. When it was finally decided to introduce the tax exemption, many breathed a sigh of relief and said that there is now a room for maneuver; they know which conditions will apply for a long period, and therefore they can invest.
In the latest round of applications for funds from Klimatklivet, there are very many applications that concern precisely investments in biogas production at the farm level, that is to say that agriculture should also step in and increase the production of biogas. But we see now that this judgment has a very large effect. Suddenly, people are pulling out for an entire industry where one previously could have created new values within the green sectors, which now will not be able to manage the transition that we so much need.
I return to my questions. There are a number of biogas actors who, from today onwards, will pay full carbon tax for the biogas. These companies have enormous challenges ahead. What promises can the Minister give to this industry today? What support will be received in the future to manage these months or more – it could take half a year or a year before we receive a decision? In what way could this be compensated for?
I have one more question: Does this mean that these companies will have to pay for the deduction or the tax exemption retroactively? We have had this for two years. Finally: Is it interesting to bring up some of the Biogas Market Study's old proposals, that is, to have support instead of tax exemption?
Finansministern Elisabeth Svantesson (M)
Madam Speaker! Thank you, Member Löfstrand, for the commitment to an important issue! Both I myself and many members in this chamber - right now there are not many present, but I mean members in the Riksdag - view very concernedly the situation that has arisen. A company has therefore appealed, and the tribunal sees that the commission should have conducted the review that the company thought should be conducted, and thus we lose our tax exemption.
What I can promise is several things. The first is, naturally, that now as actively as possible—and there the member can be reassured—work closely with the commission so that this is now accelerated, so that the review can get started in the way it should have been done from the beginning.
Fundamentally, the best we can do for the industry is to do everything we can for continued tax exemption. I believe we are in agreement on that. We must also know that that is where we will place our focus.
We are also analyzing whether there are other possibilities to help the affected companies during this time without it clashing with other types of state aid issues. As the member knows, one cannot just do anything; one needs to carefully see what can be done.
I will not promise today how the government will work on the issue, but the members can rely on the fact that we will do so. Above all, it must be known that we will work for what is the foundation. We do not accept the arguments that the company puts forward, namely that our tax exemption would fundamentally be illegal. We will continue to work precisely for this. I believe that is the absolute most important thing we can do for the different industries – this is not just one sector – and for the green transition.
That is what I can say today regarding this. I can only state that it is concerning that the judgment landed this way. We as the government shall do everything we can to expedite the process. Minister Busch and I have written a letter, but I can promise the member that we will do more than write letters. We will be active on several different levels in this matter.
Johan Löfstrand (S)
Madam Speaker! Thank you, Minister for Finance, for the answer! I am glad to hear that the Minister takes the question seriously, because it is concerning that we, overnight, essentially remove the tax exemption that very many companies have seen as given and have believed would apply until 2030 and therefore have made large investments.
I was in contact with the transport sector, where many of the companies that have wanted to lead the way and have taken a great responsibility in the transition are now desperate as the costs for their investments are becoming much higher than they had previously calculated.
I am also pleased that the Minister for Finance emphasizes that she will look into the different types of support or extra measures that can be used to support the industry. It becomes a bit strange when the companies that have decided to make a green transition and have switched to vehicles running on biogas are taxed in the same way as if they had vehicles running on fossil fuels.
In conclusion, I just want to ask one question. It may be difficult for the Minister of Finance to speculate on this, but how long does the Minister of Finance believe it might take? When it comes to the thorough review, it is difficult to know if it is a matter of months, half a year, or a year. It affects the companies to a very large extent. It would be interesting if the Minister of Finance could still indicate some type of timeframe in their closing statement.
Finally, the question is again: Does the Minister believe that it is still only tax exemptions that should apply, or shall we also look at the production support proposals that have existed previously in the debate?
Finansministern Elisabeth Svantesson (M)
Madam Speaker! Once again, thank you, Member, for the questions in the interpellation!
I do not know exactly how long this will take. We will do our utmost. In all communication and in the work with the commission, the government will try to expedite this, but it does risk dragging on.
Now it is the commission that is to do this, and it must be done better, so that we can achieve tax exemption. It is the government's goal that this shall happen. How long it will take, I do not dare to speculate.
During this time, we will also look at whether there are opportunities to assist in other ways without it clashing with different types of state aid rules. The Government is also maintaining a close dialogue at the official level with the industry and the various sectors and, of course, also with the Commission. We promise then to do our utmost to ensure that this happens as quickly as possible. It is up to the Commission, but we will be proactive both in substance and in process.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.