Biomass retains status in the Electricity Tax Act

13.11.2025

Source: E & M powernews

The Finance Committee of the Bundestag has decided: Electricity from biomass as well as sewage and landfill gas will continue to be defined as electricity from renewable energies for tax purposes.

On 12 November, the Finance Committee of the Bundestag amended the planned change to the Electricity Tax Act in favor of bioenergy. This means that biomass - as well as sewage gas and landfill gas - will continue to be recognized as electricity from renewable energies for tax purposes. An originally planned deletion of these forms of generation from the definition of the term was removed from the draft bill.

The background to this is the Third Act to Amend the Energy Tax Act and the Electricity Tax Act, which the SPD and CDU/CSU coalition parties passed in committee with several amendments. According to the parliamentary groups, the aim of the amendments is to avoid misunderstandings. There had been concerns that the exclusion of bioenergy from the definition could also have consequences in other areas of law. Although this fear was not confirmed, the committee decided to retain the previous regulation.

The move is accompanied by an editorial adjustment: In future, wind power, solar energy, geothermal energy and hydropower will be mentioned individually in the relevant paragraphs. This will not change anything for these forms of electricity generation.

Further amendments

MPs also decided to make further clarifications to the Electricity Tax Act. For example, the entitlement to tax relief for reconverted electricity from storage facilities can only arise after reconversion.

In addition, an exemption from so-called supplier status remains possible even if suppliers provide other suppliers with electricity for their own use free of charge. The threshold for exemptions from supplier status has been raised from 2 MW to 10 MW, provided that electricity is not supplied to end consumers.

According to the coalition parties, several changes are aimed at reducing bureaucracy. These include simplified regulations for tax-free electricity withdrawals. Following the vote in committee, the bill was adopted with the votes of the government factions, while the opposition voted unanimously against it.

The draft also provides for the continuation of the reduced electricity tax for industry, agriculture and forestry. Without this measure, the tax relief would expire at the beginning of 2026, which would result in higher electricity costs.

A motion by the AfD parliamentary group to permanently reduce the electricity tax for all consumers to the European minimum did not receive a majority in the committee. The Greens announced that they would submit their own motion for the plenary session on November 13. Unlike the AfD, the Greens are against the abolition of CO2 pricing.

Bioenergy sector relieved

Approval came from the industry: the Capital Office for Bioenergy (HBB) praised the Finance Committee's decision as an important political signal. "Biomass is and will remain renewable," said HBB Director Sandra Rostek. The compromise sends a positive signal to the bioenergy sector. At the same time, Rostek criticized the fact that the Federal Ministry of Finance (BMF) had not agreed to a pragmatic recognition of already verified sustainability certificates.

According to EU regulations, bioenergy plant operators must provide proof of sustainable operation in order to benefit from tax exemptions. For procedural reasons, the BMF had planned not to recognize existing proofs. Instead, the tax exemption was to be abolished and replaced by a refund - which would have meant that bioenergy would no longer have been considered renewable energy under electricity tax law. With the deletion of the term "renewable energy sources" from the law, this regulation is now off the table.

In addition to the addition to the definition, the bioenergy industry associations also welcome the planned tax relief for the manufacturing industry. As envisaged in the original draft, these should also benefit agricultural businesses. The plenary session of the Bundestag will discuss the bill on November 13 in the second and third readings.

Author: Susanne Harmsen