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Bundestag passes ordinance against double taxation through SESTA

01/30/2023

Source: Energy & Management Powernews

German companies will be exempt from the national CO2 price if they have already purchased European ETS certificates for emissions. This decided the Bundestag in an ordinance.

Companies that use fossil fuels for energy production, for example, in power plants or industrial production, must acquire CO2 certificates in the European ETS trade for this. The price for this is currently just under 80 euros/ton of CO2. Through the Fuel Emissions Trading Act (BEHG), the German government also introduced a national CO2 tax for fuels and heating materials from fossil sources from 2021. This currently stands at 30 euros/ton of CO2 and is set to rise in the future.

It has emerged that some companies are taxed twice because they fall under both regulations. This inequality healed the Bundestag on 26 January 2023 with the adoption of the ordinance to compensate for double-balanced fuel emissions. The ordinance had been drafted by the Committee on Climate Protection and Energy, with only the AfD parliamentary group voting against it.

Avoid double taxation or repay

Section 11(2) of the BEHG provides for full financial compensation for plant operators as defined in Section 3(2) of the Greenhouse Gas Emissions Trading Act (TEHG) for which emission allowances have been surrendered under the BEHG and for whose use in the plant subject to emissions trading allowances must already be surrendered under the TEHG. This applies from 2021, so also for already paid taxes.

The federal government writes in the regulation that a double burden should already be avoided by exempting the responsible party from the duty to surrender for deliveries to ETS plants (paragraph 7(5) of the SESTA). If this is not possible, the SESTA tax should be refunded. "In cases where double taxation as a result of the use of fuels in a plant subject to EU emissions trading cannot be avoided in advance, the present regulation will make possible the subsequent compensation provided for by law," according to the wording of the regulation.

Author: Susanne Harmsen