<article><p class="lead">Biomethane market participants in northwest Europe say a EU General Court (EGC) ruling to annul Sweden's subsidy scheme for biomethane has created uncertainty, and could lead to drastic price changes in the short- and medium-term in Sweden and affiliated markets.</p><p>The EGC revoked an approval by the European Commission, made in June 2020, for a 10-year extension of <a href="https://direct.argusmedia.com/newsandanalysis/article/2118935">two measures</a> that excluded biomethane used in heat generation and as transport fuel from Sweden's energy and CO2 taxation. German biomethane producer and trader Landwärme took legal action against the commission, telling <i>Argus</i> that the scheme allowed a cumulation of the aid granted in Sweden with subsidies from other EU member states, and led to overcompensation in favour of some producers and ultimately to a distortion of competition within the internal market. </p><p>The effect occurs, for example, when subsidised Danish biomethane is imported to Sweden where it is again subsidised through the domestic taxation rules.</p><p>Landwärme welcomed the EGC ruling. "Only with fair market conditions we can consolidate European efforts in biomethane production and use for renewable energy security — as envisaged by the EU through REPowerEU", its chief executive Zoltan Elek said.</p><p>But Swedish gas industry association Energigas Sverige told <i>Argus</i> this week the ruling had created uncertainty.</p><p>"In addition to declining interest in producing or using biogas, planned new production of biogas is also at risk of not happening. Now it is important to quickly find solutions that can strengthen the competitiveness of biogas in the near term", Energigas Sverige said.</p><p>It is unconfirmed as to when the tax exemptions will be annulled and whether the annulment will be applied retrospectively. </p><p>European market participants said the decision will quickly be reflected in markets that have close trading ties with Sweden, and in Sweden itself where domestic companies fear repayment of the tax reductions. Activity in the Danish market for renewable gas guarantee of origins (RGGO) had remained muted this year so far with 2023 waste RGGOs valued at around €50/MWh.</p><p>The commission and Swedish government can appeal the decision within two months from the court ruling. There seem to be no plans for an appeal from the Swedish government, Energigas Sverige told <i>Argus</i>.</p><p class="bylines">By Sophie Barthel</p></article>
