26/01/09
Germany’s green rules open fuel tax loophole
Germany’s green rules open fuel tax loophole
Hamburg, 9 January (Argus) — The introduction of increasingly stringent rules
aimed at reducing CO2 emissions in Germany has opened a tax loophole that
creates scope for and may have already given rise to fraud, according to market
participants. The country has led the way in Europe's drive to cut emissions: it
has both a greenhouse gas (GHG) reduction quota and a CO2 levy, which combined
add up to levies worth some €250/t for diesel in 2025, and which could reach
€415/t or more in 2026, Argus calculates. The CO2 levy was €25/t CO2e in 2021,
when it was first imposed. In 2025 it was €55/t CO2e, while in 2026 the
obligation will be auctioned between €55/t CO2e and €65/t CO2e with a fallback
non-auction price of €68/t CO2e. The GHG reduction obligation, meanwhile, was at
10.6pc of emissions in 2025 and has risen to 12pc this year. Under Germany's
implementation of the EU's latest Renewable Energy Directive (RED III), the
obligation will rise to 59pc by 2040, with increases every year. Most fuel
suppliers build these costs into their prices at source. But the rules for
payment of the levies do not make it compulsory to do so. The GHG and CO2 duties
apply to sales of fossil diesel and gasoline within each calendar year, but do
not have to be paid immediately — proof of GHG compliance was due on 15 July in
previous years and is now due by 1 June of the year following actual fuel sales,
while CO2 emissions certificates must be submitted by 30 September. In addition,
it is not clear how quickly the authorities would take legal enforcement action
should these deadlines be missed. The current regulatory framework creates, at
minimum, a timing gap with regard to compliance obligations and, at worst, a
serious loophole — a window of opportunity allowing businesses to sell
discounted diesel with no GHG compliance or CO2 duties factored into the price,
and exit the market ahead of compliance deadlines and ensuing legal enforcement.
Clearly, the higher the renewable tax burden, the larger the financial value of
exploiting the loophole becomes. The emergence of new suppliers in 2025 offering
diesel at steep discounts to prevailing market prices is therefore raising
questions. Since the start of 2025, established market players say a handful of
new suppliers have regularly offered and sold diesel delivered by rail and for
truck loading at specific import locations at discounts of up to €60/t (for
truck loading), subtracted from the previous day's inland price assessments for
finished-grade product. This equates at times to discounts of about 4pc to
prevailing market levels, which have ranged on average from around €1,345/t to
€1,549/t over the year. The actual volume of diesel sold at such discounts last
year is around 30,000t, Argus estimates — the equivalent of about 1,000
truckloads of fuel. That is less than 0.1 pc of total German deliveries for the
period, but because the sales occur only in specific regions they have had a
disproportionate impact in local markets. Traders say it is difficult to see how
such large discounts could be the result of factors other than delayed payment
of greenhouse levies. Regular energy taxes must be paid monthly, and the only
other variables in the price are the actual import cost of the fuel, and
logistical expenses — storage and transportation. Some wholesalers and retailers
say they are now declining to buy from suppliers who consistently offer steep
discounts because of concerns about potential legal repercussions — fearing they
might be held accountable if their supplier does not ultimately pay the CO2
duties and/or GHG compliance costs, or even concerned they might be regarded as
accessories to fraud. A number of established players in the domestic diesel
market have called on German customs authorities to be more vigilant and
thoroughly audit new suppliers to prevent any possible CO2 tax or GHG
compliance-related fraud. The authorities could also order obligated fuel
suppliers to provide a bank assurance for the payment of CO2 tax and the GHG
quota, some companies suggest. Officials with German customs authorities have
told Argus that they are aware of the concerns but declined to comment on what
steps they are taking or might take in response. Non-payment of CO2 levies on
30,000t of diesel would have cost the government about €5.2mn in 2025, Argus
calculates, while the non-compliance with GHG savings targets would reduce GHG
savings demand by 14,000t of CO2e, worth around €2.2mn, reducing biofuels demand
and undermining Germany's energy transition goals. Cases of proven fraud
involving diesel have been reported in a number European countries in recent
years, including Italy, Spain, Portugal and Romania as well as Germany, often
involving designer fuels schemes or VAT fraud. Widespread fraud relating to
non-compliant biofuels with faked credentials has also been of concern. But the
rise in Germany's CO2 taxes and GHG obligations since 2021, and the way the
government has framed the rules, may well have created a whole new set of
problems. These problems may replicate themselves in other EU countries, as
governments in the Netherlands and elsewhere move to emulate Germany's lead in
setting emissions reductions targets. Send comments and request more information
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