Commission opens in-depth State aid investigation into Swedish tax exemption schemes for non-food biogas and bio-propane

The European Commission has opened an in-depth investigation to assess whether two Swedish tax exemption schemes for non-food-based biogas and bio-propane used for heating or as motor fuel are in line with EU State aid rules. The in-depth investigation follows the General Court’s annulment of two previous Commission decisions approving the tax exemptions.

The Commission’s investigation

In June 2020, the Commission approved the prolongation until 31 December 2030 of two schemes that exempt from energy and CO₂ taxation: (i) biogas and bio-propane that is used in heat generation and (ii) biogas and bio-propane that is used as motor fuel. The Commission found both schemes compatible with EU State aid rules, and in particular with the 2014 Guidelines on State Aid for Environmental Protection and Energy.

In December 2022, the General Court annulled the two 2020 Commission decisions on procedural grounds. The General Court concluded that the Commission should have opened a formal investigation procedure to assess whether the tax exemptions combined with support from other Member States, notably Denmark, led to the overcompensation of biogas producers.

Following the General Court’s judgment, the Commission needs to open an in-depth investigation to re-examine the compatibility of the tax exemption schemes under EU State aid rules, and in particular the 2014 and 2022 Guidelines on State aid for climate, environmental protection and energy.

The Commission will now investigate further to determine whether the potential cumulation of aid may lead to overcompensation in favour of those producers when they sell biogas in Sweden.

The opening of the in-depth investigation gives Sweden and other interested parties the opportunity to submit their comments. It does not prejudge in any way the outcome of the investigation.


The Swedish tax exemption schemes are aimed at increasing the use of biogas and bio-propane to reduce the use of fossil fuels and, and thereby reducing greenhouse gas emissions. The tax exemptions apply to both domestic and imported biogas and bio-propane.

The original schemes were first approved by the Commission under EU State aid rules in 2003 for the motor fuel scheme (SA.14126) and in 2007 for the heating fuel scheme (SA.22194). The motor fuel scheme was further prolonged in December 2015 (SA.43302) and the heating fuel scheme in July 2018 (SA.49893).

The Commission’s 2014 and 2022 Guidelines on State aid for climate, environmental protection and energy provide guidance on how the Commission will assess the compatibility of environmental protection, including climate protection, and energy aid measures which are subject to the notification requirement under Article 107(3)(c) Treaty on the Functioning of the European Union. The new guidelines, applicable as of January 2022, create a flexible, fit-for-purpose enabling framework to help Member States provide the necessary support to reach the Green Deal objectives in a targeted and cost-effective manner. The rules involve an alignment with the important EU’s objectives and targets set out in the European Green Deal and with other recent regulatory changes in the energy and environmental areas and will cater for the increased importance of climate protection.