German Tax Break Extension to Boost NGV Market in Europe

Two recent political decisions promise to provide substantial stimulus for the market of natural gas vehicles (NGVs) in Europe: On the one hand the German parties about to form the upcoming German Federal Government decided to extend the tax reduction for natural gas as fuel; on the other hand at EU level the Council’s Permanent Representatives Committee confirmed an agreement that will heavily favour cars emitting low levels of CO2. Both decisions are expected to considerably increase sales figures of NGVs in Europe.

German coalition agreement: tax reduction for natural gas as a fuel will be extended

In Germany, the coalition agreement between the parties CDU, CSU and SPD has recently been fixed. In the agreement the grand coalition declares to extend the reduced energy tax rate for natural gas as fuel beyond 2018. By keeping the lower energy tax natural gas and biomethane as fuel remain significantly cheaper than petrol and diesel in the long term.

The low fuel costs are an important factor for private individuals and fleet operators in Germany to purchase NGVs. So far, however, the threat of termination of the reduced energy tax has not given sufficient investment security beyond 2018. This is in particular problematic for buses or trucks that are subject to extended terms. erdgas mobil, the initiative of leading German energy providers, is convinced that due to the extension set out in the coalition agreement the registration figures for NGVs will continue to rise in the future.

“The grand coalition underscores the importance of the alternative fuel for the energy turnaround in traffic,” said Timm Kehler, CEO of erdgas mobil GmbH. “Businesses, communities and market partners now have the assurance that the economic advantage of natural gas mobility permanently endures.” erdgas mobil assumes that this incentive is a signal for all parties to continue to engage more intensively in natural gas mobility. This applies to energy providers and companies that invest in natural gas stations, as well as automakers.

The coalition agreement also states: “We will further develop The Mobility and Fuels Strategy.” erdgas mobil welcomes this statement. “However, there are some other issues that need to be addressed if gas-powered mobility is to be brought forward. This requires not only a speedy embodiment of the planned extension of the tax reduction, but also the implementation of more transparent prices at gas stations, in order to provide consumers with the price advantage of natural gas and biomethane as fuel directly at the point of sale. Only then will the government support also be visible to the customer“, erdgas mobil’s Kehler concluded.

European Council and Parliament reach informal agreement on car CO2 emissions reduction

Apart from that, on 29 November 2013 the EU Council’s Permanent Representatives Committee confirmed the agreement reached with the European Parliament on the 2020 reduction of CO2 emissions from new passenger cars. The text still needs to be formally approved by the Parliament, whose vote in plenary is expected to take place in January 2014, and by the Council, which is due to take its decision after the vote in Parliament.

The new regulation defines the terms and conditions for car manufacturers for reaching the 2020 target for CO2 emissions (95g CO2/km) from new passenger cars. A limited one-year phase-in period requires 95% of new car sales to comply with the target in 2020 and 100% by the end of 2020 onwards. The regulation also provides for the use of so-called “super-credits” from 2020 to 2022: this means incentives for car manufacturers to develop new technologies and manufacture cars with low emission levels (less than 50g CO2/km), as these cars would count more towards meeting the fleet average than normal cars. The limit for the use of super-credits is set at 7.5g of CO2/km for the three years 2020-2022.

The Commission will review the regulation by the end of 2015 in order to establish targets for the period beyond 2020. The regulation will enter into force on the third day following that of its publication in the Official Journal of the EU. The regulation amends regulation (EC) 443/2009.

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Source: NGVA Europe, December 25, 2013