New excise duty raises the price of gasoline to BGN 3.20 per litre

Нов акциз вдига цената на бензина до 3,20 лв./л

Source of information: “Trud

Gasoline will rise by about 1 lev if the EU countries approve the Commission’s proposal for new excise duties on fuels.

European Commission proposes a different way of taxation
The tax would depend on energy content and emissions
TAXATION ON GASOLINE TO INCREASE BY 71%

Excise duties on fuels to be increased and set not on the basis of litres but according to their energy content, the European Commission proposes. If the change is adopted, the price of gasoline from the current BGN 2.20 will become BGN 3.20 per litre and diesel will rise to BGN 3.40 per litre, Svetoslav Benchev, a lawyer at the Bulgarian Petrol and Gas Association (BPGA), told Trud.

The idea is to raise excise taxes on traditional fossil fuels to give people and businesses an incentive to use more alternative fuels and electricity. For petrol and diesel, the European Commission (EC) proposes a minimum excise duty of €10.75 per gigajoule. At the moment in our country the excise duty for petrol is BGN 710 per 1000 litres and for diesel (gas oil) BGN 646 per 1000 litres. Taking into account the energy content of petrol and diesel and the fact that 20% VAT is also due on the excise duty, the final price of petrol will increase by BGN 1 per litre and that of diesel by BGN 1.20 per litre if the Commission’s proposal is adopted, according to the BPGA’s calculations.

For all this to happen, there must be agreement among EU countries. The European Commission’s proposal is for the new excise duty rules to come into force on 1 January 2023. But a transition period of 10 years is foreseen for some fuels, so that in 2023 the new way of taxation will start with lower excise duties, which will gradually increase until 2033.

EU climate and energy policy has changed radically in recent years. The current fuel taxation directive is no longer in line with current EU policies, the Commission said in its reasoning. The proposed new directive is part of the “Fit for 55” legislative package and focuses on environmental issues, with the aim of reducing air pollution. The EU’s new target is to achieve at least a 55% reduction in emissions from 1990 levels by 2030. And this is being done to meet the Paris Agreement target of a global temperature rise of well below 2°C compared to mid-19th century levels, or even 1.5°C, the reasoning says.

Incentives to consume fossil fuels need to be removed across the EU to achieve reductions in greenhouse gas emissions, the authors of the new directive say. This could be achieved by introducing higher levels of taxation on polluting fuels, in addition to pricing transport fuels by introducing them into the emissions trading scheme, the reasoning says.
Proposal by the European Commission

In addition to raising excise duties, the European Commission is discussing the inclusion of car fuels in the Emissions Trading Scheme. This means that you will have to pay when you use fuels that emit harmful emissions into the atmosphere. However, this proposal has not yet been clearly formulated and it is not yet known what the objective is – that the fuel producers should pay for the emissions or that the emissions should be included directly in the price of the fuel for end users. If this proposal is implemented, the price of fuel will rise further.

The current directive on fuel taxation does not promote the reduction of greenhouse gas emissions, energy efficiency and the use of electricity and alternative fuels (renewable hydrogen, synthetic fuels, advanced biofuels, etc.), the reasoning states. Nor does the current directive provide incentives for investment in clean technologies.

The new directive will set higher excise duty levels for fossil fuels and lower ones for renewable fuels, thus reducing the price advantage of fossil fuels over less polluting alternatives, the EC said. This would discourage the use of fossil fuels.
The current minimum excise duty rates for fuels are low because they have not been updated since 2003, although national rates in most EU countries are well above the minima, the Commission’s reasoning says.

Нов акциз вдига цената на бензина до 3,20 лв./л

In addition to raising excise duties, the European Commission is discussing the inclusion of car fuels in the Emissions Trading Scheme. This means that you will have to pay when you use fuels that emit harmful emissions into the atmosphere. However, this proposal has not yet been clearly formulated and it is not yet known what the objective is – that the fuel producers should pay for the emissions or that the emissions should be included directly in the price of the fuel for end users. If this proposal is implemented, the price of fuel will rise further.

The current directive on fuel taxation does not promote the reduction of greenhouse gas emissions, energy efficiency and the use of electricity and alternative fuels (renewable hydrogen, synthetic fuels, advanced biofuels, etc.), the reasoning states. Nor does the current directive provide incentives for investment in clean technologies.

The new directive will set higher excise duty levels for fossil fuels and lower ones for renewable fuels, thus reducing the price advantage of fossil fuels over less polluting alternatives, the EC said. This would discourage the use of fossil fuels.
The current minimum excise duty rates for fuels are low because they have not been updated since 2003, although national rates in most EU countries are well above the minima, the Commission’s reasoning says.

Svetoslav Benchev, lawyer at BPGA, told “Trud”: biodiesel three times more expensive

Светослав Бенчев, юрист в БПГА, пред „Труд”: Биодизелът три пъти по-скъп

Fuel for cars will also rise due to a number of administrative obligations imposed by the European Commission. An obligation to add new biofuels to petrol and diesel is to be introduced, with the new biodiesel being three times more expensive, Svetoslav Benchev, a lawyer at the Bulgarian Petrol and Gas Association, told Trud. Currently, biodiesel is made from rapeseed. But with new EU rules, biodiesel will not have to be made from food, and crops that displace food cultivation. Therefore, for example, waste oil from restaurants or fat trimmings from animals must be used.

Biotethanol, on the other hand, can be produced as a waste product in the manufacture of confectionery.

There is also an obligation for oil companies to take measures for improving energy efficiency at end customers level. However, it is not yet clear how exactly this will be this will work. Some companies are working towards offering higher efficiency oils so as to reduce fuel consumption. In some countries, oil companies are putting money into a fund that uses the money to save energy, for example to renovate buildings. In Bulgaria, however, there is no such fund.
In France, these energy efficiency requirements for end customers have led to fuel prices rising by 8-9 euro cents. In our country, the rise in fuel prices will not be so great, but a few stotinki from every litre will have to be spent on this too.
Regarding the prices of gasoline and diesel in Bulgaria in the coming weeks, Svetoslav Benchev said that there could be an increase of a few stotinki if the price of oil approaches 80 dollars per barrel. But at the moment there is a slight drop in the oil price.

There may be a 10 years Transition period
Several fuel groups have been formed

The EC wants to stimulate the production of biofuels from agricultural waste, not rapeseed.
The proposed new directive groups fuels according to their environmental performance. Conventional fossil fuels, such as petrol and diesel, will be taxed at the highest rate.
The next category of rates will be for fuels that are fossil-based but less harmful and still have some potential to contribute to decarbonising the economy. This includes, for example, natural gas, propane-butane and fossil hydrogen, for which the minimum excise duty will initially be 2/3 of that on petrol, with a transitional period of 10 years during which the excise duty will gradually increase. In the next group are biofuels, for which the excise duty will initially be only half that on petrol. The lowest excise duties will be on electricity, advanced biofuels, liquid biomass fuels, biogas and renewable hydrogen. An example of an advanced biofuel is cellulosic ethanol, which can be produced by hydrolysis and fermentation of lignocellulosic agricultural waste such as straw, corn residues, other forages and energy grasses, i.e. – the fuel is not produced from food.

The heating tax is currently higher than the minimum

There is no agreement between EU member states on the change

Няма съгласие между страните членки на ЕС за промяната

The Commission’s proposal aims to get more people using electric cars.
There is still no agreement among EU countries on the introduction of the new directive. But most EU countries have agreed that excise duties on fuels should be set on the basis of their energy content and emissions rather than on a per litre basis, the draft directive’s explanatory memorandum says.

The idea is that the new excise duties should also apply to air and maritime transport, and that minimum excise duties on heating fuels should be raised. For air and maritime transport, however, they propose that there should be a 10-year transition period in which the minimum excise duty levels are reached. For heating, there will be the possibility for Member States to exempt vulnerable consumers from paying the excise duty, or to use the levies collected to provide more social benefits. In our country, however, heating oil is subject to the same excise duty as that used in transport. This was done because there was a lot of fraud – fuel intended for heating was used in transport.

For the excise duty on electricity used by households, they are discussing several options – to remain zero for 10 years, to be zero for the first year only and then gradually increase, or to exempt only vulnerable households from the excise duty for 10 years. In our country, there is currently no excise duty on electricity for households, and on electricity for businesses it is BGN 2 per megawatt-hour.

Covid-19 brought down the value of oil

15 st. per liter increase for the last two months

Over 1 dollar drop in a day
Covid-19 свали стойността на петрола 15 ст. за литър повишение за последните два месеца Над 1 долар спад за ден

Oil has fallen in price due to the increase in newly infected with Covid-19 in Asia.
Petrol and diesel prices at the country’s petrol filling stations have gone up by 14-15 stotinki per litre in just two months. This rapid rise in price is due to increase in oil prices on international markets.

At the beginning of June, the price of petrol averaged BGN 2.10 per litre and diesel BGN 2.11, according to fuelo.net. And Brent oil, which is the country’s fuel price determinant, was worth about $70 a barrel on international markets.
Within two months, oil rose to over $75 a barrel. As a result, petrol and diesel prices rose to an average of BGN 2.25 per litre. If the oil price continues to rise, fuel in Bulgaria will rise further.

Today, however, the oil price fell by more than a dollar per barrel. If this continues over the next few days, rather than being a short-term correction in the market, we could see lower prices at the filling pumps in the coming weeks.

The main reason for the decline in oil today was the increase in the newly infected with Covid-19 in Asia. Authorities in Thailand are poised to expand the range of containment measures as the number of newly infected in Sydney reaches a new record level. As a result of fears of a return of restrictive measures due to the rapid spread of the delta variant of Covid-19, the price of Brent crude oil fell to $74.64 per barrel. And US light crude fell to 73.12 dollars a barrel.