Government’s proposal to reduce the obligation to distribute biofuels this year submitted to Parliament

On 25 May 2022, the Government submitted a legislative proposal to Parliament that would temporarily lessen the obligation to lower the obligation to distribute renewable fuels in 2022. The objective of the proposal is to decrease the prices of transport fuels.

The amendment to the Act on the Promotion of the Use of Renewable fuels for Transport (the so-called Distribution Obligation Act) would reduce the distribution obligation this year by 7.5 percentage points. The distribution obligation would therefore be 12 per cent in 2022.  

In addition, the regulation on exceeding the distribution obligation would be temporarily eased. According to the proposal, any excess in distribution during 2022 could be taken into account entirely in the calculation of distribution obligation in the following calendar year.

Lessening the distribution obligation is estimated to lower the price of diesel at the pump by about 12 cents per litre. The proposal is also expected to indirectly increase the excise duty revenue from transport fuels by approximately EUR 75 million in 2022.

The reduction of 7.5 percentage points for 2023, which the Ministerial Working Group on Preparedness decided on in April, has been deferred to the Government proposal to be issued in autumn. At the same time, the proposal lays down provisions on compensating for the emission reductions that will not be implemented in 2022 and 2023 in the coming years. The distribution obligation for 2030 will be raised to 34 per cent.

The proposal now submitted to Parliament is related to the second supplementary budget proposal for 2022 and is intended to be considered in conjunction with it. The Act is scheduled to enter into force in summer 2022. 

The Distribution Obligation Act requires distributors of transport fuels to supply a minimum amount of renewable fuels for consumption each year, based on separate provisions.  

Inquiries: 
Nicoleta Kaitazis, Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 29 504 7067, nicoleta.kaitazis(at)gov.fi
Harri Haavisto, Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 29 504 7059, harri.haavisto(at)gov.fi