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Amendments to distribution obligation of biofuel oil and Sustainability Act sent out for comments

Ministry of Economic Affairs and Employment
Publication date 11.7.2022 12.11 | Published in English on 13.7.2022 at 16.11
Press release
Kaivuri työmaalla

The distribution obligation of biofuel oil aims at replacing light fuel oil used especially in building-specific heating and machinery with biofuel oil. The draft amendments to the distribution obligation of biofuel oil and the Sustainability Act have been sent out for comments.

The Ministry of Economic Affairs and Employment invites comments on amendments to the Act on the Promotion of Biofuel Oil and the Act on Biofuels, Bio liquids and Biomass Fuels, i.e. the Sustainability Act.

It is proposed that the distribution obligation of biofuel oil be raised to 30 per cent by 2030

The distribution obligation means that distributors of light fuel oil must ensure that a certain proportion of the fuel oil distributed to the market is biofuel oil. This obligation applies to all distributors that supply over one million litres of light fuel oil for distribution during a calendar year.

According to the proposal sent out for comments, the distribution obligation of biofuel oil would be raised as of 2026 so that in 2030 it would be 30 per cent. Now, the obligation to distribute biofuel oil increases annually so that it is 10 per cent by 2028. The proposed increase aims at reducing emissions by 0.5 million tonnes.

Light fuel oil is used in heating, machinery and stationary engines. The use of oil to heat buildings has decreased in recent years, and this trend is expected to continue. 

As to machinery, replacing oil with other energy sources is more challenging, and there are limited supply of electric machinery, for example. The proposed increase in the distribution obligation of biofuel oil would start in 2026, which means that it will have the greatest impact on companies and operators using machinery.

Increasing the distribution obligation is linked to several of the Government’s policies and objectives, such as the Medium-term Climate Change Policy Plan (KAISU) and the national Climate and Energy Strategy. 

Reference to the Act on Excise Duty on Electricity and Certain Fuels to be included in the Sustainability Act

The Sustainability Act on biofuels, bio liquids and biomass fuels defines sustainability criteria for renewable fuels, and it is applied in a number of acts, such as those on the distribution obligation, emissions trading and taxation.

A reference to the Act on Excise Duty on Electricity and Certain Fuels is now proposed to be included in the Sustainability Act. The sustainability of biogas used in heating and machinery can then be demonstrated with a sustainability system approved by the Energy Authority. A precondition for tax exemption for biogas used in heating and machinery is that sustainability can be demonstrated.

The deadline for submitting comments is 9 August

The deadline for submitting comments on the amendments to the Act on the Promotion of Biofuel Oil and the Sustainability Act is 9 August 2022. Comments can be given in the lausuntopalvelu.fi website. Based on the feedback received, the proposal will be finalised and submitted to Parliament in autumn 2022. The Acts are scheduled to enter into force during autumn 2022. 

Inquiries: 
Outi Vilén, Senior Specialist, Ministry of Economic Affairs and Employment, 
tel. +358 29 504 7016 (available until 13 July 2022),
Pekka Grönlund, Senior Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 29 560 4815, (available on 18 to 29 July 2022), and
Nicoleta Kaitazis, Senior Specialist, Ministry of Economic Affairs and Employment, 
tel. +358 29 504 7067 (from 8 August 2022)

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