Alexela does not support linking fuel excise duties to emissions

Alexela does not support linking excise rates to emissions as proposed by Estonian fuel companies and the Estonian Oil Association (Eesti Õliühing) last week, and the company believes it is important to use other fuels not just liquids.

Alexela, a member of the Estonian Oil Association, proposes the highest excise duty should be levied on liquefied gas (LPG), as it burns the most CO2. This would be followed by diesel, gasoline and CNG. Biogas, or biomethane, is proposed to be climate-free.

Chairman of Alexela's management board Aivo Adamson wrote in a letter to the ministries of the environment, finance and economic affairs and communications saying: "There are disagreements among the members of the oil union and it is increasingly difficult to find common ground for all the members of the association."

He continued: "Alexela started in the LPG market in 2012. So far, as the sole oil company member and the only seller of liquid fuel, we have pursued the goal of promoting the production and use of biomethane in transport through the development of the relevant infrastructure in the National Transport Development Plan 2014-2020."

Adamson disagrees with the Oil Association and said LPG, CNG and LNG are less polluting than petrol and diesel and the proposal would lead to higher taxes being levied of these fuels. He added CNG and LNG can be completely replaced by biomethane once the infrastructure is in place and consumers are willing to buy it.

The head of Alexela also said if the state were to change the excise system based on the proposals of the oil company, achieving the goals of the Estonian Transport Development Plan could be jeopardized. Adamson believes the CO2 footprint of biofuels should also be calculated and taking into account as well as the pollution generated by its production and transport.

He estimated other fuel sellers are promoting their interests at the expense of Alexela. "Unlike Alexela, other members of the oil union have not yet shown any interest in investing in CNG filling stations or biomethane production. No other oil union member has developed either an LNG filling station or electric car charger," Adamson wrote, adding so they are stuck with traditional fuels. This is despite the European Commission's call to reduce the dependency on liquid fuels and to promote domestic biofuel production.

The Estonian Oil Association submitted its proposals for changes in the excise duty system on fuels at the end of January. The association's proposal suggests the excise duty system should be divided into two components, one for greenhouse gas and one for fiscal. In practice, the implementation of the proposal would lead to a reduction in excise duties on biofuels and an increase in the excise duty on alternative fuels, which so far have been lower.

Members of the Estonian Oil Association are Alexela, Jetoil, Neste, Olerex, Orlen, Amspec. Island Fuel, Saybolt, SGS, Circle K, Olerex, Tartu Terminal and Kroodi Terminal.


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Editor: Helen Wright

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