Estonian Minister of Climate Kristen Michal (Reform) has sent a draft bill for approval, which would shorten the monitoring period for assessing compliance with the motor fuels bio-additive requirement from a year to six months. The bill would also mean a change in the way penalties are applied for non-compliance with the requirement.
The bio-additive requirement for motor fuels emerged as a wider issue due to a recent case involving fuel company Olerex. Some competitors suspected Olerex of failing to adhere to the requirement as it may have been cheaper for the company to instead pay the resulting fine for non-compliance.
In June, the Estonian Prosecutor's Office announced, that criminal proceedings would be launched to investigate whether Olerex had knowingly made false statements in order to avoid the requirement, something Olerex denies.
Fuel retailers have an obligation to ensure that at least 7.5 percent of the total energy of the fuels they supply is provided by biofuels. Currently, whether they have satisfied this obligation is calculated according to the total amount of fuel they supply over a one-year period.
According to the law, fines of up to €10 million may be imposed for non-compliance, an amount that market participants estimate to be around €30 million less than it might cost a large fuel company to comply with the regulations.
"Transport is one of the largest sectors when it comes to greenhouse gas emissions. By complying with the bio-additive requirements, fuel retailers are contributing to cleaner fuel being available at filling stations. The planned change in the law will help ensure timely compliance with the requirements for fuels, leaving a smaller environmental footprint and ensuring a fair market for all," said Michal.
The bio-additive requirement can be met by using traditional liquid bio-additives, domestic biomethane or electricity from renewable energy sources. Each fuel retailer is able to meet the requirements across their entire product portfolio, by deciding for themselves on the balance of fuels they sell to customers.
While currently, fuel retailers have to meet the requirements over the course of a year, the draft would make it necessary for them to do so every six months. A shorter monitoring period will allow the state to react more quickly if the biofuel requirement is not met.
The bill would also mean changes to the fines handed out for non-compliance with the bio-additive obligation, making them proportionate to the size of the infringement and also taking into account the fuel retailer's estimated revenue. According to the proposal, fines of €125 will be imposed for each gigajoule (GJ) fuel retailers sell, which takes their sales beyond the required limit at the end of each six month period.
The limitation period for infringement proceedings is currently set at four years. The Estonian Environmental Board has the power to suspend a fuel retailer's license if an infringement is detected.
Editor: Michael Cole