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In Austria, the National Emission Allowance Trading Act (NEHG 2022) has been in force since October 1, 2022. The law provides for additional pricing of CO2 and primarily affects the sectors of buildings, transport, agriculture, waste management and parts of industry. There are no free allowances, so it is effectively a CO2 tax. The NEHG regulates the placing on the market of certain fossil fuels and is scheduled to be implemented in several stages leading up to the market phase in 2026. In the fixed-price phase, market participants must purchase emission allowances and surrender them to the authority in the following year according to the actual quantity of emissions. Fixed prices are planned to increase annually until the market phase.
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National Emissions Trading Scheme NEHG 2022
[/vc_column_text][vc_column_text]Now that almost all climate bonuses for 2022 have been paid out, the National Emission Allowance Trading Act 2022(NEHG 2022), which was introduced as part of the Eco-Social Tax Reform Act 2022, entered into force on October 1, 2022, after a two-month delay. The NEHG 2022 covers greenhouse gas emissions from fossil fuels and, in addition to the existing energy taxes, provides for additional pricing of CO2 in those sectors that are not yet subject to the European Emissions Trading Scheme (EU ETS). Thus, the new NEHG 2022 covers in particular the sectors buildings, transport, agriculture, waste management and parts of industry, which means that future EU plans to extend the existing EU ETS to the sectors buildings and transport are already implemented in Austria.
With the NEHG 2022, a National Emissions Trading Scheme will be implemented in Austria, which, after a simplifying introductory and transitional phase with fixed prices, will transition to a market phase from 2026 onwards, taking European developments into account. Unlike the EU ETS, this does not include any free allowances, which is why the new regulation is effectively a CO2 tax.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
NEHG Application areas
[/vc_column_text][vc_column_text]The NEHG focuses on the placing on the market, i.e. the production or first-time import of certain fossil fuels, and is closely linked to the regulations of existing energy taxes such as the mineral oil tax. In the case of placing on the market, the tax liability is to be based on the already existing energy taxes (mineral oil tax, natural gas tax and coal tax), which is why companies that have not yet fallen under the scope of existing energy taxes will, in principle, also not fall under that of the NEHG 2022. In the future, a trading participant that puts a fossil fuel on the market will have to purchase emission certificates for it. Depending on the energy source, a certain CO2 emission factor is provided for, which is needed to determine the greenhouse gas emissions and consequently the number of certificates to be purchased. One certificate must be surrendered for each ton of greenhouse gas emissions. So far, seven fossil energy sources are covered by national emissions trading.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_single_image image=”18914″ img_size=”large” alignment=”center”][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]The introduction of the national emissions trading system is planned in several stages, with a fixed price phase with annually increasing prices until the market phase from 2026. Accordingly, the CO2 pricing Austria looks as follows:[/vc_column_text][vc_column_text]
Fixed price phase – October 1, 2022 to December 31, 2025
[/vc_column_text][vc_column_text]The fixed-price phase, which is divided into an introduction phase and a transition phase, is intended in particular to facilitate the transition of market participants to a new system. In the introductory phase of the national emissions trading system, which will last at least until January 1, 2024, a simplified registration procedure is envisaged in addition to the fixed prices. Only at the beginning of 2024, or 2025 if the technical requirements for the start of the transition phase are not yet in place, is it planned to expand the system by introducing a monitoring plan and creating a national emissions allowance trading registry. Until the market phase, the following fixed prices are foreseen:
Year | Fixed price per ton of CO2 |
2022 | 30 euro |
2023 | 32,5 Euro |
2024 | 45 euros |
2025 | 55 euros |
In the fixed-price phase, market participants must purchase emission allowances and surrender them to the specially established authority in the following year in accordance with the actual volume of emissions. If certificates were not used, they can be returned against refund of the purchase price.
In order to be able to cushion strong developments in energy prices, a price stability mechanism is provided for the annual increase amount. If the energy costs increase (decrease) by more (less) than 12.5% in the observation period compared to the previous year, the increase amount for the following year is halved (increased by 50%).[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][ultimate_spacer height=”25″ height_on_tabs=”25″ height_on_tabs_portrait=”25″ height_on_mob_landscape=”10″ height_on_mob=”10″][vc_single_image image=”18918″ img_size=”large” alignment=”center”][ultimate_spacer height=”25″ height_on_tabs=”25″ height_on_tabs_portrait=”25″ height_on_mob_landscape=”10″ height_on_mob=”10″][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
CO2 pricing from 2026: Market phase
[/vc_column_text][vc_column_text]In the market phase, national emission allowances are to be traded on the open market. In this respect, the NEHG 2022 does not yet provide any specific information, but rather an evaluation obligation in which a possible design of the market phase is to be examined, particularly with regard to European developments.[/vc_column_text][vc_column_text]
Exemptions and relief measures
[/vc_column_text][vc_column_text]The 2022 NEHG distinguishes between exemptions and relief measures. While exemptions are generally aimed at trading participants, the relief measures provide relief for selected companies that are not burdened directly but indirectly due to an increased price (pass-through of costs).
To prevent a possible double burden, plants subject to the EU ETS are to be exempted from surrendering allowances under the NEHG 2022. An additional exemption is to exist for trading participants who only bring one ton of CO2 emissions into circulation in a calendar year (minor cases). In order to ensure consistency between the national emissions trading system and the existing energy taxes, the exemption criteria of the energy taxes have also been incorporated into the NEHG 2022.
In addition to the exemption provisions, the NEHG provides for special (pro rata) relief measures for affected companies, which are intended to maintain the competitiveness of companies and prevent hardship cases and carbon leakage, i.e. the shifting of greenhouse gas emissions out of Austria. In order to ensure the effectiveness of the measure, the relieved companies must invest at least 80% (in the introductory phase at least 50%) of the granted relief in climate protection measures within the company. In the fixed-price phase, the amount of the relief measures is capped, which is why, if the annual cap is exceeded, the relief measures are paid out on a pro rata basis.
2022 | 2023 | 2024 | 2025 | |
Agriculture and forestry | 15 million euros | 35 million euros | 40 million euros | 45 million euros |
Carbon leakage Non-ETS energy and industry | 37.5 million euros | 100 million euros | 125 million euros | 150 million euros |
Hardship cases | 37.5 million euros | 100 million euros | 100 million euros | 100 million euros |
While the carbon leakage regulation affects specific economic sectors listed in Annex 2 of the NEHG 2022, the hardship regulation can in principle affect any company for which the share of costs for energy sources subject to the NEHG 2022 is particularly high in relation to total costs. A case of hardship exists if
- the actual costs for energy sources subject to the NEHG are more than 15 % of the total business costs (energy cost dimension) or
- the additional costs arising from the introduction of the NEHG amount to more than 15% of gross value added (additional cost dimension).
In this context, the NEHG 2022 provides that.
- with a share between 15 and 20 % the additional load to max. 50 % and
- if the share exceeds 20%, the additional charge to max. 95 % is relieved.
Tip: When planning costs, be aware that there may be less (pro-rata) relief due to the budgetary cap. Thus, while the hardship provision potentially provides for 95% of the additional burden to be relieved, there may be a lower percentage relief in 2022 due to the maximum EUR 37.5 million provided.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
Summary
[/vc_column_text][vc_column_text]On October 1, 2022, the National Emission Allowance Trading Act 2022 (NEHG 2022) will come into force, which will bring an additional CO2 pricing in Austria of fossil energy sources in the sectors not (yet) covered by the European Emissions Trading Scheme (in particular transport and buildings). The focus is not on the consumers, but on the distributors of the energy sources (so-called market participants). For the building sector, therefore, it is likely that most companies will not fall under the scope of the NEHG 2022 and will therefore only be indirectly affected by it via the higher prices for energy sources. Since landlords, for example, do not usually produce energy sources or import them into Austria for the first time, but purchase them from manufacturers or distributors, they do not have to purchase CO2 certificates, but they do have to expect increased costs. In particular, energy sources that were not previously covered by the EU ETS will experience a price increase as a result of the NEHG 2022.
In the fixed-price phase, which is planned until the end of 2025, market participants will have to pay an annually increasing fixed price for emission allowances per imported ton of CO2 emissions, starting at EUR 30 in 2022. From 2026, the fixed-price phase is then to be replaced by a market phase in which national emissions allowances are to be traded on the free market.[/vc_column_text][/vc_column][/vc_row]