Initial information on the 2022 national emissions certificates trading law (NEHG 2022)
The 2022 eco-social tax reform law represented a further important step along Austria's path to establishing cost transparency of CO2e emissions. The 2022 national emissions certificates trading law is intended to make a decisive contribution to achieving climate-related goals, by inducing an environmental incentive effect and increasing the appeal of using innovative, low-emission technologies.
CO2e pricing is set to begin on 1 October 2022.
Subject matter and scope
The NEHG 2022 covers energy-related greenhouse gas emissions that have been produced by the non-ETS sectors (buildings, transport, agriculture, waste and small industrial plants). This essentially concerns the following fossil energy sources: petrol, gasoil (diesel), heating oil, natural gas, liquefied gas, coal and kerosene (Annex 1 of the law). The greenhouse gas emissions of the ETS sectors (electricity and heat generation, energy-intensive industry sectors including oil refineries, steelworks, etc.) are subject to the EU Emissions Trading System (EU ETS).
The scope of the law is limited to placing energy sources into free circulation; it does not concern the actual use of the specified energy sources by the consumer. The decisive factor is therefore not the emission itself (the actual generation of the greenhouse gas emissions from the specified energy sources by the consumer), but rather the act of placing it into circulation. This considerably reduces the administrative effort involved.
When filling up petrol in a car , it is not the driver at the fuel pump who bears the responsibility as the emitter for the submission of emissions certificates as the emitter, but the company that manufactured the petrol or brought it to Austria and, in doing so, ultimately placed it into free circulation under tax law.
By linking the responsibility to the entity placing the energy source into circulation, conformity with the energy taxes (= mineral oil tax, natural gas tax (available only in german) and coal tax (available only in german)) is achieved. This entity bearing responsibility for circulation is referred to as the "trading participant"in the NEHG 2022.
Trading participants are obliged by the NEHG 2022 to acquire emissions certificates for the energy sources placed into circulation. An emission certificate corresponds to one tonne of CO2-equivalent, CO2e. The procurement of national emission certificates is a prerequisite for placing energy resources into circulation.
In contrast to the existing EU ETS , the NEHG 2022 is not initially intended solely for the trading of certificates, but rather as a system that will gradually develop into a trading system. This is primarily evident in its intended phases:
Fixed price phase (1 October 2022 – 31 December 2025)
In this phase, the emissions certificates will be assigned a specific price.
During this time, the NEHG 2022 will closely follow the systematics of the energy taxes . To ensure a smooth entry into the system the fixed price phase is subdivided into two further phases:
- Introduction phase (expected to be 1 October 2022 – 31 December 2023): This period will involve a simplified procedure for trading participants with regard to reporting greenhouse gas emissions.
- Transition phase (expected to be 1 January 2024 – 31 December 2025): During this phase, the standard regulation system for trading participants will be applied, which is intended to facilitate the transition to a pure emissions trading system.
Market phase (starting 1 January 2026)
Once the market phase comes into effect, the national emissions certificates are intended to be traded on a free market. Since this phase is dependent on developments at the EU level, more detailed provisions will only be established at a later point in time. In particular, developments in the context of the Fit for 55 package at the EU level may lead to a possible expansion of the EU-ETS to include the building and transport sectors, which have been considered non-ETS sectors up until now. This would in turn have consequences for the design of the market phase of the NEHG 2022.
One national emissions certificate must be submitted for each tonne of CO2e.
The calculation of the CO2e emissions is based on the emissions factors defined in Annex 1 of the NEHG 2022, which specifies the CO2e emissions of an energy source per unit (e.g. for petrol, 2.38 kg per litre). By multiplying these emissions factors by the quantity of the energy sources placed into circulation, the trading participant obtains the total quantity of CO2e emissions that are relevant for the certificate submission.
Exemptions and relief measures
The NEHG 2022 makes a distinction between exemptions and relief measures.
The exemption measures concern the trading participants themselves and cover the following aspects:
- Installations that are subject to the EU Emissions Trading System: In order to avoid unnecessary double burdens , plants that already have submitted emissions allowances for their greenhouse gas emissions in accordance with the EU-ETS are set to be exempt from the obligation to submit national emissions certificates in accordance with NEHG 2022. As a rule, the exemption is intended to be granted in advance, although it will also be possible to make a subsequent correction.
- Negligible cases: Trading participants that place less than one tonne of CO2e emissions into circulation are exempted from the obligations in accordance with the NEHG 2022.
- Exemptions under the energy taxes: In order to bring energy taxes into line with energy taxes for the introduction phase, the exemptions in accordance with these taxes are also to be applied to the NEHG 2022. See the exemptions of the respective energy taxes in the Business Service Portal (only available in german).
The relief measures, in contrast, concern other companies that are not trading participants. The aim of these measures is to relieve companies of certain specific additional burdens that have arisen as a result of the NEHG 2022. In the fixed price phase, these relief measures are guaranteed up to a budgetary ceiling. It must be pointed out that the application of the relief measures is subject to the reservations of the approval of the European Commission with regard to state aid law and is not yet applicable for the time being. Provisions are made for the following relief measures in the NEHG 2022:
- Agriculture and forestry: Diesel that is used in agricultural and forestry vehicles in connection with the core concerning agriculture and forestry may be subject to relief.
- Carbon Leakage: This relief is provided to significantly affected economic sectors that are at particular risk of relocating their production to countries with less stringent climate-policies. The economic sectors in question and the amount of relief provided are specified in Annex 2 of the law.
- Hardship cases: This relief is provided to companies for which the share of costs for energy sources that are subject to the NEHG 2022 is particularly high.
Due to the existing proximity to the energy taxes, the implementation of the NEHG 2022 falls under the responsibility of the Federal Ministry of Finance. The responsible entity is the Office for National Emissions Certificates Trading (Amt für den nationalen Emissionszertifikatehandel) as an independent unit within the Customs Authority of Austria, under the specialist supervision of the budgetary and taxation sections.
Eco-social tax reform 2022 (only available in german)
National emissions certificates trading law 2022 (NEHG 2022) (only available in german)
Natural gas tax (Business Service Portal) (only available in german)
Coal tax (Business Service Portal) (only available in german)