Spanish biomass rejects new energy tax proposals

The proposed taxes, which are expected to be around 4.5pc — coupled with the suspended subsidies for new renewable energy projects — will make investment cases very challenging, AVEBIOM said.

“The biomass industry is angry,” AVEBIOM international relations manager Marcos Martin said. “It is unacceptable to put this tax onto an industry which has good benefits for the country, like reducing forest fires or creating local employment, and such a small profit margin. And this adds to the regulatory uncertainty which is already present within the Spanish biomass community.”

The government believes it has locked in feed-in tariffs which are too high, a Spanish biomass trader said.

“The government says it gives too many subsidies to renewable generation and renewable companies are generating too much profit which needs to be reduced,” the trader said. “The government cannot change the subsidy as it is grandfathered for between 20 and 30 years. So to recoup some of the profits, it will increase the taxes.”

While the exact tax levels and introduction date remain unclear across all eligible energy sectors, Spanish prime minister Mariano Rajoy confirmed the new tax as part of the energy sector reform in a speech on 11 July.

“The energy policy decisions that were taken over the past eight years have set aside the priority to supply energy at the lowest cost possible and led to a vast tariff deficit,” Rajoy said. “The solution to the tariff deficit, which now stands at over €25bn ($30.4bn), will come from distributing the deficit among the various sectors involved via a new energy tax model.”

The proposals were expected to be approved at a meeting on 13 July, but nothing was decided regarding energy taxation. AVEBIOM is vigorously lobbying the government to reduce the proposed tax.

“We are lobbying hard to get the government to agree to a 3pc tax on biomass installations,” Martin said. “The extra 1.5pc is what our members think would make their business models continue to be economically viable — a 3pc tax would be acceptable to them.”

The new tax proposals follow the suspension of renewable energy subsidies in January for new projects in the country. But there are concerns among the industry that this will become permanent, Martin said.

“The industry does not know what the limit is for these subsidies to be reinstated,” he said. “There is great concern that it will remain as it is, even if our economy improves.”

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