15 Sept 2023
Germany's Finance Minister, Christian Lindner, representing the Free Democrat Party, has announced plans to provide tax advantages for combustion engine cars powered by synthetic fuels, aiming to put them on par with electric vehicles (EVs). A draft bill outlining this proposal is already in an advanced stage, with plans to present it in the autumn.
Balancing the Playing Field
Lindner's concept includes exemptions from vehicle taxes and alterations to tax regulations related to company cars. Additionally, he is advocating for a low European Union (EU) energy tax rate for synthetic fuels, often referred to as e-fuels, and for their exemption from sales tax as soon as possible.
Innovation for Climate Protection
Officials from the Ministry of Finance argue that climate protection necessitates embracing innovation rather than dictating a specific technology. They emphasize that e-fuels offer an opportunity to reduce carbon dioxide emissions in existing vehicles.
Doubts Over EV Dominance
German Transport Minister Volker Wissing, also a member of the Free Democrat Party, expressed skepticism about the worldwide dominance of electric mobility. He noted that "the race for the car drive of the future is completely open." Wissing suggested that predicting the prevailing technology by 2040 is challenging and acknowledged the potential role of e-fuels and hydrogen fuel cells.
Synthetic Fuels and EU Controversy
Earlier this year, under pressure from the Free Democrat Party, the German government faced criticism from European partners by insisting on exceptions for synthetic fuels in the EU's efforts to promote climate-friendly vehicles. These fuels, produced using renewable electricity, could provide a lifeline for combustion engines. However, many experts consider them inefficient compared to electric motors and express concerns that they could delay the transition to cleaner mobility.