04 Sep 2023, 13:23
Sören Amelang

German finance minister plans tax breaks for cars powered by synthetic fuels - report

Frankfurter Allgemeine Zeitung / Bild am Sonntag

Germany’s finance minister Christian Lindner (FDP) wants to ensure that combustion engine cars powered by synthetic fuels enjoy the same tax advantages as electric vehicles, reports newspaper Frankfurter Allgemeine Zeitung. A draft bill outlining the plan is already in an advanced stage, and the Free Democrat Party (FDP) plans to table it in the autumn, ministry sources told the paper. Lindner’s concept involves exemptions from the vehicle tax, and changes to tax rules governing company cars. In addition, Lindner wants to push for a low EU energy tax rate for synthetic fuels, which are also referred to as e-fuels, and for exempting them from sales tax as soon as possible. Ministry officials said that climate protection can only be achieved with innovation, and without prescribing a particular technology, adding that e-fuels are an opportunity to reduce carbon dioxide emissions in existing vehicles.

German transport minister Volker Wissing, also a member of the FDP, expressed doubts that electric mobility will prevail as the most important drive system worldwide. "The race for the car drive of the future is completely open," Wissing told the "Bild am Sonntag" on the eve of the car show IAA in Munich, where his ministry organises an e-fuel conference. "We cannot possibly predict today which technology will prevail in 2040. Possibly e-fuels and hydrogen fuel cells will play a bigger role than some would like," Wissing said.

Under intense pressure from the FDP, the German government earlier this year enraged European partners by insisting on exceptions for synthetic fuels in the EU's push for climate-friendly cars. These fuels, made with renewable electricity, could throw a lifeline to combustion engines. But they are considered an unsuitable option by most experts because they are highly inefficient compared to electric motors. Critics also warn that e-fuels for cars are a pipedream that could delay the transition to clean mobility.

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