UPDATE: What future lies for the Spanish F-gas tax?

By Pilar Aleu, Nov 20, 2015, 14:40 4 minute reading

Spain’s senate has endorsed an amendment to the 2016 General State Budget Bill approving the extension of reduced tax level on fluorinated gases in 2016. As a result, the tax level will remain the same as in 2015 for another year: 66% rather than the 100% originally planned.

This article was updated on 20 November, 2015

In January 2014, the Spanish government put in place a tax on fluorinated greenhouse gases including hydrofluorocarbons (HFCs) with global warming potential (GWP) greater than 150. Gradually imposed, the tax was meant to reach its 100% cap in 2016. However, an amendment to the 2016 General State Budget Bill recently introduced by the Spanish government and approved by the senate has changed the initial plan to increase the f-gas tax to 100% next year.

The Popular Party justified the measure by saying that several of the f-gases affected by the tax do not currently have substitutes that are both equally efficient and less harmful to the environment. Guillermo Martínez, responsible for the implementation and evaluation of the f-gas tax at the Spanish ministry of MAGRAMA noted that ‘key’ end users had pushed for the freeze.

“Key end users, specially commercial distribution associations representing supermarket and hypermarket chains, have asked to freeze the current tax. The Ministries of Finance as well as Agriculture, Food and Environment (MAGRAMA) have also considered that the present level of CO2 price is closest to the market value whilst maintaining its effectiveness.”

Reactions to the tax: how is this affecting the industry?

Initially, there was a certain level of resistance to change according to Martínez, but following the broader implementation of the tax, perceptions have changed such that the possibility of its removal is not longer a topic of discussion. Martínez added that developments had also led to employment opportunities and added investment in developing HFC-free technology alternatives.

The tax is also influencing companies to adopt CO2 technology. Whilst some existing installations are opting for HFCs with lower GWPs than others, new installations are being equipped with natural refrigerant-only technology or hybrid systems using CO2.

Spain’s proposed F-gas tax level comparable to Denmark model

Following Denmark, Norway and Slovenia, Spain introduced an f-gas tax, which has been phased in gradually since 2014, to eventually reach a level of 20/tCO2eq. The full tax level was meant to be applicable as of 2016, with lower levels for the transitional years 2014 (33% of level) and 2015 (66% of level).

Tax levels are calculated on the basis of the GWP of fluorinated gases or their mixtures (with a GWP greater than 150) by applying the coefficient of 0.020 to the GWP value of each fluorinated gas, up to a maximum of 100 per kilogram, a level comparable to the F-Gas tax in Denmark.

The tax does not cover the first equipment refrigerant charge. In addition, a lower coefficient for the use of recycled and reclaimed f-gases applies. A tax refund/deduction is also possible when delivering f-gases to certified facilities for destruction, recycling or reclamation.

Taxable transactions include:

  • Leaks of HFCs (according to its GWP). The first refrigerant charge after a leak is taxed but the amount paid can be redeemed if the gas is recovered and handed over to a waste manager at the end of the working life of the facility.

The tax structure is quite flexible in that it can be paid by several entities in the chain such as the producers, importers and distributors of the fluorinated gases. However, in most cases the installers bear the tax because they are responsible for the recharge of the gases, which is reflected in the final cost of the gas, paid by the end user.

“Initially, they thought the tax would be paid by gas manufacturers or importers in the first stage of commercialisation (in the Spanish market), as it is happening in the quota system as per the European regulation.” Martinez explained.

“However, because the tax rate can be actually higher than the price of some gases, such as R404, this would result in a high burden for the whole supply chain. To address this, they decided that certified installers could also accrue the tax. Installers can decide if they purchase the refrigerants with the tax payable by other parts of the chain or whether they bear the tax upon installation.” 

What does 2014 tell us?

Martínez said that the tax had helped end users tighten maintenance measures to minimise leaks and adopt technology using gases with lower GWPs.

“We estimate that near 70 million euros have been raised in the first year of the implementation of the tax, 2014, although the number would need to be confirmed by the tax agency. We believe that the tax must be pursued further in the future in order to achieve the more and more ambitious mitigation goals in Spain” concluded Martínez.


By Pilar Aleu

Nov 20, 2015, 14:40

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