The Fuel Emissions Trading Act (BEHG), which came into force on 20.12.2020, will apply to the heating and transport sectors from 2021.


The SESTA regulates the pricing of fossil greenhouse gas emissions in the heat and transport sectors and is intended to make a substantial
Greenhouse gas neutrality in Germany 2050
 contribute to the

The SESTA covers emissions from heat generation in the buildings sector, from energy and industrial installations outside the EU Emissions Trading Scheme (EU ETS), and emissions from the combustion of fossil fuels. Air transport, which is subject to the EU ETS, is not affected by SESTA.

Even though 14 regulations are still missing in February 2020, which largely regulate the requirements of the affected companies, GALLEHR+PARTNER® can already make a statement on the groups of companies that are fundamentally affected:

Who is affected by SESTA?

The effects of the BEHG will probably be felt indirectly by the entire German population, since the CO2 price is expected to lead to higher fuel costs in general.

Direct costs and administrative overheads arise for the following companies:

1. distributors of fuels:


Distributors
 of fuels are around 4000 companies that market fuels according to Annex 1 of the SESTA. In 2021 and 2022, these fuels are limited to petrol, gas oils, heating oils, natural gas and liquefied gases (see Annex 2).These companies must submit a (simplified) monitoring plan and emissions report to the Federal Environment Agency (presumably DEHSt) and surrender a certificate per tonne of CO2 on the basis of the annually determined emissions.

In the explanatory notes to the first draft of the law dated 05.11.2019, the distributors were specified as follows:

„In the process, in accordance with the The system of energy tax law obliges companies to participate at the level of trade at which, in the case of the Energy Tax Act for the placing on the market of energy products the tax – irrespective of tax exemptions – arises in principle. In the case of mineral oil products, for example, these are predominantly the distributors (first stage of trade), whereas in the case of natural gas they are the suppliers (last stage of trade).”

2. undertakings subject to the EU ETS:

Companiessubject to EU emissions trading under the TEHG are to be protected from a so-called “
Double burden
” by the SESTA. According to Section 7 (5) SESTA, the double burden is to beavoided as far as possible in advance, especially in the case of direct deliveries. The exact procedures and requirements are to be clarified in the course of 2020 in a legal ordinance.

From the point of view of GALLEHR+PARTNER® it can be assumed that almost every operator of a plant subject to emissions trading will be confronted with new administrative requirements. Without the cooperation of these companies, it will, for example. it will be difficult for distributors to draw a clear line between the two.

The legislator already anticipates this aspect to the extent that it intends to regulate in a separate statutory instrument how installation operators who are nevertheless exposed to a double burden can receive full financial compensation.

3. undertakings with very high fuel costs – Undue hardship

Companies for which the additional costs incurred as a result of SESTA account for more than 20% of gross value added or 20% of total business costs are to be given the opportunity to apply for financial compensation(cf. §11 para. 1). The extent to which this will be done and whether the percentage of 20% will be maintained are to be regulated in a subsequent legal ordinance.

4. companies that manufacture products at risk of relocation (carbon leakage)

Protection is envisaged for companies facing strong international competition. A further legal ordinance is to regulate the avoidance of
Carbon leakage
 (leakage of C02 emissions out of Germany) from 2022 onwards. Competitiveness is to be achieved through earmarked financial support for climate-friendly investments.

GALLEHR+PARTNER® assumes that companies wishing to receive appropriate financial support must, for example, carry out the following verification requirements:

  1. Evidence of the risk of displacement by means of NACE or PRODCOM codes.
  2. Evidence of planned measures in climate-friendly investments
  3. Proof of the costs of the climate-friendly investments carried out
  4. Evidence of methods for monitoring the effectiveness of investments, such as the implementation of
    standard-compliant energy audits
     or the existence of
    Energy management systems according to ISO 50001

GALLEHR+PARTNER® supports affected companies on all issues relating to the Fuel Emissions Trading Act (SESTA) and the national Emissions Trading Scheme (nEHS).

We carry out the following activities:

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Author: Marcus Hipp, GALLEHR+PARTNER®

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The “Fuel Emissions Trading Act” (BEHG), which came into force on 20.12.2020, applies from 2021 to the heating and transport sectors


The BEHG regulates the pricing of fossil greenhouse gas emissions in the heating and transport sectors and is intended to make a significant contribution to Germany’s greenhouse gas neutrality in 2050.

The BEHG covers emissions from heat generation in the building sector, energy and industrial plants outside the EU Emissions Trading Scheme (EU ETS), and emissions from the combustion of fossil fuels. Aviation, which is subject to the EU ETS, is not affected by the SESTA.

Who does the SESTA concern?

The effects of the BEHG will probably indirectly affect the entire German population, since the CO2 price is generally expected to result in higher fuel costs.
Even if there are still 14 ordinances missing in February 2020 that largely regulate the requirements of the companies concerned, GALLEHR+PARTNER® can already make a statement about the groups of companies fundamentally affected:
Direct costs and additional administrative expenses will arise for the following companies:

1. distributors of fuels:

Approximately 4000 companies are placing fuels according to Annex 1 of the SESTA on the market. In 2021 and 2022 these fuels
are limited to petrol, gas oils, heating oils, natural gas and liquefied gases (see Annex 2)
 These companies must submit a (simplified) monitoring plan and emissions report to the Federal Environment Agency (probably DEHSt) and issue a certificate per tonne of CO2 on the basis of the annually determined emissions.

In the explanatory notes to the first draft of the law of 05.11.2019, the marketers were specified as follows:

“In accordance with the system of the energy tax law, the companies are obliged to participate at the trade level at which the tax – without prejudice to tax exemptions – is basically incurred in the energy tax law for the marketing of energy products. In the case of mineral oil products, for example, these are mainly the distributors (first level of trade), whereas in the case of natural gas it is the suppliers (last level of trade).”

2 Participants in European emissions trading

Companies subject to EU emissions trading under TEHG are to be protected against a so-called“double burden” from the BEHG. According to paragraph 7(5) SESTA, the double burden should be avoided as far as possible in advance, especially in the case of direct deliveries. The exact procedures and requirements are to be clarified in a statutory instrument in the course of 2020.

From the point of view of GALLEHR+PARTNER® it can be assumed that almost every operator of a plant subject to emissions trading will be confronted with new administrative requirements. Without the involvement of these companies, it will, for example, hardly be possible for the marketers to make a clear distinction.

The legislator anticipates this aspect to the extent that it intends to regulate in a separate statutory instrument how plant operators who are nevertheless exposed to a double burden can receive full financial compensation.

3. companies with very high fuel costs – unreasonable hardship

Companies for which the additional costs incurred as a result of SESTA account for more than 20% of gross value added or 20% of total business costs should be given the opportunity to apply for financial compensation(paragraph 11 (1)). The extent to which this will be done and whether the 20% percentage will be maintained will be regulated in a subsequent ordinance.

4. companies that manufacture products at risk of relocation (carbon leakage)

Protection is planned for companies that are in strong international competition. A further legal regulation is to regulate the avoidance of
carbon leakage
 (migration of C02 emissions out of Germany) from 2022 onwards. Competitiveness is to be achieved through earmarked financial support for climate-friendly investments.

GALLEHR+PARTNER® assumes that companies wishing to receive such financial support must, for example, provide the following proof:

GALLEHR+PARTNER® supports affected companies on all issues relating to the Fuel Emission Trading Act (BEHG) and the national emissions trading system (nEHS).


We offer the following activities:

Author: Marcus Hipp, GALLEHR+PARTNER®

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