Why choose biogas? – Auris Energy

Switch to biogas without changing your equipment

Biogas directly replaces natural gas in existing equipment and processes. This renewable energy source is suitable for heat and steam production, industrial processes and transport fuel.

Biogas helps businesses reduce fossil fuel use and increase the share of renewable energy in their consumption. It can also help businesses meet growing sustainability requirements from customers, investors and authorities.

Biogas-powered steam production at the Helsinki Distilling Company distillery

Why is biogas classified?

Feedstocks, production methods and compliance with statutory sustainability criteria affect biogas’s environmental impact, tax treatment and reporting. Sustainability certificates and guarantees of origin demonstrate its origin and sustainability. The R, T and H categories determine its tax treatment.

Biogas classification is based on the European Union’s renewable energy targets. The EU Renewable Energy Directive guides Member States to increase renewable energy use and ensure renewable fuels are produced sustainably. Finland has implemented these requirements through its sustainability legislation.

The sustainability system increases renewable energy use and encourages the use of waste and production side streams in particular. Biogas made from waste and residues therefore receives different tax treatment from biogas made from other biomass.

The classification shows

The feedstocks used to produce the biogas
Whether sustainability criteria are met
The applicable tax treatment

How is biogas sustainability determined?

Biogas sustainability is assessed on the basis of production methods, feedstocks and greenhouse gas emissions throughout the production chain.

Biogas use is often considered carbon-neutral, but production generates emissions from activities such as feedstock collection, transport and processing. These emissions are compared with statutory thresholds to assess whether the biogas meets sustainability requirements.

In Finland, biogas taxation is not based directly on a calculated emissions value. What matters is whether it meets sustainability requirements and which category it belongs to.

Biogas categories

The category is determined by feedstocks, production methods and compliance with sustainability criteria. Classification affects taxation and the tax benefits available for its use.

Biogas may be uncertified, meaning non-sustainable, sustainable, or sustainable and made from waste and residues. Sustainable biogas falls into tax category R, while sustainable biogas made from waste and residues falls into category T.

Category H refers to the application, not the production method or sustainability of the biogas. It includes heating, mobile machinery and stationary engines, for example.

Both R- and T-category biogas are sustainable, and their use requires a sustainability certificate.

Demonstrating sustainability and guarantees of origin

A sustainability certificate demonstrates biogas sustainability. It can be issued through a national system approved by the Finnish Energy Authority or an EU-approved voluntary certification scheme such as ISCC. The certificate confirms the sustainability category and enables the tax treatment applicable to sustainable biogas.

A guarantee of origin shows where and when the biogas was produced and injected into the gas grid. Combined with a sustainability certificate, it verifies both the gas’s origin and its sustainability.

Guarantees of origin can be traded separately from the energy itself. To allocate the renewable share of biogas to a specific use, a corresponding volume of guarantees of origin must be cancelled. For taxation, guarantees of origin can support proof of sustainability when presented alongside the required sustainability certificate.

There must be a physical connection between production and consumption to link sustainability information to the gas used. In practice, the biogas must have been injected into the gas transmission network.

How does classification affect taxation?

Both biogas and natural gas are subject to excise duty. This consists of an energy content tax, a carbon dioxide tax and a strategic stockpile fee. The amounts vary according to the type of biogas and its use.

Uncertified biogas is taxed like natural gas. Sustainable R- and T-category biogas receive a reduced carbon dioxide tax rate. If sustainable biogas is used in H-category applications, a reduced energy content tax rate also applies.

A business using biogas taxed at the reduced H R or H T rate must register in the excise duty aid beneficiary register in MyTax, because the tax benefit is considered state aid.

Biogas tax rates depend on the sustainability category and application. Uncertified biogas is taxed like natural gas. R-category biogas receives tax benefits, T-category biogas the greatest benefits, and category H may qualify for additional reductions in certain applications.

When is biogas use tax-exempt?

Natural gas and biogas are fully exempt from excise duty in certain applications. The exemption depends on the use, not the biogas sustainability category.

Typical tax-exempt applications include:

Use as an industrial raw material or auxiliary material
Electricity generation
Oil refining processes
Commercial shipping

A business can benefit from the exemption by registering as a natural gas user or applying for a tax refund afterwards. The detailed qualifying uses and procedures are set out in excise duty legislation.