Slovenia is a country not particularly endowed in fossil fuels resources. It imports virtually all of its oil natural gas, the latter of which is purchased through long-term contracts and trading hubs in Austria and Italy. Indigenous energy sources – in the form of domestic coal, nuclear power, hydropower, and renewables —satisfy slightly more than half of Slovenia’s energy needs. In 2021, around 24% of all electricity in Slovenia was generated from domestic lignite, currently produced in the Velenje mine. Domestic production of lignite met about 80% of the demand for solid fuels in the same year. This coal is of very low calorific value (with an approximate calorific value of 12 MJ/kg) and contains high levels of sulphur and ash.
OECD Inventory of Support Measures for Fossil Fuels: Country Notes
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Slovenia
Energy resources and market structure
Source: IEA (2022), "World energy statistics", IEA World Energy Statistics and Balances (database).
In 2021, nuclear and hydropower were the primary sources of electricity generation (accounting for about 38% and 29% of national electricity generation, respectively). The nuclear PP Krško, the thermal PP Šoštanj and the hydro PP Dravske Elektrarne are the main power plants in Slovenia. These power plants are either fully or mostly state-owned. The electricity distribution system is owned by five distribution companies that are also largely state-owned. State-owned company SODO, Ltd. oversees the electricity distribution system and state-owned ELES, Ltd. operates the electricity transmission network. Another state-owned company, Borzen Ltd., acts as Slovenia’s electricity power market operator, and has a 50% share of BSP, the country’s power exchange operator. In 2017, there were 21 active suppliers in the Slovenian retail market, delivering electricity to final consumers.
The framework for the energy market in Slovenia is provided by the Energy Act of 2014. The National Energy Programme (NEP), adopted in April 2004, defines the main energy-policy objectives, diversification of energy sources and ensures a secure, sustainable and competitive energy supply. The Administration has published proposal for a new long-term development strategy document – The Energy Concept of Slovenia – laying out objectives for a sustainable and competitive energy supply in the country up until 2060. In accordance with the nation’s energy policy commitments in the EU, Slovenia adopted its national Energy Efficiency Action Plan, Action Plan for Renewable Energy Sources, Action Plan for Nearly Zero-Energy Buildings and Long-term Strategy for the Energy Renovation of Buildings. According to EU Regulation 2018/1999 on the governance of the Energy Union and climate action rules, Slovenia will develop integrated national energy and climate plans (NECPs) covering five dimensions of the energy union for the period 2021 to 2030.
Energy prices and taxes
Competition in the energy market is monitored by the national energy regulator, the Slovenian Energy Agency. The electricity and natural gas markets were opened in 2001 for companies and in 2007 for households; therefore all consumers can choose their own electricity and natural gas supplier. Besides a 22% VAT, most fossil fuels are taxed with excise duty, tax on CO2 emissions and energy taxes (e.g. compensation for commodity reserves, contribution for supporting electricity production from renewable energy sources (RES) and Combined Heat and Power (CHP) plants, contribution for supporting energy efficiency programmes and contribution for electricity market operator).
Figure 2. Total tax rebates and support for fossil fuels in Slovenia
1. Fiscal cost of support measures for fossil fuels are based on information reported by countries through official documentation (e.g. budget reports). Support measures for which such information is not available are excluded from the aggregate amount reported in this table. In addition, support measures in certain countries may not have been exhaustively identified.
2. Tax expenditures are estimates of revenue that is foregone due to a particular feature of the tax system that reduces or postpones tax payments (relative to a jurisdiction’s benchmark tax system) to the benefit of fossil fuels’ producers or users. Hence, (i) tax expenditures estimates can increase either because of greater concessions (relative to the benchmark tax system) or because of an increase in the benchmark itself; (ii) cross-country comparisons of tax expenditures can be misleading due to country-specific benchmark tax systems.
3. Support measures for fossil fuels are included in the Inventory without reference to their economic or environmental effects. No judgment is therefore made as to whether such measures are inefficient or ought to be reformed.
4. Data are expressed in nominal local currency. Data for 2022 are on a preliminary basis.
Source: OECD Inventory of support measures for fossil fuels (2023).
Recent developments and trends in support
Most of the support for fossil fuels in Slovenia is in the form of consumer support to end-users and industries. The refund on excise duty for diesel in commercial transport which has breached EUR 50 million mark in 2017, retreated its 2015 level to around EUR 44 million in 2018 as a result of lower excise duty rates for diesel (which makes lower residual to excise duty rate used for commercial transport sector). It still, however, represents nearly half of all fossil fuel support identified. In 2012, market price support for coal, the main producer support, was terminated. Following this, support for the use of coal use suddenly fell and the virtual elimination of producer support followed. Slovenia’s support scheme for combined heat and power (CHP) plants and renewable plants (RES) encourages the use of natural gas in CHP plants through feed-in-tariffs, which explains the rising support for natural gas. By encouraging natural gas use and reducing direct producer support for coal, Slovenia hopes to diversify its energy sources in line with the Energy Act of 2014.
The draft National Energy and Climate Plan (NCEP) states that subsidies that encourage inefficient use of fossil fuels and those that are inconsistent with the objectives of reducing greenhouse gas (GHG) emissions will be gradually reduced. The Operational Programme for Reducing Greenhouse Gas emissions until 2020 (OP GHG 2020) also aims at gradually cutting fossil fuel support. During 2022, some of these efforts were halted or reduced as energy prices rose. In 2022, the government enacted several plans to cap energy rates charged, particularly with electricity and natural gas.
The fiscal cost of support measures for fossil fuels in Slovenia was estimated at EUR 258.73 million in 2022 (Table 1). Seventy-six per cent (76%) was directed at end user beneficiaries, as opposed to 24% directed to firms. Support was mainly given out in the form of tax expenditures (EUR 196.16 million) accounting for 76% of the total fiscal cost of support measures. Direct transfers amounted to EUR 62.57 million.
The fiscal cost of support measures for fossil fuels has increased by 61% since 2017. Since last year, tax expenditures have increased by 230%, from EUR 83.41 million to EUR 196.16 million and direct transfers increased by 120%, from EUR 28.45 million to EUR 62.57 million. All growth rate percentages above are expressed in terms of nominal national currency amounts.
Table 1. Fiscal cost of support measures for fossil fuels (in millions of national currency)
|
|
2017 |
2018 |
2019 |
2020 |
2021 |
2022 |
|---|---|---|---|---|---|---|
|
Tax expenditures |
114.738 |
104.218 |
92.712 |
48.920 |
83.406 |
196.162 |
|
Direct transfers |
45.756 |
40.790 |
28.453 |
28.453 |
28.453 |
62.566 |
|
Total |
160.494 |
145.008 |
121.165 |
77.373 |
111.859 |
258.728 |
1. Fiscal cost of support measures for fossil fuels are based on information reported by countries through official documentation (e.g. budget reports). Support measures for which such information is not available are excluded from the aggregate amount reported in this table. In addition, support measures in certain countries may not have been exhaustively identified.
2. Tax expenditures are estimates of revenue that is foregone due to a particular feature of the tax system that reduces or postpones tax payments (relative to a jurisdiction’s benchmark tax system) to the benefit of fossil fuels’ producers or users. Hence, (i) tax expenditures estimates can increase either because of greater concessions (relative to the benchmark tax system) or because of an increase in the benchmark itself; (ii) cross-country comparisons of tax expenditures can be misleading due to country-specific benchmark tax systems.
3. Support measures for fossil fuels are included in the Inventory without reference to their economic or environmental effects. No judgment is therefore made as to whether such measures are inefficient or ought to be reformed.
4. Data are expressed in nominal local currency. Data for 2022 are on a preliminary basis.
Source: OECD Inventory of support measures for fossil fuels (2023).
Table 2 highlights a selection of support measures associated with a large fiscal cost. A description of these measures is provided in Table 3.
Table 2. Selected support measures for fossil fuels with a large fiscal cost (in millions of national currency)
|
Measures associated with large fiscal cost in 2022 |
2022 |
2017 |
Variation since 2017 |
|
|---|---|---|---|---|
|
Tax expenditures |
||||
|
Excise duties on energy decreased by 50% |
128.167 |
(Started 2022) |
128.167 |
|
|
VAT on gas, electricity, district heating and firewood reduced |
26.774 |
(Started 2022) |
26.774 |
|
|
Partial Refund Exemption of Excise Duty on Motor Fuel Used in Agricultural and Forestry Machinery |
16.941 |
21.037 |
-4.097 |
|
|
Direct transfers |
||||
|
Feed in Tariff for Natural Gas Used in CHP Plants |
28.453 |
29.159 |
-0.706 |
|
|
Temporary decreased CO2 levy for high-efficiency cogeneration and energy saving levies. |
19.055 |
(Started 2022) |
19.055 |
|
|
Energy Subsidy |
15.058 |
(Started 2022) |
15.058 |
|
1. Fiscal cost of support measures for fossil fuels are based on information reported by countries through official documentation (e.g., budget reports).
2. Tax expenditures are estimates of revenue that is foregone due to a particular feature of the tax system that reduces or postpones tax payments (relative to a jurisdiction’s benchmark tax system) to the benefit of fossil fuels’ producers or users. Hence, (i) tax expenditures estimates can increase either because of greater concessions (relative to the benchmark tax system) or because of an increase in the benchmark itself; (ii) cross-country comparisons of tax expenditures can be misleading due to country-specific benchmark tax systems.
3. Support measures for fossil fuels are included in the Inventory without reference to their economic or environmental effects. No judgment is therefore made as to whether such measures are inefficient or ought to be reformed.
4. Data are expressed in nominal local currency. Data for 2022 are on a preliminary basis.
Source: OECD Inventory of support measures for fossil fuels (2023).
Table 3. Description of selected support measures for fossil fuels
|
Excise duties on energy decreased by 50% |
Excise duties on energy (electricity, petrol, diesel, natural gas for heating, gasoil for heating) are decreased by 50% compared to excise law or are reduced to the EU minimum (from February 2022 on - until revoked) |
|
VAT on gas, electricity, district heating and firewood reduced |
VAT on gas, electricity, district heating and firewood reduced from 22% to 9.5%. |
|
Partial Refund Exemption of Excise Duty on Motor Fuel Used in Agricultural and Forestry Machinery |
This scheme, introduced in July 1999 by §9 of Article 54 of the previously applicable Excise Duty Act (article 94 of the current Excise Duty Act), exempts users of motor fuel when used to power agricultural and forestry machineries (including tractors). Eligible users can receive a 50% refund of the excise duty normally applied to motor fuel from 2000 to 2009, which has since been raised to 70%. The scheme was in place until 31 December 2022, after which the reimbursement of excise duty was replaced by a partial exemption of excise duty in the final consumer price of diesel. Starting from 1 January 2023, the Excise Duty on motor fuel used in agricultural and forestry machinery is the same as the Excise Duty on gas oil (diesel) used for heating. Annual payments have been allocated to diesel oil. |
|
Feed in Tariff for Natural Gas Used in CHP Plants |
Use of natural gas in CHP plants is encouraged through provision of a feed-in tariff for this particular fuel. The value of the feed-in tariff is determined by the reference cost of electricity production. |
|
Temporary decreased CO2 levy for high-efficiency cogeneration and energy saving levies |
Halving of contribution for renewable energy sources. Temporary decreased CO2 levy, contributions (duties) for efficient use of energy (URE), for electricity generation from renewable energy sources and high-efficiency cogeneration and energy saving levies (OVE + SPTE). |
|
Energy Subsidy |
Enterprises eligible for support need to have at least five employees and energy expenditures of at least EUR 10 000, or 5% of their revenues in 2019, or if their energy costs increase by more than 40% in 2022 compared to 2021. The subsidy may not exceed the amount equal to 60% of the loss incurred by the beneficiary due to the increase in energy prices and not exceed the maximum amounts stipulated in the law. |
Data sources
Note on the Methodology
Aggregate numbers from the Inventory represent the fiscal cost of support measures for fossil fuels. They should not be interpreted as a level of support for fossil fuels, nor as an indicator of the extent to which the considered policies are favourable or unfavourable to climate mitigation.
The Inventory reports tax expenditures as estimates of revenue foregone due to measures that reduce or postpone tax payments relative to a jurisdiction’s benchmark tax systems to the benefit of fossil fuels producers or users. Tax expenditure estimates can thus increase over time due to either an increase in the offered concession (relative to benchmark tax systems) or an increase in the benchmark itself. Cross-country comparisons of tax expenditures can also be misleading due to differences in countries’ benchmark tax systems.