The adoption of the legislative draft on transport energy, which obliges fuel suppliers to increase the share of renewable energy in their energy portfolio, could lead to higher fuel prices, as LETA found, interviewing fuel traders.
Cirlce K Latvia LLC manager for fuel quality Gatis Titovs said the increase of renewable energy in the energy portfolio will definitely increase prices, because it involves the construction of additional infrastructure, as well as the fact that bio-mixture is more expensive than fossil fuels.
“Already Circle K Latvia receives classic fuel from various suppliers in Europe. Bio-components are ordered separately. We can basically conclude our fuel is made in Latvia,” adds Titovs.
He said the company will adapt to the changes. However, fuel prices will go up in accordance with the bio-mixture price.
Viada Baltija JSC Kaspars Tupiņš said the company believes the legislative draft will not introduce great influence on Latvia’s fuel retail market, because Viada Baltija as a trader already sells fuel with bio-mixture.
Viada Baltija expects there to be influence on the market only if addition bio-mixture is required for diesel fuel in the winter period as well. In this case the company predicts price rise of 0.035 to 0.004 euros directly for the end user from existing fuel prices, Tupiņš added.
He added that this would further reduce the opportunities for Viada Baltic as a trader to compete for the attraction of international carriers due to the projected price increase.
“In this case, “Viada Baltija” positively evaluates the timely drafting of the laws adopted by the Saeima and the implementation period, when fuel traders are given a reasonable period of time to implement the new changes in the retail segment in order to implement all the planned provisions of the law in practice,” he continued.
He said one important factor will be the assurance of controlling mechanisms from the side of the state to ensure all companies operate based on equal market rules and honest entrepreneurship is maintained.
Virši-A board chairman Jānis Vība said the progress with the law is a positive step towards promoting a more environmentally friendly development of Latvia’s transport industry, as well as securing further investments for the country’s green energy sector.
Vība said the renewable forms of fuel are more expensive than fossil fuels. Nevertheless, the company believes it is too soon to make conclusions about the legislative draft’s influence on fuel prices.
He said that the advantages of the bill are that it clearly defines the requirements for renewable fuels in the long term, which in turn provides opportunities for local entrepreneurs to develop fuel production in Latvia, but as a disadvantage he mentioned that the goals of the bill are currently relatively moderate and are introduced several years late compared to neighbouring countries.
Neste Latvija board chairman Armands Beiziķis said Neste is unable to comment on the legislative draft at the moment or its possible influence on the fuel market and prices, because the process is not over – the Saeima will need to go through it. He said the company closely follows discussions and decision-making.
“It is important to understand that in the fight against climate change we need all possible solutions to reduce greenhouse gas emissions,” said Beiziķis.
LETA previously reported that on the 25th of June the government approved the legislative draft from the Ministry of Climate and Energy.
The ministry notes the transport sector is the second biggest source of emissions in Latvia, making up 37% of emissions generated by sectors of the national economy. The objective of regulations is promoting “greenifying” the transport sector.