Assessment of the Interrelations and Dependencies Between Fuel Consumption in Agriculture and Tax Exemptions on Fuel Purchase (Only in Lithuanian, English summary available)
Energy efficiency in agriculture is shaped by several factors: (i) the level of mechanisation and technology used; (ii) subsidies for renewable energy and the requirements of agricultural and environmental policy; (iii) the farming system, crops, and structure of each farm; and (iv) climate, geographical location, and soil characteristics. In crop farming, most direct energy consumption comes from fossil fuels. Therefore, the excise duty exemption for agricultural gas oil plays an important role, as it improves farm profitability and competitiveness compared to neighbouring countries such as Poland and Latvia. However, this tax relief system may discourage efforts to reduce gas oil and fossil fuel use.
The purpose of this evaluation was to assess how the potential for improving gas oil efficiency in crop farming is linked to tax obligations and other regulatory or non-regulatory factors. The evaluation was structured around four tasks: analysing the energy efficiency of gas oil use in Lithuanian, Latvian, Polish, and German crop farms; assessing efficiency differences and their drivers; comparing excise duty relief across these countries; and formulating recommendations for more efficient gas oil use in crop farming.
The study was based on a review of scientific literature, including studies by Lithuanian and international researchers; OECD, FAO and EU databases (statistical data, studies, evaluations); interviews with farmers’ associations; and an analysis of national and EU legislation. Methods applied included statistical analysis, quantitative and qualitative content analysis, comparative analysis, and expert evaluation.
The review highlighted a lack of comparable data. Eurostat’s statistics cover agriculture, fisheries, and forestry in all EU countries, but do not reflect crop-specific fuel use. FAO data also proved unsuitable for detailed analysis. The Farm Accountancy Data Network (FADN) provides detailed farm cost data across the EU, but in some cases public information was incomplete or inconsistent. Studies from projects such as EIP-AGRI and Horizon collected crop- and country-specific gas oil data, but their scope and time periods varied, making it difficult to generalise findings at national level. As a result, differences in efficiency across Lithuania, Latvia, Poland, and Germany could only be assessed partially.
Between 2010 and 2016, agricultural petroleum use rose sharply: Lithuania (+28%), Poland (+30%), Latvia (+29%). In Germany, the increase was modest (+6%). From 2019 to 2021, growth slowed in Poland and Latvia but continued in Lithuania, likely due to a later take-off. Higher fuel use correlates with greater productivity and output: wheat yields rose by 43% in Lithuania and Latvia, 18% in Poland, and 5% in Germany; meanwhile cropland expanded by 16% in Latvia, 8% in Lithuania, 3% in Poland, and fell by 2% in Germany.
Looking at farm fuel expenditure, in 2022 Lithuanian farmers spent a smaller share of total costs on fuel (9%) than farmers in Latvia (15%) and Poland (13%, including electricity and heating). Per hectare, German (€177/ha) and Polish (€151/ha) farms spent more than Lithuanian (€123/ha) and Latvian (€116/ha) farms. In Lithuania, larger farms spent relatively less overall on fuel but faced higher costs per hectare. Fuel prices and excise duty levels were found to have little effect on total consumption.
The literature identified several key efficiency measures: modern machinery, efficient equipment, sustainable farming practices, and renewable energy production. To reduce fuel use, priority should be given to efficient machinery and sustainable practices. Farms often choose renewable energy technologies, as they are mature, widely supported, and common in agriculture, but these mainly change the energy mix rather than improve efficiency. Advanced machinery powered by biomethane, hydrogen, or electricity remains costly, underpowered, or difficult to operate (e.g. charging times, limited service for biodiesel engines). Therefore, information, training, and financial support are crucial to help farmers adopt more efficient technologies.
The comparison of excise duty regimes showed that all four countries provide tax relief, though in different forms. Lithuania and Latvia use foregone revenue, while Germany and Poland refund part of the paid excise duty. Germany applies the highest excise (€215/1000 L), Poland the lowest (€20/1000 L). Only Germany plans to phase out the scheme from 2026. Lithuania allows the highest purchase limits, in some cases up to three times those in Latvia or Poland (e.g. for potatoes, vegetables). For cereals and legumes, Lithuanian norms (102 L/ha) are broadly in line with Latvia (100 L/ha) and Poland (110 L/ha), but exceed them for crops such as sugar beet and silage maize.
Germany does not set maximum purchase limits but restricts use to agricultural machinery and special-purpose vehicles. Lithuania’s law initially limited green gas oil to agricultural production only. From January 2024, its use in light vehicles was banned, but following farmer protests this restriction was repealed in February 2024. Compliance is monitored by the State Tax Inspectorate, which inspects about 30 farms per year. Most violations occur in spring, when farms exhaust quotas and switch to heating fuel (also subsidised).
The evaluation concluded that excise duty levels have little impact on fuel consumption in Lithuania. Efficiency improvements require technological alternatives that reduce fuel demand. Excise rates should be aligned with Poland and Latvia to preserve competitiveness. Until 2024, Lithuania’s rate was similar to Latvia’s but higher than Poland’s; from 2025, an additional “defence component” will further increase the gap. Recommendations include: reviewing the use of green gas oil in transport vehicles and phasing it out except in special cases; updating maximum purchase limits in line with sustainable practices; and applying energy efficiency criteria more broadly when evaluating energy-related investments at both policy and farm level.
The evaluation was carried out from July to December 2024 under the EU LIFE Integrated Project LIFE IP EnerLIT (No. LIFE20 IPC/LT/000002) “Improving Energy Efficiency in Lithuania”, funded by the LIFE Programme and the Republic of Lithuania.