**Consumers Should Brace for Further Fuel Price Hikes in 2028**
Consumers in Cyprus are being advised to prepare for significant increases in fuel prices starting in 2028, as the country aligns its regulations with European Union directives aimed at promoting the use of biofuels in transportation. This warning was issued during a parliamentary session on Tuesday, where officials discussed the implications of upcoming legislation that will be submitted to the EU within the next two months.
The new regulations are part of the EU's revised Renewable Energy Directive, which establishes binding targets for renewable energy utilization in the transport sector, including maritime and aviation. By 2030, EU member states are required to achieve either a 29% share of renewable energy in transport or reduce the emissions intensity of transport fuels by 14.5%. In Cyprus, the blending of biofuels into diesel and petrol is expected to increase the price of diesel by approximately 7 cents per litre and petrol by about 2.5 cents.
Energy ministry officials indicated that the European Commission will take an additional four months to review the proposed legislation after its submission. The price adjustments related to the new biofuel regulations are anticipated to take effect in 2028, with potential compensatory measures for vulnerable groups possibly being introduced as early as 2027. These offsets are estimated to amount to €174 million, with €131 million sourced from EU funds and the remainder from the Cypriot government.
Cyprus faces unique challenges in meeting these EU targets, as the country lacks sufficient biofuel production capacity. Consequently, officials have opted to focus on reducing the emissions intensity of transport fuels by 14.5%. A representative from the Scientific and Technical Chamber (Etek) expressed concerns over the lack of support for private businesses in the biofuel sector, stating that the country has "gone astray" in this area.
During the parliamentary discussions, Nikos Georgiou, chair of the House energy committee, criticized the government's vague assurances regarding compensatory measures for consumers. He emphasized the need for a clear outline of these measures and a specific timeline, arguing that while the transition to greener energy is essential, it should not continuously burden consumers. Georgiou's remarks reflect a broader concern among lawmakers about the potential impact of rising fuel prices on households.
Andreas Pasiourtides of the opposition party Akel echoed these sentiments, warning that the impending changes would further escalate fuel prices. He reiterated his party's longstanding proposal to eliminate double taxation on fuel, which currently sees at least 50% of the retail price attributed to taxes. Pasiourtides noted that the state imposes VAT on top of the fuel consumption tax, and removing the VAT could save motorists between 7 to 8 cents per litre.
Biofuels, which are derived from organic materials such as plants, agricultural waste, or algae, are seen as a crucial component in the EU's strategy to reduce greenhouse gas emissions. However, Cyprus's historical production of biofuels has been minimal, averaging only 0.01 thousand barrels per day from 1980 to 2024, in stark contrast to the global average of 45.36 thousand barrels per day in 2024.
As Cyprus prepares to implement these changes, the government faces the dual challenge of meeting EU obligations while ensuring that consumers are not disproportionately affected by the rising costs associated with the transition to renewable energy sources. The discussions in parliament highlight the need for a balanced approach that addresses both environmental goals and economic realities for citizens.