New EU energy taxation, green budgeting and further carbon pricing could play a role in achieving a climate-neutral economy, as discussed by EU finance ministers at an informal meeting on 13 and 14 September in Helsinki.
A revision of the 2003 Energy Taxation Directive might be on the agenda, as “the Directive does not factor in the environmental performance of different energy products”, counting only their volume and disregarding their capacity to pollute or carbon content. This leads to means in no tax differential between renewable and carbon-intensive power sources as “the environmental differences between biofuels and fossil fuels are not recognised”.
Present tax exemptions such as those on aviation and maritime fuel “weakens incentives” for further investing in and decarbonising these sectors. Tools such as tackling emissions under the EU ETS or taxation of fuels are to be explored, despite the EU ETS currently allocating “substantial free allowances to airlines”.
According to the Finnish presidency, “energy taxation alone will not solve the climate challenge, but it can be an important part of the economic incentives that will steer our economies towards environmentally sustainable structures”.
Commission president-elect Ursula von der Leyen’s announced ambition to launch a sustainable investment plan was accompanied by her stated intention of installing an EU-wide carbon tax.
Source: ENDS Europe, September 2019