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Green Budget Europe AISBL

GBE

Green Budget Europe (GBE) is a Europe-wide initiative established to stimulate discussion and encourage progress on environmental fiscal reform (EFR) and on market-based instruments (MBIs) internationally, at European Union level, and in individual European states.

Lobbying Activity

Response to Evaluation Energy Taxation Directive

21 Sept 2017

The primary objectives of the revision of the Energy Tax Directive should be to internalise external costs, promote climate change mitigation, and eliminate perverse incentives. The need for an EU-wide energy tax legislation is most obvious for the transport sector, since it is common that fuel bought in one Member State is also used in another Member State. It is hard to justify why non-commercial use of diesel for road transport is taxed less than any use of petrol for road transport – whether related to energy units, volume or in relation to external costs caused. A logical solution to eliminate this distortion would be to make the ETD promote technically neutral fuel taxes by linking the tax rates to the energy content and apply the same tax rate in €/kWh (or equivalent national currencies) regardless of the energy carrier, whether it is petrol, diesel, LPG, natural gas or some sort of renewable fuel. In addition, we suggest the inclusion of carbon content when defining the final tax rate of energy consumption. Diesel is used not only for road transport but also for non-road purposes: stationary machines, vehicles used in agriculture and forestry etc. The need to incentivise energy efficiency is not less urgent for these purposes, which means this fuel use should be covered by the same energy-related taxes as road vehicles. The same goes for rail traffic, and inland and coastal shipping. The electrification of road transport is likely to radically change the conditions and possibilities to tax the energy used in an efficient manner. This confronts the European Union and its Member States with new, dramatic challenges. The electrification of road transport is increasing fast. The switch from combustion engines to electric propulsion will deliver a number of positive consequences: the emissions of “regular“ pollutants – NOx, HC, particles – will largely cease, which is of great value, in particular for the local environment. The electrification of road transport will result in lower sales of transport fuels, not only shrinking an important tax base for the Member States, but also depriving them of a tool to govern the growth of the traffic as well as its remaining environmental impact. Green Budget Europe considers that the electrification of road transport should go hand-in-hand with building the necessary tools for regulating and taxing road transport in the future. We identify two different ways to tax electrified road vehicles: 1) Energy use The monitoring of the energy use can be done either at the source, at charging point(s) or in the vehicle. In the first case, the tax level should be adjusted according to the fuels used in the power plant, whereby a coal tax could be envisaged. In the latter two cases, standardisation of equipment is necessary and urgent. 2) Driven distance This solution is already common for heavy vehicles, but could be streamlined and made cheaper and more targeted by standardising the equipment requirements. For cars, registering driven distance in different Member States (or regions with different tax regimes within a Member State) may bring challenges from personal integrity points of view. In both cases, it is important that the charges vary in relation to the environmental impact. A revised ETD should also include rules that make it easy and favourable for Member States to tax the use of aviation fuels to the same extent other fuels are taxed. If harmonisation of taxes is not accepted in other fields, the arguments in favour of a common aviation fuel tax should be sufficient. The challenge would be to design a legitimate and fair distribution of the tax revenues among the Member States. A more detailed presentation on our feedback can be found in the attached file. For further information: Eero Yrjö-Koskinen Green Budget Europe Rue du Trône 4 B-1000 Brussels Tel: +32 2 514 3480 Gsm: +358 50 347 8778
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21 Mar 2016 · Phasing out support to fossil fuels

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Meeting with Valdis Dombrovskis (Vice-President) and

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