Brussels will set out plans this week to increase taxes on polluting fuels and introduce an EU-wide levy on aviation kerosene for the first time, under measures intended to put it at the forefront of global efforts to reduce carbon emissions.
The European Commission will propose a revamp of its 15-year-old rule book on carbon taxes to provide an incentive for low-emissions fuel and impose levies on heavily polluting energy used in the airline and shipping industry. The measure is one of a dozen policies to be unveiled on Wednesday to ensure the EU can meet a goal of reducing average carbon emissions by 55 percent by 2030. Others include an extension of the EU’s emissions trading scheme, tougher C02 rules for cars and a carbon levy on some imports.
A draft legal text of the energy taxation directive, seen by the Financial Times, proposes gradually increasing minimum rates on the most polluting fuels such as petrol, diesel, and kerosene used as jet fuel over a period of 10 years. Zero emissions fuels, green hydrogen and sustainable aviation fuels will face no levies for a decade under the proposed system.
The “Fit for 55″ package puts the EU at the vanguard of decarbonization efforts but the proposals risk a backlash from some governments and the public.
Introducing environmental taxes is likely to be among the most politically sensitive measures in the commission’s plans. Unlike most of Brussels’ new green policies, updating the energy taxation directive will require unanimous backing from the EU’s 27 member states to become a reality.
Paolo Gentiloni, the Brussels economics commissioner, has called the reform a ‘now or never moment”.
“Paradoxically, [the current energy taxation directive] is incentivizing fossil fuels and not environmentally friendly fuels. We have to change this”, Gentiloni said at a meeting of G20 finance ministers this weekend.
The EU’s energy taxation rules date back to 2006 and have created a system that “favors fossil fuel use” owing to a series of exemptions and loopholes for dirty energy across different member states, according to the text. The directive is designed to set a series of minimum tax rates for energy products across the bloc.