While assembled in Helsinki for an informal working session, on Saturday 14 September the European Finance Ministers will discuss the European framework for energy taxation, which has remained unchanged since 2003.
In a note dated 29 August, of which EUROPE has a copy, the Finnish Presidency of the Council of the EU explains that the objective of this working meeting is to reflect on the role that energy taxation can play in mitigating climate change in the broadest sense, but also to identify the main elements that should be taken into account when revising the Energy Taxation Directive.
The Commission had already proposed in 2011 amending the scope and structure of the Directive in order to introduce taxation based on CO2 emissions and the energy content of the different fuels covered. However, no political agreement could be reached (see EUROPE 11177/4) and the institution then decided to withdraw its proposal in 2015.
The current Commission has launched an evaluation to determine whether the provisions of the Directive are still appropriate for the objectives pursued. The President-elect, Ursula von der Leyen, has confirmed, in her 'European Green Deal', her intention to propose a revision of the Directive (see EUROPE 12297/1).
This informal discussion is therefore a good starting point and should allow Member States to formulate their expectations. Finland - which actively supported the Commission's revision proposal - intends to play a particularly active role under its Presidency of the EU Council in promoting the subject.
"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", it writes.
According to the Presidency, the directive is "outdated" and "poorly adapted" to the challenges of climate change and the evolution of energy policy at European level. It does not take into account the environmental performance of different energy products and does not cover new technologies or products such as biomethane.
The Directive is also poorly aligned with newer energy legislation, such as the Renewable Energy Directive, which seeks to encourage the use of advanced biofuels and other products that are more environmentally friendly than traditional fossil fuels, the Presidency points out.
It also has shortcomings with regard to the proper functioning of the single market. Diverging national tax rates, higher than the EU's rather low minimum rates, increase the fragmentation of the single market and there is a risk of increasing distortion of competition in the internal market and erosion of the tax base in high-tax countries, it explains. (Original version in French by Marion Fontana)