Fifteen Member States subsidise fossil fuels more than green energy, a situation that is inconsistent with the EU’s climate goals, according to an analysis of EU energy taxation policies published by the European Court of Auditors on Monday 31 January 2022.
The report does note that efforts have been made. Subsidies for renewable energy have almost quadrupled between 2008 and 2019, from 20 to 78 billion euros. The use of renewable energy for electricity generation has increased over the decade and reached 19.7% in 2019 in all Member States, bringing it close to the 20% target for 2020.
However, although some Member States have committed to phasing them out, annual fossil fuel subsidies have remained relatively stable over the past decade at around €56 billion.
Two thirds of these subsidies, or €35 billion in 2018, took the form of tax exemptions or reductions. The remaining third - €8.5 billion - took the form of feed-in tariffs and premiums for renewable energy obligations and price support schemes for producers of electricity generated from a combination of heat and electricity using fossil fuels.
Fifteen states have even subsidised fossil fuels more than renewables: Finland, Ireland, Cyprus, Belgium, France, Greece, Romania, Lithuania, Bulgaria, Sweden, Hungary, Poland, Slovakia, Slovenia and Latvia.
The expected contribution of the revision of the Energy Taxation Directive
As part of its legislative package to achieve the target of reducing greenhouse gas emissions in the EU by at least 55% by 2030 (‘Fit for 55’), the European Commission presented a proposal in July 2021 to revise the Energy Taxation Directive, which has remained unchanged since 2003 (see EUROPE 12762/9). In particular, it proposes to abolish national exemptions for polluting fuels, such as diesel in agriculture, and to end tax breaks for fossil fuels in energy-intensive industries.
“With our review, we aim to contribute to the discussion on energy prices and climate change, and in particular to the upcoming debate around the proposed revision of the Energy Taxation Directive”, explained Viorel Ştefan, the member of the European Court of Auditors responsible for the review.
In addition to the climate objectives, this situation affects the internal market. While the majority of Member States impose fuel taxes well above the minimum levels set by the Energy Taxation Directive, some countries keep taxes close to the minimum. This situation may lead to distortions of competition in the internal market, notes the Court of Auditors. The main objective of the 2003 Directive was to ensure the proper functioning of the single market by ensuring a minimum level of taxation of energy products and electricity, and a harmonisation of national legislation.
See the report: https://aeur.eu/f/3t (Original version in French by Anne Damiani)