If the EU is to meet its energy and climate policy goals, it will need to adopt a common energy tax regime, said the European Economic and Social Committee (EESC) in its opinion on the internal energy market adopted yesterday.
The EESC said that the countries of the EU must "rethink energy taxation" with a view to making it "uniform and smarter across Europe". It suggested creating a common tax framework which would link the tax rate to the energy source and factor in CO2 emissions.
The burden of fees and VAT for electricity ranges from 4.7% in the UK to 45.6% in Denmark, with no heed to the energy content of electricity produced
said Pierre-Jean Coulon (Workers' Group, France), rapporteur for the opinion.
Local and national taxation results in price distortions that heavily penalise consumers and energy-intensive industries, according to the EESC.
European energy market: European in name only
The opinion, which presents European civil society's stance on the European Commission's plan to complete the internal energy market by 2014, deplores the fact that the gas and electricity markets are still European in name only.
In practice, it is more of a hotchpotch of national practices, markets and providers
said Mr Coulon.
The internal energy market was intended to give consumers better choice and value, by enabling them to switch energy suppliers. It was also supposed to unleash market forces to drive much-needed investment in the energy sector.
In reality, there has been a shift from monopolies to oligopolies with little competition between players in the market, said the EESC. "In a third of EU countries, 80% of electricity is produced by historical providers. As regards the internal gas market, it is largely hypothetical due to the dominant position of national gas suppliers", added Mr Coulon.
He deplores the effect of price regulation at national level on energy consumption and business returns. "The administered energy prices do not provide the price signals necessary for consumers to cut down on energy use, nor do they cover the real cost of energy production and supply". In his view, this undermines companies' balance sheets and the investment in energy production and networks that will be needed in the coming decades.
Administered prices run counter to the EU's interests and should only be accepted as "a temporary exception" in extraordinary circumstance, said the Committee in its opinion. It also reiterated its call for the adoption of an EU-wide definition of energy poverty, which would automatically trigger national support policies for the most vulnerable.
The EU must make a clear distinction between policies targeting energy poverty and protectionist practices that go against the spirit of the internal market
said Mr Coulon.
Putting consumers at the heart
The EESC has said that consumers must be placed at the heart of EU energy policy, enabling them to make the most of a new, smarter energy market.
It asked the European Commission to launch a major information campaign which would give consumers across the EU practical and easy to understand information about their rights and benefits. As Mr Coulon points out, "few consumers have changed energy suppliers since 2007 when it became legally possible. This is simply the result of a chronic lack of information and communication by States, regulatory authorities and providers".
The EESC opinion calls on manufacturers producing smart energy devices to design and roll them out in close cooperation with consumer associations, thus ensuring that they are "beneficial and useful to consumers and give them the option to change provider".