Revision of the Energy Taxation Directive (ETD)

Key points:

The EESC

• welcomes the objective of the proposal, because it updates and seeks to clarify the framework of the 2003 Directive and because it seeks to structure taxation in a way that favours sustainable non-fossil energy. However, EESC regrets that the taxation of biofuels under the proposal is too rigidly linked to the categorisation made in the Renewable Energy Directive (RED)  and believes that the scarcity of alternative fuels and the ensuing high cost level call for a more flexible attitude on admissible biofuels, including with regard to the minimum taxation level, which should be much lower than that applicable to fossil fuels;
• considers that the increased minimum tax level may have negative social effects, causing energy and mobility poverty, and is pleased to note that Member States may go below minimum levels for heating fuel and electricity used by vulnerable households and organisations recognised as charitable and that a ten-year total exemption from taxation for heating fuel and electricity used by "vulnerable households" is proposed;
• recommends using the notion of "energy precarity", which is a qualitative phenomenon (perception of cold, humidity, comfort level) as well as a quantitative one (energy costs, poverty threshold), and cannot be treated solely in terms of its quantitative aspects, as the proposal for a Directive does with the notion of "vulnerable household". The EESC also highlights that environmental taxation must also clearly pursue social objectives, in the interest of its social acceptability; wherever the question arises of the redistribution of tax revenues, the Committee recommends that the proceeds of such taxes be returned, for example, to the people most heavily affected;
• emphasises that financial difficulties arising from energy costs are currently under the spotlight in many Member States. The EESC believes that significant contributions to resolving these problems can be made by substantially increasing investment in renewable energies and adjusting the European pricing system to ensure that it reflects the price of all forms of energy, including the cheapest ones. This requires changing the current system of auctions in the wholesale electricity market;
• finally, warns of the risk of negative effects on the competitiveness of European industry and considers the Commission proposal to enable Member States to grant tax reductions the consumption of energy products used for heating in favour of energy-intensive business or where agreements are concluded to improve energy efficiency is essential to preserve competitiveness of EU industry given that most economies outside the EU have so far failed to adopt tangible climate measures.