European industry is calling for a swift recast of the European Energy Taxation to boost the production of renewable and low carbon energy

The signatories of this letter welcome the European Commission’s initiative for a recast of the Energy Taxation Directive (ETD) as they trust that such framework will have the double objective of helping to achieve the aims of the European Green Deal, as well as developing new markets for energy products which were not available when the ETD was adopted in 2003.

Favourable taxation schemes adjusted to the environmental performance and GHG savings of the individual energy carriers are part of the Commission’s proposal, and can provide to consumers and businesses the right price incentives to accelerate the progressive production of Renewable and Low-Carbon Fuels, including all sustainable gaseous and liquid fuels as defined by the Renewable Energy Directive, complying with the sustainability criteria included in the EU Renewable Energy Directive.

Currently, we fear that the lack of progress on the ETD recast negotiations will result in a withdrawal of the proposal, and we call for the continuation of the negotiations, both on technical and political level. We also understand that such situation is a consequence of the energy crisis which is affecting both EU households and businesses. However, shifting to sustainable energy carriers is not only a tool to address the climate crisis, but also the answer to a more diverse, resilient, and cost-efficient energy supply in the medium and long term:

  • In the short-term, Member States’ revenues will not be affected due to low blend levels, but favourable taxation will contribute to the scale up of Renewable and Low Carbon Fuels industrial production;
  • In the long term, the ETD can ensure that tax revenues would remain almost constant.

Decisive action is required now to help accelerating industrial production of Renewable and Low-Carbon Fuels. Therefore, the signatories call for:

  1. Member States to swiftly reach an agreement to incentivise the production and the use of Renewable and Low-Carbon Fuels, allowing the EU to take a pioneering role in the energy transition;
  2. Support that taxation of each energy product consisting of a mixture of one or more blend components is based on each component (Article 2(6)), providing a clear incentive for higher blends of Renewable and Low-Carbon Fuels and thus boosting their production;
  3. Finally, considering the divergencies in the Council related to the tax exemptions of intra-EU air and maritime transport, we recommend maintaining the ten-year minimum tax rate of zero for sustainable fuels in those sectors.