Proposal to review energy products taxation Directive postponed until Autumn 2010

The proposal to review the energy products taxation Directive has been postponed to the autumn 2010. The proposal would review Directive 2003/96/EC to introduce a minimum harmonised tax on energy products based on their CO2 emissions and additional taxes based on the energy content.

The college of Commissioners held an orientation debate on the future proposal on 23 June 2010. The Commissioners all agreed on the principle of revising Directive 2003/96/EC and on introducing a minimum harmonised carbon tax on energy. However, concerns were raised over the impacts of a carbon tax on energy on consumers and vulnerable sectors such as agriculture. Some derogations may therefore be added to the proposal.

A flat rate applied to both motor fuels and heating fuels is under consideration, though some exemptions are likely for industrial sectors at risk of carbon leakage. The proposal would be a Council Directive, and would aim to cover all energy sectors but avoid overlap with the Emissions Trading Scheme (ETSⁱ). Consequently the proposal would introduce an exemption for CO2 taxation of energy products that fall under the ETS scheme to avoid cumulative costs for CO2 reductions. The exemption of biomass from CO2 taxation was also discussed.

It is unclear when the Commission will adopt the proposal but the aim is to propose it as soon as possible. It is likely to be postponed until the autumn 2010. The proposal will then be sent to the European Parliament for a non-binding opinion and to the Council for adoption by unanimity.