Brussels has earmarked taxes on aviation fuel to reduce carbon emissions

This week Brussels will present plans to raise taxes on polluting fuels and introduce a first EU-level tax on aviation kerosene, with measures planned to put it at the forefront of global efforts to reduce emissions. carbon emissions.

The European Commission will propose an amendment to its 15-year rulebook on carbon taxes to provide an incentive for low-emission fuel and impose levies on highly polluting energy used in the airline industry and of maritime transport. The measure is one of a dozen policies to be introduced Wednesday to ensure the EU can meet an average carbon reduction target of 55% by 2030. Others include an EU extension. emission exchange scheme, harder CO2 regulations for cars and a coal tax on some imports.

A draft legal text of the energy taxation directive, seen by the Financial Times, proposes to gradually increase minimum rates for the most polluting fuels such as petrol, diesel and kerosene used as jet fuels for a period of 10 years. Zero-emission fuels, green hydrogen and sustainable aviation fuels have not faced increases for a decade in the proposed system.

The “Fit for 55” package puts the EU at the forefront of decarbonisation efforts but the proposals risk a backlash from some governments and the public.

The introduction of environmental taxes is likely to be among the most politically sensitive measures in the commission’s plans. Unlike most of Brussels ’new green policies, the update of the energy taxation directive will require unanimous support from the 27 EU member states to become a reality.

Paolo Gentiloni, Brussels’s economy commissioner, called the reform “a moment now or never”.

“Paradoxically, [the current energy taxation directive] encourages fossil fuels and not environmentally friendly fuels. We need to change that, ”Gentiloni said at a meeting of G20 finance ministers this weekend.

EU energy taxation rules date back to 2006 and have created a system that “favors the use of fossil fuels” due to a number of exemptions and gaps for raw energy in several states. members, according to the text. The directive is intended to establish a series of minimum tax rates for energy products throughout the blockchain.

One of the major changes proposed is the end of the exemption for highly polluting fuels such as kerosene used in aviation. The bill says jet fuel used on intra-EU flights should be subject to a new minimum tax rate, the details of which have yet to be decided, officials said. The rules should, however, exempt flights only for cargo, and apply lower rates for non-commercial flights, according to the bill.

Although a tax on kerosene has been accepted by many EU countries, it has aroused resistance from the aviation industry. Brussels also plans to phase out free carbon credits provided to the sector in its ETS. Along with taxation rules, the phasing out of deductibles would significantly increase the pressure on aviation to reduce its emissions or pay for pollutants.

The bill says the gradual increase in minimum taxes during a ten-year transition would help avoid the problem of “double taxation” for the maritime and airline industries that risk being subject to two forms of CO2 tariffs.

The A4E airline group said the new coal rates for the sector are “ecologically and economically counterproductive” and that the market-based price of coal should be the only major form of CO2 tariff placed on the industry.

“An intra-EU tax on kerosene could lead to a competitive distortion in the internal market of Europe and worldwide,” he told A4E. “A possible tax on kerosene that sets minimum tax rates for intra-EU flights is likely to have the most negative impact, because it can open the door to different rates in the single market.”

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