‘Green taxation’ is the part of the European Green Deal that remains pending approval within the EU three years after the European Commission put an ambitious plan on the table of the 27. The division persists. At a time when some of the initiatives proposed in the previous mandate of Ursula von der Leyen have begun to be reversed, such as the law against deforestation or the reduction of the use of pesticides, a majority of countries, among them where Spain is located, they are committed to leaving air and maritime transport untaxed, as until now.
In July 2021, the European Commission presented the ‘Target 55’ package (Fit for 55, in English) with which it prepared the continent for climate neutrality by mid-century with an intermediate objective of reducing emissions by 55% in 2030. Among the initiatives he proposed was the review of the directive on energy taxation, which sought to update a legal framework that had become obsolete for new climate commitments.
In general terms, the proposal involved raising the minimum rates for the most polluting energy, and included a relevant novelty: eliminating the exemptions for air and maritime transport. “Kerosene used as fuel in the aviation sector and heavy oil used in the maritime sector will no longer be fully exempt from energy taxes for travel within the EU,” the European Commission noted at the time. The approach was to introduce minimum rates applicable to these fuels that would gradually increase.
The agreement is resisted within the EU and the Hungarian presidency, which is responsible for leading the debates this semester, has proposed maintaining the exemption for air and maritime transport and reviewing that decision in 2035.
A majority of countries have been in favor of the proposal, considering that taxing these fuels would harm the EU’s competitiveness. “Climate objectives are a priority. However, the measures necessary to achieve it must be assessed based on the economic impact and the situation of each member state. “Energy prices have a great impact on European competitiveness, especially in industry,” said the Italian Finance Minister in a meeting with his European counterparts in which the matter was discussed.
His Greek counterpart, for example, has defended maintaining the exemption due to the harm it would mean for tourism, which accounts for 20% of the country’s GDP. Other ministers, such as the Maltese or the Portuguese, have cited geographical reasons.
Treasury Secretary General Paula Conthe has also said that maintaining the exemption with a review clause within a decade is a “reasonable compromise”. “These changes do not weaken the main objective, which is to align taxes on energy products with the objective of decarbonizing the economy,” he defended.
On the contrary, Climate Action Commissioner Wopke Hoekstra has expressed disappointment with the direction the initiative is taking. “If one sector does less, another has to do more,” he said about climate objectives. Among the countries that have most vehemently rejected the softening of the proposal have been France, Holland and Belgium.
“France supported this initial ambition of the revision of the directive due to the climate objectives we share. We can only regret the exclusion of the air and maritime sector. This would prevent us from achieving the objectives we have set,” defended Emmanuel Macron’s Finance Chief, who is in office. “We regret the low ambition of the last text,” said the Belgian, adding to the Dutchman’s complaints.
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