The EU will focus the plane on renewing the fossil fuel tax
The EU is getting closer and closer to agreeing on an aircraft tax, as part of a comprehensive renewal of fossil fuel taxes, to help meet high-emission targets.
EU finance ministers held a wide-ranging meeting in Lisbon on Saturday for proposals to come across Europe for the tax on kerosene fuel used in aircraft, officials told the Financial Times.
Brussels has struggled in previous years to extend fuel tax rules to areas such as air and sea, but the cause has resurfaced with the bloc pledging to reduce EU carbon emissions by 55% over the next decade and a net zero by 2050.
The pandemic aviation industry has previously expressed concern over EU tax plans on kerosene.
In July, the European Commission will propose a complete overhaul of the Energy Tax Directive, which sets minimum tax rates for fossil fuels and has been out of date for almost two decades. The agreement on the changes was hampered by the need to reach a unanimous agreement in the 27 member states.
Brussels has said it will extend the control rules to aircraft and maritime sectors that were exempt from the system. However, European Union finance ministers have expressed less support for extending the directive to maritime transport, with countries on the geographical periphery of Europe expressing concern about the plans, officials said.
The renewal of the Energy Tax Directive will be one of the most politically sensitive sections of the Brussels Green Agreement agenda, as all countries have a veto on tax policy. EU Vice President of Economy Valdis Dombrovskis said the directive was “outdated” and that ministers had indicated “the right political moment to make changes”.
João Leão, Portugal’s finance minister, who chaired the meeting, said he was in favor of expanding his country to the maritime and aircraft sectors to help meet the EU’s ambitious environmental goals.
Some EU countries have run for office to end fuel tax exemptions, and the Netherlands has promised to introduce a national aircraft tax in the absence of an EU-wide agreement.
The renewal of Brussels will also aim to eliminate the exemptions that many Member States offer to sectors such as agriculture, the coal industry and diesel. The commission is also looking at a more stringent system, where taxes on minimum fuels will increase within 10 years, an official said.
Energy taxes are one of the main regulatory tools that Brussels can use to help reduce emissions, making higher-emission technologies more expensive for consumers and businesses. Another significant carbon pricing initiative that the Commission wants to renew is the European Emissions Trading Scheme (ETS), which is also considering transporting Brussels to cover shipments, aircraft and cars.
During the discussion, some finance ministers expressed concerns about the imposition of double charges on ships and airlines, included in the ETS and renewed rules for energy control, said diplomats familiar with the debate.
The Commission presented an initial plan to ministers to introduce a carbon tax that will tax imports to the EU based on their carbon footprint. The measure, which will be published in July, has raised alarm in countries such as Russia and Ukraine. Brussels has argued that the tax is necessary to protect the competitiveness of EU industry and prevent foreign companies from failing to meet their emissions targets.
Dombrovskis said the border tax will only be introduced “gradually,” as the initial scope will be limited to high-emission imports, such as cement, steel and fertilizers. “We are confident that we will have a consensus on the proposal to gradually adjust the carbon limit over time,” he said.