Brussels will set out plans this week to
increase taxes on polluting fuels and
introduce an EU-wide kerosene levy on
aviation for the first time, under measures intended to put it at the forefront of
global efforts to cut carbon emissions.
The European Commission will propose a revamp of its 15-year-old rules on
carbon taxes to provide an incentive for
low-emissions fuel and impose levies on
heavily polluting energy used in the airline and shipping industries.
The measure is one of a dozen policies
to be unveiled on Wednesday to ensure
the EU can meet a goal of reducing average carbon emissions by 55 per cent by
2030. Others include an extension of the
EU’s emissions trading scheme, tougher
CO2 rules for cars and a carbon levy on
A draft legal text of the energy taxation directive, seen by the Financial
Times, proposes gradually increasing
minimum rates on the most polluting
fuels such as petrol, diesel and kerosene
used as jet fuel over a period of 10 years.
Zero-emissions fuels, green hydrogen
and sustainable aviation fuels will face
no levies for a decade under the proposed system.
The “Fit for 55” package puts the EU
at the vanguard of decarbonisation
efforts, but the proposals risk a backlash
from some governments and the public.
Introducing environmental taxes is
likely to be among the most politically
sensitive measures in the commission’s
plans. Unlike most of Brussels’ new
green policies, updating the energy taxation directive will require unanimous
backing from the EU’s 27 member states
to become a reality.
Taxing carbon is increasingly seen as
an important way to drive down emissions. At the weekend, G20 finance ministers collectively endorsed carbon pricing for the first time, saying in a joint
statement it was one of a “wide set of
tools” for tackling climate change.
The EU’s energy taxation rules date
back to 2006 and have created a system
that “favours fossil fuel use” owing to
exemptions and loopholes for dirty
energy across different member states,
according to the text. The directive is
designed to set minimum tax rates for
One of the big changes being proposed
is an end to exemptions for heavily polluting fuels such as kerosene used in aviation. The draft says jet fuel used in
intra-EU flights should be subject to a
new minimum rate of taxation, the
details of which have not yet been
decided, said officials. The rules should,
however, exempt cargo-only flights, and
apply lower rates for non-commercial
flights, according to the draft.
Although a kerosene tax has been
welcomed by many EU countries, it has
sparked resistance from the aviation
industry. Airline group A4E has said
new carbon taxes for the sector are
“ecologically and economically counterproductive”.
Germany’s Greens page 2
Aluminium sector wants out page 6
FT View page 16