European Union to target Aviation in revamp of Fossil-Fuel levy

The EU is approaching an air tax agreement as part of an extensive reform of fossil fuel levies to help meet ambitious emission targets.

The EU Treasury Ministers’ Meeting in Lisbon on Saturday expressed broad support for future proposals for a European-wide tax on kerosene jet fuel used in aircraft, officials told the Financial Times.

Brussels has struggled to extend its fuel tax rules to areas such as aviation and maritime affairs, but will reduce EU carbon dioxide emissions by 55% over the next decade to net zero by 2050. The cause was rekindled by the block’s efforts to do.

The pandemic aviation industry had previously expressed concern about EU kerosene tax plans.

In July, the European Commission sets a minimum tax rate for fossil fuels and proposes a major overhaul of the Energy Tax Directive, which has not been updated for nearly 20 years. The change agreement has been hampered by the need to obtain unanimous agreements from all 27 member states.

Brussels has indicated that it will extend its tax rules to sectors such as aviation and maritime, which are exempt from the system. However, EU Treasury Ministers have weakened their support for the expansion of the directive to shipping, and European geographic neighbors have expressed concern about the plan, officials said.

The revision of the Energy Taxation Directive will be one of the most politically sensitive parts of Brussels’ Green Deal Agenda, as virtually every country has veto power over taxation policies. Valdis Dombrovskis, EU Vice-Chairman of Economic Affairs, said the directive was “obsolete” and that ministers expressed “the right political momentum to make a difference.”

Portugal’s Treasury Minister João Leão, who chaired the conference, said his country had helped expand into the maritime and aviation sectors to help achieve the EU’s ambitious environmental goals.

Some EU member states are leading accusations to end jet fuel tax exemptions, and the Netherlands has promised to introduce national aviation taxes without EU-wide agreement.

The Brussels renewal also aims to eradicate the exemptions that many member states provide to sectors such as agriculture, the coal industry and diesel. The Commission is also considering a stricter system in which the minimum fuel tax will be raised over a decade, officials said.

The energy tax is one of the major regulatory tools available to help Brussels reduce emissions by making higher emission technologies more expensive for consumers and businesses. Another important carbon pricing initiative that the European Commission wants to reform is the European Union Emission Trading Scheme (ETS), which Brussels is considering extending to shipping, aviation and automobiles.

During the debate, some finance ministers expressed concern about imposing double billing on vessels and airlines by including them in ETS, and the energy tax rules were amended, diplomats familiar with the debate said. ..

The Commission also presented the Minister with the first plan to introduce a carbon border tax on imports into the EU based on carbon dioxide emissions. The bill, announced in July, has warned countries such as Russia and Ukraine. Brussels argues that taxation is needed to protect the competitiveness of EU industry and avoid underestimating businesses by foreign companies that do not need to comply with emission targets.

Mr Donbrovsky said border taxes will only be introduced “in stages” and the initial scope will be limited to high-emission imports of cement, steel and fertilizers. “We are confident that we will reach consensus on a targeted carbon border adjustment proposal that will be phased in over time,” he said.