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Λογότυπος της Ευρωπαϊκής Επιτροπής
Taxation and Customs Union

Review of the Energy Taxation Directive (proposal)

In July 2021, as an integral part of the “FitFor55” package, the Commission put forward a proposal to revise the Directive. The proposal aims at ensuring more coherence with other EU policies as well as at contributing to achieving the EU’s mid- and long- term energy and climate objectives, amongst them the Green Deal. The proposal does so by reflecting more accurately the climate impact of the various sources of energy and to encourage consumers and businesses to change their behaviour.

In line with the above the proposal follows three main objectives:

  • aligning taxation of energy products and electricity with EU energy and climate policies with a view to contributing to the EU 2030 targets and climate neutrality by 2050;
  • preserving the EU internal market by updating the scope and the structure of rates as well as by rationalising the use of optional tax exemptions and reductions and
  • preserving the Member States’ revenues raising capability.

The proposal and its Annexes, were accompanied by an Impact Assessment (Summary), that explored the impacts of various policy options and based on its conclusions selected the best policy option, that was ultimately put forward by the Commission. The proposal was also accompanied by an Open Public Consultation, which received over 200 contributions ranging from large manufacturing companies, through airlines to individual citizens. All contributions are accessible on the Have Your Say web portal.

The proposal is currently being discussed by Member States in a dedicated ad- hoc Working Group of the Council.

Path to the review of the Energy Taxation Directive

The Energy Taxation Directive (ETD) lays down EU rules for the taxation of energy products and of electricity used as motor fuel or heating fuel. Adopted in 2003, the Directive has been in place in its current form for almost two decades. In 2011, the Commission  proposed a revision of the Directive. However, Member States in the European Council could not agree on the revision. Meanwhile, energy markets and technologies have experienced significant developments and the EU’s international commitments, notably the Paris Agreement in 2015, have evolved considerably. In 2019, the Commission started the process of revising the Directive again.

As a first step in the legislative process, in September 2019, the Commission published the evaluation of the Energy Taxation directive (full report, summary). Its conclusion is clear: the EU Energy Taxation Directive is no longer in line with the EU internal market and climate objectives. Furthermore, the evaluation concluded that:

  • The ETD does not promote emission reductions, energy efficiency, or alternative low carbon / sustainable fuels. A wide range of sectorial exemptions and reductions applied by Member States de facto incentivizes the use of fossil fuels;
  • The ETD does not provide sufficient incentives for investments in clean technologies;
  • The ETD is not in line with other climate EU policies (EU Emission Trading System, Renewables Directive, Energy Efficiency Directive).

A European Green Deal - Striving to be the first climate-neutral continent

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