European Union study ways to combat climate change through taxes

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European Union side event during the UN climate conference COP24 in Katowice, Poland on the 6th of December 2018. COP24 gathers parties of United Nations Framework Convention for Climate Change (UNFCCC). (Photo by Dominika Zarzycka/NurPhoto via Getty Images)
European Union side event during the UN climate conference COP24 in Katowice, Poland on the 6th of December 2018. COP24 gathers parties of United Nations Framework Convention for Climate Change (UNFCCC). (Photo by Dominika Zarzycka/NurPhoto via Getty Images)

A European Union document has revealed that the block is studying the reform of energy taxes to align them with climate targets. It listed possible measures higher/minimum tax rates, fossil fuel levies and the end of waivers for the air and sea transport sectors.

The document, seen by Reuters, was prepared by the Finnish presidency of the EU ahead of a meeting of the bloc’s finance ministers on Saturday in Helsinki, which will discuss the matter.

EU rules on energy taxation have not changed for more than 15 years and they appear “outdated and poorly adapted to climate change challenges and developments in energy policy at EU level,” the document says.

In the last decade, EU countries have led the global shift towards renewable energy and set up the world’s largest emissions trading system to price carbon and reduce reliance on more polluting fuels.

But their taxes have not reflected these changes, as existing taxation “does not differentiate between renewable and carbon-intensive sources of electricity,” the document says.

The confidential paper, which is not binding on EU authorities, urges a review of minimum tax rates for energy products, which currently differ among EU states and do not reward sources of energy for their efficiency.

“The minimum rates for electricity and heating fuels, for example, are too low to give an adequate price signal to energy users,” discouraging investment in energy efficiency, the document says.

It also calls for an end to energy tax exemptions granted to the aviation and maritime transport sectors in the EU, as they are “not in line with the decarbonization objectives of the Union’s transport policies.”

By increasing taxes on more polluting energy products, the EU could more effectively contribute to the fight against climate change, supporters of the plan say.

Ambitious targets for reducing carbon emissions by at least 50% by 2030 are part of the agenda of the new European Commission which will take office in November.

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