The European Parliament voted on the proposal by the European Commission reforming the EU legislation on energy taxation, which sets out minimum European rates, notably with a view to introducing EU-level carbon taxation.
The Greens political group criticised the outcome of the vote, which calls for the prolonging of some of the key loopholes in the current legislation, notably the favourable treatment of diesel under the current rules.
A majority of MEPs has today voted to include perverse incentives for dirty fuels under the EU’s energy taxation system.
Neutral taxation would help ensure energy taxation does not give perverse incentives to more-polluting fuels. By rejecting neutral taxation, MEPs have voted for preserving these perverse incentives.
The EP also voted to strengthen proposals on carbon taxation however, calling for the rates to be adapted every three years. The lesson from the EU emissions trading scheme (ETS), where the current low carbon permit price is completely undermining the effectiveness of the scheme, is that carbon pricing needs to be set at the right level to be effective in stimulating emissions reductions and investment in greener technologies.
More regular updating of the rates would help ensure the carbon tax does not lag too far behind.
The Council and Commission need to speed up their efforts with a view to ensuring the legislative review can be concluded as quickly as possible. However, they must also ensure the final legislation is consistent with the EU’s energy and environment priorities. This means endorsing tax neutrality.