Fit For 55: TRAN/ITRE Committee Meetings 03/03/2022

by Maria Constantinescu

On the 3rd of March various important meetings took place for tackling key topics such as the Energy Taxation Directive (ETD), with a focus on the challenges, shortcomings and strategic objectives. 

Highlights from the Committee on Industry, Research and Energy (ITRE)

The discussion was led by the Rapporteur for the opinion Robert Hajšel from the S&D (Socialists & Democrats) Party. Hajšel highlighted that, especially now, our energy dependency on Russia must decrease and we must diversify our energy sources at the EU level. In order to do so, the only way is to accelerate the transition to clean energy and protect vulnerable groups.

As such, in his opinion, the revision of the ETD is crucial for the energy transition, as it would better reflect the current market situation. A key point to not be omitted, is that there should be no more exemptions and reductions for environmentally harmful activities and, in contrast, the clean activities should receive the correct pricing. 

Finally, in Mr. Hajšel’s point of view, the focus of the ETD should fall on the following five key areas: 

1. Social monitoring and reporting: the European Commission should regularly report on energy poverty and motivate the Member States to use higher revenue from taxes to tackle energy poverty.
2. To replace the definition of vulnerable consumers with a quantitative definition of energy poverty, as the current definition does not reflect the multiple dimensions of it.
3. To strengthen the uptake of renewables by making tax exemption mandatory, as well as encouraging power purchase agreements and energy communities by making exemptions for them.
4. No double taxation: taxes should be perceived solely for the final consumption.
5. The origin of electricity should be certified and the European Commission should create a proper framework for this (with electricity coming from renewable sources being taxed the lowest rate).

In response to Mr. Hajšel’s proposal, many MEPs took the floor such as Mr. Falca from EPP who underlined that the Member States should have the flexibility to adopt policies depending on their national circumstances and have differentiated taxes for the same products under certain circumstances or permanently; or Mr. Ijabs from Renew Europe who came in complete support of the tax exemptions and the common European Certification System. 

Perhaps a very interesting point of view was brought by the intervention of Ms. Hahn from the Greens, who stated that the proposal, although very well structured, has some shortcomings on the tax rates, as they do not necessarily reflect the different contributions to global warming of fuels, or that we should, overall, eliminate the preferential treatment to low-carbon fuels which are fossil or even nuclear based.

Lastly, after the intervention of all shadow rapporteurs from different parties, the European Commission gave its opinion on the proposal by suggesting that, in order to strengthen our objectives at EU level, there should be a mix of energy for the future and in light of the current crisis. At the same time, the Commission urged that the current crisis calls for a short-term strategy, whereas the Directive is thought of more  as a long-term action plan.

To conclude, the Commision highlighted that the ETD remains an important source of revenue for the Member States and that, overall, the taxation would rely on the remaining energy sources, such as renewables, once the others are phased out. 

Highlights from the Committee on Transport and Tourism (TRAN)

On the same topic discussed during ITRE’s meeting, the TRAN committee tackled the proposal of Rapporteur Maria Grapini from the S&D Party. In her view, she suggested that the gradual shift of the Directive should indeed take place during 10 years, but starting as of the year 2025, rather than as soon as possible. 

She argued that the private sector, for example, must be firstly allowed to build their own electric vehicles, such as trucks, and invest in the field, before starting this journey – as, in her belief, we might not have sufficient resources to start with.

Additionally, she vouched for the avoidance of multiple taxations and overlapping of taxes through EU legislation, but also to exclude fishing from the scope of the directive – particularly the taxation of small vessels.

Lastly, the threshold for taxation of electrical items and renewable energy should be held at national level, by the Member States, and at EU Level to build a community framework where smaller enterprises are also included, as they need a higher legal degree of certainty regarding taxation.

Interestingly enough, when the floor was given to the shadow rapporteurs, MEPs from various parties, there was a majority of opinions disagreeing with the transition period postponed to start as of 2025 and end only by 2035 – Mr. Ciaran, from the Greens, for example, also highlighted the recently published IPCC report which calls for urgent action, and postponing the action would be like ‘burying the head in the sand’.

Subsequently, I would like to highlight some key topics tackled by the shadow rapporteurs during their intervention in regard to Mrs. Grapini’s proposal:

• The amount of the fuel used for intra-EU navigation should be taxed as well, in order to avoid as much carbon leakage as possible (Mr. Marinescu, EPP).
• The rail sector should have available green fuel and should benefit from tax exemption (Ms. Daly, GUE/NGL).
• The taxation of kerosene should be avoided – as it would distort the competition on the market (Ms. Braunsberger, EPP).

To conclude, the European Commission’s position was that energy taxation is indeed an important revenue source for the Member States, in some even more important than corporate taxes. In addition , the Commission highlighted that the energy mix should be taken into consideration and balanced, as there are some States using more renewables than others and the work should focus on the possibility of exemptions and reductions, rather than rates’ increase.

References: 

All EP meetings can be watched at: https://www.europarl.europa.eu/committees/en/meetings/webstreaming