EU reckons tax as a tool to fight climate change

The Head of EU climate policy stated that taxation will be a part of the European Union’s plans to restrain global warming emissions and that levies should be reconstructed to match environmental costs.

Brussels seeks to eliminate emissions to ‘net zero’ (balancing emissions by absorption measures) by 2050, by rejuvenating policies including Europe’s carbon market, farming subsidies and CO2 standards for cars. In addition, the European Commission will revise EU energy taxation rules by next summer.

Commission Executive Vice-President Frans Timmermans said, “At some point, we need to make sure that our carbon footprint is fully reflected in our taxes”. This means that the current system needs to be altered to a level where taxes reflect the cost of making and transporting a product.

Germany expects tough EU negotiations on energy taxes

The bloc considers higher prices for carbon emissions as means to success in its climate protection targets. For this reason, Germany expects tough negotiations on the introduction of new energy taxes in the European Union.

Some countries, such as The Netherlands, have introduced national environmental taxes. Meanwhile, EU countries have agreed to a bloc-wide tax on non-recycled plastic waste, as the Commission is considering tax on jet fuel promoting a cut in aviation emissions.

However, for implementation of these taxation rules, there needs to be approval from all the 27 member countries. This is difficult to obtain as countries that are conscious that higher carbon-taxes will increase the price of their products, or hurt consumers, will resist this change. Even though, advocates state that revenues from the carbon levies can be used to fund low-carbon projects and support vulnerable citizens.

Currently, the EU has minimum excise duty rates for member countries to apply to fuels such as gas and coal.