Amendments to Proposal for a Council Directive restructuring the Union Framework for the taxation of energy products and electricity (recast)

Key Messages

• Eurelectric welcomes the proposed switch to energy content-based taxation, specifically, the proposal which ranks electricity among the lowest taxed energies, recognising its important contribution to the European Green Deal and the decarbonisation of the economy).
• Eurelectric supports the possibility for Member States to apply taxation which is lower than the proposed minima for less pollutant energy products, like renewable and carbon-neutral electricity. We believe this possibility should be incentivised in the Renewable Energy Directive to support RES-based electrification.
• Eurelectric supports the exemption for electricity and energy products used to produce electricity and electricity used to maintain the ability to produce electricity, however, clarification is needed on situations where Member States, under individual derogations, may tax these products for reasons of environmental policy (for instance, this derogation should never apply for renewable and carbon-neutral sources).
• While recognising that the ETD covers only excise duty, Eurelectric believes that the Council should consider a broader and more holistic approach to the energy taxation framework. This would translate into including in the revised ETD the rules on the Member States’ own initiatives covering other fiscal and para-fiscal charges related to the overall activities within the electricity value chain and that contradict the energy and climate goals and hamper electrification.
• Eurelectric calls on the Commission to add an explicit provision on self-consumption since the proposed changes in the ETD only exempt “small producers.” The lack of a proper definition for small producers may lead to different frameworks and rules across the Member States and may create a barrier for the adoption of a more decentralized, renewables-based ecosystem. Self-consumption should be exempted at least up to a certain threshold, for instance for small self-consumption which can be clearly defined (home PV, for example).
• Eurelectric supports the same rule of exemption for energy products used to produce electricity being applied to renewable and carbon-neutral electricity used by electrolysers to generate renewable and low carbon hydrogen.
• Eurelectric welcomes the amendments to avoid double taxation of storage and provides suggested definitions for redistributors and electricity storage to provide clarity on who the responsible party is for the tax and exempting storage within self-consumption.
• For the proposed taxation rates, Eurelectric questions the proposed transitional period of 10 years applied, for instance, to the use of the 2/3 reference rate to natural gas, LPG and hydrogen of fossil origin. It does not strengthen the achievement of the Fit for 55 objectives within this decade and should not be extended any further. At the same time, it does not take into account the contribution of electrolytic hydrogen and derived fuels to the decarbonisation of hard-to-abate sectors like industry and heavy-duty transport since the increase of taxation is not consistent with the fact that the electricity mix will further decarbonise.
• Eurelectric welcomes the proposed review and gradual phase out of existing exemptions for aviation and maritime fuels to encourage the switch to cleaner transportation when economically feasible.