Policy Overview

The Energy Taxation Directive 2003/96 sets out rules for the taxation of different energy products in the EU. Its revision under the Green Deal aims to align energy taxation with the EU's increased climate objectives, and the reform was proposed in December 2019 alongside the EU Green Deal. A public consultation was launched to gather stakeholder views in March 2020. The ETD revision aimed to review how energy is taxed in the EU and update minimum taxation rates for fossil fuels and energy sources based on environmental criteria.

Policy At Risk

After intense negative lobbying efforts from heavy industry sectors, the EU Commission proposal's contains unambitious reforms of the taxation of energy-intensive industry and fossil gas, although it proposed increased taxation of maritime and aviation fuels despite fierce opposition from the affected sectors.

InfluenceMap Query

IPCC aligned transition from carbon-emitting technologies

Policy Status

Under consideration: first reading and being discussed in Parliament and Council.

  • European Council: Economic and Financial (ECOFIN) Council Configuration
  • European Parliament: Economic and Monetary Affairs Committee (non-binding input)
  • Rapporteur: Johan Van Overtveldt (European Conservatives and Reformists)

Evidence Profile

62894453103

European Commission

Lobbying Overview

Overview of Corporate and Industry Lobbying

The aggregated evidence of corporate and industry lobbying on the update of the ETD shows intense, negative engagement from energy intensive sectors (cement, steel, etc), while energy and utility actors have supported greater ambition.

Long-term Lobbying Trends

The aviation industry strongly opposed a kerosene tax for jet fuel, with easyJet emerging as a lone supportive voice within the aviation industry in June 2021. The majority of the aviation industry, including Air France-KLM, Ryanair, IATA and A4E, advocated that a kerosene tax would negatively impact the sector’s international competitiveness.

The gas industry promoted tax incentives for Liquified Natural Gas and Compressed Natural Gas through the ETD reform, including actors Eurogas and Snam.

Heavy industry sectors strongly opposed the removal of existing exemptions for energy-intensive industries, with heavy industry and cross-sector associations such as Cefic, IFIEC, Eurofer and the BDI advocating that it would negatively impact industry’s international competitiveness. BusinessEurope and its national members suggested that the ETD should not tax emissions that are covered by the EU Emissions Trading System.

Several entities in the utilities and gas sector have lobbied in support of the ETD revision, advocating that there should be a level playing field between energy carriers. This includes associations Eurelectric and Gas Infrastructure Europe (GIE), and companies EDF and Enel.

The automotive industry supported exemptions for sustainable renewable fuels, including the European Association of Automotive Suppliers (CLEPA) and European Automobile Manufacturers Association (ACEA).

Lobbying on the EU Commission’s proposal since July 2021

The aviation sector has split into two camps over the proposed reform of the ETD to introduce a kerosene jet fuel tax in the EU, with the International Air Transport Association (IATA), Airlines for Europe, the International Airlines Group (IAG), Lufthansa and Air France-KLM strongly opposing the tax. Ryanair’s CEO Michael O’Leary publicly stated support for a jet fuel tax on all inter- and intra-EU flights on the condition that all other climate regulation and taxes are removed in November 2021, but in response to an EU public consultation in the same month Ryanair opposed the introduction of a jet fuel tax. WizzAir supported a kerosene tax for cargo planes only, and EasyJet advocated to include all inter- and intra-EU flights in the EU’s kerosene jet fuel tax in 2021.

The heavy industry sector and cross-sector associations do not seem to support most reforms to the ETD, the BDI and CEMBUREAU strongly opposing the exclusion of mineralogical processes from tax exemptions in 2021-22. Several industry associations, including Confindustria and IFIEC, did not support the increase of minimum taxation rates, stressing impacts on international competitiveness, and others, including Eurofer and the Confederation of European Paper Industries (CEPI) advocated for a tax exemption for high efficiency cogeneration.

Cross-sector associations and the utilities and energy sectors were unsupportive of increased rates of taxation and the phase in period for fossil gas, including the BDI, Confindustria and Repsol. The gas industry, including the International Association of Oil and Gas Producers (IOGP) and Enágas advocated for preferential treatment for gas.

The automotive sector pushed back against some elements of the ETD proposal in 2021 but some appear to have become more supportive in 2022. ACEA and the German Association of the Automotive Industry (VDA) advocated against the proposed higher taxes on diesel and BMW suggested a longer transition period for motor fuel taxation until 2033 in 2021. However, in 2022, ACEA and the European Association of Automotive Suppliers (CLEPA) advocated for the ranking of taxation based on GHG emissions in the ETD in March 2022.

The utilities and renewable energy sectors supported a shortening of the 10 year transition period for fossil fuel taxation, including Eurelectric, Enel and Iberdrola, and advocated for improved support for renewable hydrogen.

Lobbying Impacts on Policy Ambition

By considering the potential scenarios in the EU Commission's original Impact Assessment Report for ETD reform, and comparing this to the final proposal, a gauge of the impact of industry lobbying can be taken. In this case, intense engagement from heavy industry sectors and the gas industry appears to correlate to the adoption of several weaker positions by the EU Commission and EU Parliament Draft report.

EU Commission Proposal

  • Base of taxation: The proposed ETD would tax fuels by energy content rather than volume.

  • Aviation and Maritime fuel taxation: Tax exemptions for the aviation and maritime sectors would be removed in the ETD proposal, and would be phased in over ten years.

  • Taxation rates: The ETD reform would introduce a four-tier taxation rate based on environmental performance where conventional fossil fuels are taxed at the highest rate and cleaner options such as advanced sustainable biofuels, renewable hydrogen and electricity, whether produced with fossil fuels or renewables, are incentivized via reduced rates or exemptions. Fossil gas and hydrogen made with fossil fuels would be taxed at two-thirds of coal, diesel and petrol, increasing over a ten-year period to the same level. Fossil gas when used for road transport or heating is granted a lower tax rate than other fossil fuels for a 10-year “transition period”, which appears to correlate with lobbying efforts from Eurogas to gain “favorable taxation” in the ETD in 2020. The 10-year timeline for phasing-in the new system is the longer of the two transition period options considered by the Commission (10-years vs. 7-years).

  • Minimum taxation rates: The ETD would set minimum taxation rates which are linked to inflation and so will increase in coming years. Lower minimum levels of taxation would be set for motor fuels for transport and extractive/productive activities, and for heating fuels. Tax rates for energy intensive industries can be mitigated by Member States through reduced tax rates but with some stringent conditions attached. Tax exemptions for mineralogical processes have been removed but reduced minimum taxation rates continue for most energy intensive industries. Fossil gas when used for transport or heating receives tax exemptions for a 10-year transition period.

Draft EU Parliament Report

The draft EU parliament position, released in February 2022, significantly weakened the ambition set by the EU Commission.The rapporteur suggested that the absence of an overall Fit for 55 impact assessment was “highly problematic” and delayed the entry into force date of the policy to 1 January 2023.

  • Tiered taxation levels: The proposal suggested removing the tiered taxation levels based on environmental performance, preferring a technologically neutral approach.

  • Maritime fuel taxation: The draft did not fully support the taxation of bunker fuel, citing international competitiveness concerns, and advocated that taxation should only target journeys within the EU.

  • Taxation exemptions: It seemed to support tax exemptions and reductions on the basis of risks to international competitiveness.

  • Aviation fuel taxation: The proposal did support the taxation of jet fuel, without exemptions, and advocated for a permanent zero tax rate on sustainable alternative fuels and electricity.

InfluenceMap Query

IPCC aligned transition from carbon-emitting technologies

Policy Status

Under consideration: first reading and being discussed in Parliament and Council.

  • European Council: Economic and Financial (ECOFIN) Council Configuration
  • European Parliament: Economic and Monetary Affairs Committee (non-binding input)
  • Rapporteur: Johan Van Overtveldt (European Conservatives and Reformists)

Evidence Profile

62894453103

European Commission

Live Lobbying Alerts

CEMBUREAU opposes reform to EU Energy Taxation and Renewable Energy directives

23 June 2022

In a position paper, published on 13th June, CEMBUREAU opposed the removal of taxation exemptions for mineralogical processes in the reform of the Energy Taxation Directive, and stressed the policy should avoid overlap with the EU Emissions Trading System (EU ETS). On the 17th June, CEMBUREAU also published responses to the EU Commission’s consultations on the Renewable Energy Directive reform Delegated Act on fuels of Renewable Non Biological Origin (RNFBOs), both of which did not support the EU Commission’s proposal. The association did not support simultaneity and location criteria, and suggested that CO2 accounting for GHG savings from recycled carbon fuels should not apply upstream.

Entities Engaged on Policy

The table below lists the entities found to be most engaged with the policy. InfluenceMap tracks over 350 companies and 150 industry associations globally. Each entity name links to its full InfluenceMap profile, where the evidence of its engagement can be found.

Influencemap Performance BandOrganizationEngagement Intensity
C-Shell63EnergyEurope
CBP60EnergyEurope
CVolkswagen Group54AutomobilesEurope
C-TotalEnergies52EnergyEurope
B-Microsoft38Information TechnologyNorth America
D-BusinessEurope53All SectorsEurope
C-European Chemical Industry Council (Cefic)58ChemicalsEurope
CEuropean Round Table for Industry (ERT)20All SectorsEurope
D+European Automobile Manufacturers Association (ACEA)40AutomobilesEurope
D-International Federation of Industrial Energy Consumers (IFIEC)35All SectorsEurope