EC draft shows EU to propose aviation fuel tax in efforts to cut European CO2 emissions

The European Commission has drafted plans to set an EU-wide minimum tax rate for aviation fuels, as it seeks to meet more ambitious targets to fight climate change. The EC is drafting an overhaul of EU energy taxation, as part of a package of measures it will propose on July 14, to meet a target to reduce EU greenhouse gas emissions by 55% by 2030, from 1990 levels. The draft proposes taxing aviation fuel, as its continuing exemption “is not coherent with the present climate challenges and policies.”  From 2023, the minimum tax rate for aviation fuel would start at zero and increase gradually over a 10-year period, until the full rate is imposed. The draft proposal did not specify what the final rate would be. A recent survey suggests that Europeans support the taxation of aviation fuel.  Even factoring in the impact of the pandemic, aviation emissions are expected to grow between 220-290% by 2050 compared to 2015 levels, which would be disastrous for the climate. Airlines favour carbon offsetting schemes, rather than fuel tax; but these allow them to continue polluting even though offsets have been repeatedly found to be largely ineffective.
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A majority of Europeans favour a tax on jet fuel

By Ciarán Cuffe  (Euractiv)

7th July 2021

One of the biggest injustices in aviation is the tax exemption for the fuel planes burn, argues Green MEP Ciarán Cuffe. [Bilal EL-Daou/Pixabay]

A recent survey suggests that Europeans believe airlines should be required to pay tax on aviation fuel. The European Commission should heed the public and not the aviation lobby, writes Ciarán Cuffe.

Ciarán Cuffe is an Irish Member of the European Parliament affiliated with the Greens/EFA group. He is a member of the Parliament’s transport and energy committees.

On 14 July, the European Commission will publish its long awaited package that will hopefully set the EU on a path towards climate neutrality and a just transition, with social and environmental sustainability at its core.

This package, if delivered correctly, will be good for people, the planet, and business. No one is underestimating the scale of the challenge, but we need to be ambitious if we are to deliver on all these objectives.

The lethal heat waves we have seen in Pakistan and in Canada are not isolated events – they are becoming the norm because we continue to drag our heels on tackling climate change. The package represents an opportunity to reform many sectors for the better.

The transport sector is particularly problematic because its emissions have been growing over the past number of years.

Although aviation has been hit hard by the Covid-19 pandemic, it is not unique among transport operators. All modes have seen dramatic drops in passenger numbers.

Indeed, even factoring in the impact of the pandemic, aviation emissions are expected to grow between 220-290% by 2050 compared to 2015 levels.

This spells disaster for our climate. We cannot go back to business as usual in aviation.

The era of cheap €9.99 air fares must come to an end, not only because it is bad for the environment, but because it is often done on the back of precarious employment practices.

Announcements by Member State governments, including German proposals on a minimum price for an airline ticket, French moves to ban domestic flights where there is a rail alternative, or a similar government agreement with the national carrier in Austria are a clear recognition that aviation has a serious problem. It is even clearer when we consider that only about 1 in 10 people fly regularly.

One of the biggest injustices in aviation is the tax exemption for the fuel planes burn, an exemption provided for in the Energy Taxation Directive which is due to be revised as part of the July package.

While other transport modes typically pay for the fuel they use (not to mention citizens and businesses), aviation continues to receive special treatment despite its impact on the environmental.

It is not just CO2 emissions, but air and noise pollution, and the non-CO2 effects of aviation, which the European Aviation Safety Agency found warms the planet up to twice as much as carbon.

A recent report on lobbying by the industry shows how successful the sector has been in avoiding any kind of regulation that impinges on its right to pollute.

Despite acknowledging the unfolding climate crisis through public support for the 2050 climate neutrality target, many airlines have consistently lobbied against all of the measures that would help achieve this goal.

If these companies are against taxing the pollution they produce, against a stronger Emissions Trading Scheme, and against targets for sustainable aviation fuels, how else do they propose we reduce emissions?

Airlines favour carbon offsetting schemes, which allow them to continue polluting even though they have been repeatedly found to be largely ineffective.

It is high time that we ended tax benefits for polluters in the EU. Ending the tax exemption for jet fuel, and introducing an EU-wide tax rate for all flights departing and arriving into the EU is a matter of fairness.

The tax rate needs to be set at a rate that will incentivise decarbonisation and must come into force immediately if we are to tackle emissions.

Unfortunately, leaks this week from the European Commission suggest that it is planning to set the rate at zero from 2023, a rate that would increase gradually over a 10-year period.

While an end to the exemption is welcome, the Commission is in essence proposing to end the exemption in 2031. This is woefully inadequate and out of step with the public mood.

In a survey carried out by Ipsos in all twenty-seven Member States, 72% of respondents agreed that airlines should be required to pay tax on the fuel they use. In no country was the rate lower than 60%. Moreover, 68% supported linking taxation levels in transport to the impact the mode has on the environment.

This survey, and previous surveys before it, show that that the public fully support fair taxation in transport. They support a tax on jet fuel now, and not in 10 years’ time. When the Commission publishes its proposals on 14 July, it should heed the public, and not the aviation lobby.

https://www.euractiv.com/section/aviation/opinion/a-majority-of-europeans-favour-a-tax-on-jet-fuel/

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Draft shows EU to propose aviation fuel tax in green policy push

By Kate Abnett (Reuters)

5th July 2021

BRUSSELS, July 4 (Reuters) – The European Commission has drafted plans to set an EU-wide minimum tax rate for polluting aviation fuels, as it seeks to meet more ambitious targets to fight climate change, a document seen by Reuters shows.

The European Commission is drafting an overhaul of EU energy taxation, as part of a package of measures it will propose on July 14, to meet a target to reduce EU greenhouse gas emissions by 55% by 2030, from 1990 levels.

A draft of the Commission’s tax proposal takes aim at aviation, which escapes EU fuel taxes.

That exemption “is not coherent with the present climate challenges and policies,” the document said, adding that EU tax rules promote fossil fuels over green energy sources and need rewriting to support the bloc’s climate goals.

The proposal would impose an EU-wide minimum level of tax on energy products supplied as aircraft fuel for flights within the EU.

From 2023, the minimum tax rate for aviation fuel would start at zero and increase gradually over a 10-year period, until the full rate is imposed. The draft proposal did not specify what the final rate would be.

Sustainable fuels, including renewable hydrogen and advanced biofuels, would not face minimum EU taxes during that 10-year period.

The Commission declined to comment on the draft proposal, which could change before publication.

POLITICALLY DIFFICULT?

Introducing the proposals could be politically difficult. Changes to EU tax rates require unanimous approval from the 27 EU countries, meaning a single state could veto them.

EU countries are responsible for setting national taxes, although Brussels can set bloc-wide minimum rates.

The levies would be based on a fuel’s energy content and environmental performance, meaning polluting fuels would become pricier.

The aim is to encourage airlines to start switching to sustainable fuels, such as e-kerosene, to curb greenhouse gas emissions. Uptake of such fuels has been hampered by high costs, and they make up less than 1% of Europe’s jet fuel consumption.

Brussels is also expected next month to propose requirements for airlines to use a minimum share of sustainable fuels, to stir demand for them.

The minimum EU tax rate would not apply to cargo-only flights or to “pleasure flights” and “business aviation”. That could include recreational use of an aircraft or a company using a plane, not for public hire, to conduct its business. Member states could choose to tax those flights’ fuel on a national basis.

The draft proposal would also introduce minimum tax rates on polluting fuels used for waterborne navigation, fishing and freight transport within the EU.

Reporting by Kate Abnett, additional reporting By Sabine Siebold; Editing by John Chalmers and Barbara Lewis

https://www.reuters.com/business/sustainable-business/draft-shows-eu-propose-aviation-fuel-tax-green-policy-push-2021-07-04/

 

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