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EU attempt to tax polluting aviation fuel hits impasse
The EU proposal would apply higher minimum tax rates to polluting fuels like petrol, and the lowest rates to electricity and sustainable fuels.
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An Air France aircraft, operated with sustainable aviation fuel (SAF) produced by TotalEnergies, is refueled before its first flight from Nice to Paris at Nice airport, France, October 1, 2021. (Reuters/ERIC GAILLARD)
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uropean Union plans to start taxing polluting aviation fuels have hit an impasse as the bloc's 27 member states struggle to agree to make green fuels cheaper and fossil fuels more expensive, diplomats said.
EU countries are negotiating an overhaul of energy taxes - which haven't been updated since 2003 - with their new climate change targets.
But two years after the EU executive proposed the law to tax aviation fuels for the first time, a deal is still not in sight. Countries are at odds over issues including whether to introduce an EU-wide minimum tax for such fuels, which currently escape levies.
"We do not expect the distances between countries to be resolved during the Spanish presidency," said a diplomat from one EU country in reference to Madrid chairing EU talks until the end of the year.
Changing EU tax policy is fiendishly difficult because it requires unanimous approval from all EU countries - meaning any one government can block.
A spokesperson for the executive European Commission said the revamp would "remove outdated exemptions and reduced rates that currently encourage the use of fossil fuels".
Under the proposal, the minimum tax rate for aviation fuel for flights within Europe would gradually increase over 10 years. Sustainable aviation fuels would get a 10-year tax holiday, to encourage their use.
But some countries warn against measures that could raise fuel prices for voters before with European Parliament elections next year.
"If they do it before the election, it will be politically suicidal," another EU country diplomat said.
The EU has passed a dozen policies in the last year to cut the CO2 emissions causing climate change. But political appetite appears to have waned, with some governments and lawmakers trying to block or weaken recent green laws.
The EU proposal would apply higher minimum tax rates to polluting fuels like petrol, and the lowest rates to electricity and sustainable fuels.
Supporters say this would make low-carbon transport like electric trains more cost competitive with fossil fuel-based flights, and raise revenues that governments could invest in clean transport.
Jo Dardenne, aviation director at campaign group Transport and Environment said the draft law was likely "a lost cause".
"It's absurd to still have exemptions for polluting modes of transport in the climate crisis," she said.
