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Europaudvalget 2021
KOM (2021) 0563
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EUROPEAN COMMISSION

19/3/2021

SEC(2021)

663

REGULATORY SCRUTINY BOARD OPINION

Proposal for a

Council

Directive

restructuring the Union framework for the taxation of energy products

and electricity (recast)

{COM(2021)

{SWD(2021)

563}

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EUROPEAN COMMISSION

Regulatory Scrutiny Board

Brussels,

RSB

Opinion

Title:

Impact assessment / Revision of the Energy Tax Directive

Overall opinion:

POSITIVE WITH RESERVATIONS

(A) Policy context

The Energy Taxation Directive (2003/96/EC) (ETD) lays down EU rules for the taxation

of energy products used as motor or heating fuels and electricity. It sets minimum rates to

avoid harmful energy tax competition among Member States. The Directive also aims to

allow Member States to use energy taxation to support other policies, such as

environmental protection, climate objectives, energy efficiency, etc.

An evaluation of the Directive in 2019 found that it is no longer fit for purpose, given

changes in energy markets and technology, and the strengthened EU commitments on

climate and environment. The proposed revision of the Energy Taxation Directive is part

of the European Green Deal. It will form part of the ‘Fit for 55 Package’ of proposals to

deliver on the EU’s enhanced climate ambitions.

B) Summary of findings

The Board notes the useful additional written information provided in advance of the

meeting and commitments to make changes to the report.

However, the report still contains significant shortcomings. The Board gives a

positive opinion with reservations because it expects the DG to rectify the following

aspects:

(1) The report does not sufficiently explain the coherence between the Energy

Taxation Directive and other ‘Fit for 55’ initiatives, in particular the Emissions

Trading System (ETS).

(2) The report is not sufficiently clear on its objectives. In particular, it does not

clearly determine to what extent revenue raising is an objective. It does not

sufficiently explain possible conflicts between fiscal and environmental targets.

(3) The report does not sufficiently justify some of the proposed minimum rates and

why alternative packages of measures were not explored under the preferred

option(s).

(4) The analysis of impacts on employment, international competitiveness and air

________________________________

This opinion concerns a draft impact assessment which may differ from the final version.

Commission européenne, B-1049 Bruxelles - Belgium. Office: BERL 08/010. E-mail: [email protected]

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pollution is not sufficiently developed.

(1) The report should better explain how the objectives of the ETD have evolved to

include environmental and climate policy objectives. It should better explain the coherence

of the ETD with other initiatives in the ‘Fit for 55’ package, and in particular the ETS. It

should further develop how these instruments interplay and what the optimal combination

of the instruments and their ambition levels should be. It should explain how the ETD will

contribute to reaching the agreed targets in the most cost-efficient way. It should clarify to

what extent the success of the other ‘Fit for 55’ initiatives will be dependent on this one,

and vice-versa.

(2) The report should nuance its finding that the current minimum tax rates no longer

serve their purpose to prevent a race to the bottom. For several energy products, many

countries are still at or close to the minimum rates. The report could better explain that

avoiding a race to the bottom is not sufficient to harmonise rates, unless the minimum rates

are set at a sufficiently high level, which is currently not the case.

(3) The report should clarify the Directive’s role in generating energy tax revenues. It

should consider introducing an objective on tax collection, as a basis for the analysis of tax

revenues in the comparison of options.

(4) The report should better explain the rationale for some proposed minimum rates. It

should clarify the evidence behind the concept of ‘environmental performance’ that

determines the minimum rates. In this context, it should better justify the proposed rates for

the primary sector, aviation and maritime transport. It should specify how it proposes to tax

cargo-only flights within the EU and sustainable airline fuel. The report should better

explain how the indexation of minimum rates to inflation would affect effective taxation. It

should discuss whether there are plausible alternative combinations of key policy design

measures (in terms of minimum rates, scope extension or removal of differentations,

reductions and exemptions) under the preferred option(s) that might become politically

relevant and, if so why such variants were not assessed.

(5) The report should reinforce its analysis of impacts on employment, international

competitiveness and air pollution. It should expand the economic impact analysis for

energy intensive and transport sectors (in particular air transport), including on their

international competitiveness. It should differentiate between the equity effects on

households and Member States. The report should better explain regulatory costs and

benefits. In particular, it should clarify the consequences of the initiative on administrative

costs. The report should expand on the distribution across affected groups.

(6) The report should strengthen its analysis on why the options that also tax air pollution

perform worse than the preferred option(s). The comparison of options should better

recognise the benefits of reduced air pollution, and balance them against negative

distributional effects. The analysis could consider transition periods for the introduction of

such a tax, take into account the local character of some emissions, and reflect the effects

on technical innovation.

The Board notes the estimated costs and benefits of the preferred option(s) in this

initiative, as summarised in the attached quantification tables.

Some more technical comments have been sent directly to the author DG.

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(D) Conclusion

The DG must revise the report in accordance with the Board’s findings before

launching the interservice consultation.

If there are any changes in the choice or design of the preferred option in the final

version of the report, the DG may need to further adjust the attached quantification

tables to reflect this.

Full title

Proposal for a revision of Directive 2003/96/EC restructuring

the Community framework for the taxation of energy products

and electricity

PLAN/2020/6493

19 February 2021

17 March 2021

Reference number

Submitted to RSB on

Date of RSB meeting

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ANNEX: Quantification tables extracted from the draft impact assessment report

The following tables contain information on the costs and benefits of the initiative on

which the Board has given its opinion, as presented above.

If the draft report has been revised in line with the Board’s recommendations, the content

of these tables may be different from those in the final version of the impact assessment

report, as published by the Commission.

I. Overview of Benefits (total for all provisions) – Preferred Option 2a

Description

Amount

Direct benefits

Change in EU 27 emissions in 2035 compared to the By reducing emissions, the ETD will

enable the EU to achieve its increased

baseline:

targets for 2030 and become carbon



GHG: -2,2%

neutral by 2050



NOx: -2,1%



PM2.5: -2,6%



SO2: -1,9%

(see the relevant section on impacts of the policy

options, results on option 2a)

The introduction of the new minima and the broadening The envisaged provisions on product

of the tax base will contribute to greater convergence of coverage, tax rates and taxable base aims

at fostering more harmonised rules to the

effective tax rates across Member States

benefit of the internal market (and

(see the relevant section on impacts of the policy

national

administrations,

economic

options, results on option 2a)

operators, citizens)

Revenues in Member States are expected to increase. Due to the widened product coverage,

The evolution in EU27 of total tax revenues is expected increased

minimum

rates

and

as follows:

enlargement of taxable base, revenues

generated from energy taxation are



+34% in 2035 corresponding to c. 32 billion expected to increase significantly.

EUR



This additional revenue compensates for

around 70% of the loss in revenue projected

under the baseline

(see the relevant section on impacts of the policy

options, results on option 2a)

Equity has been taken in due consideration in the policy As expected due to the very different

design for the revision of the current legal system

national situations the proposed option

will have distributional impact. This is



The relative contribution towards GHG reduction one of the reasons why some changes are

differs noticeably among Member States.

proposed following a transitional period



The same holds for the increase in revenues.

of implementation.



In general, lower income Member States, which

have lower national rate, will be the most affected.



The effect on income distribution is of small

magnitude and seems just slightly larger in the first

half of the income distribution.

(see the relevant section on impacts of the policy

options, results on option 2a)

Comments

Contributing to the EU

2030 targets and climate

neutrality by 2050 in the

context of the European

Green Deal

Preserving the EU

internal market and

ensure fair competition

Budgetary impacts

Equity

Coherence with other The preferred option is fully coherent with other This option does not overlap with but in

initiatives of ‘Fit for 55’ initiatives of ‘Fit for 55’ Package and relevant EU fact usefully complements other policy

Package

and

other policies.

actions under the ‘Fit for 55’ Package.

relevant EU policies

(see the relevant section on impacts of the policy

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options, results on option 2a)

II. Overview of costs – Preferred option 2a

Citizens/Consumers

One-off

Increase in

effective

taxation in the

economy

(GDP,

employment,

distributional

effects, etc.)

Action

- Loss of

employment

by 0.2% at

EU 27 level

Recurrent

- Increase in

household

heating and

transport prices

Businesses

One-off

Recurrent

Administrations

One-off

Recurrent

None

Direct

costs

- Cost

- Increase in None

increase due fossil fuel

to reduced prices

exemptions

Indirect

costs

Direct

costs

Indirect

costs

None as stated in the evaluation report

Electronically signed on 19/03/2021 10:34 (UTC+01) in accordance with article 11 of Commission Decision C(2020) 4482