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Draft shows EU to propose jet fuel tax in green policy push By Reuters

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© Reuters. FILE PHOTO: A plane flies under the jet stream of another plane over the Italian city of Padua. Photo taken on September 18, 2013. REUTERS / David Gray / File Photo

By Kate Abnett

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

The European Commission is drafting a review of EU energy taxes, as part of a package of measures it will propose on July 14, to meet the goal of reducing the EU’s greenhouse gas emissions by a 55% by 2030, from 1990 levels.

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

That exemption “is not consistent with current climate policies and challenges,” the document says, adding that EU fiscal rules promote fossil fuels over green energy sources and need new wording to support the climate goals of the block.

The proposal would impose a minimum level of taxes across the EU on energy products supplied as jet fuel for intra-EU flights.

Starting in 2023, the minimum tax rate for aviation fuel would start at zero and gradually increase 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 face no minimum EU taxes during that 10-year period.

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

POLITICALLY DIFFICULT?

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

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

Taxes would be based on a fuel’s energy content and environmental performance, meaning polluting fuels would become more expensive.

The goal is to encourage airlines to start switching to sustainable fuels, such as e-kerosene, to curb greenhouse gas emissions. Consumption of these fuels has been hampered by high costs and they represent less than 1% of jet fuel consumption in Europe.

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

The EU minimum tax rate would not apply to cargo-only flights or to “pleasure flights” and “business aviation”. That could include recreational use of an airplane or a business that uses an airplane, not for public rental, to conduct business. Member states could choose to tax the fuel for those flights domestically.

The draft proposal would also introduce minimum tax rates on polluting fuels used for navigation, fishing and the transport of goods by water within the EU.

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