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DRAFT OPINION (COM(2021)0563 – C90362/2021 – 2021/0213(CNS))

On the proposal for a Council directive restructuring the Union framework for the taxation of energy products and electricity (recast)

AGRI-PA-774500

Committee on Agriculture and Rural Development · Rapporteur: Carlo Fidanza

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The Committee on Agriculture and Rural Development's rapporteur proposes amendments to the proposed Council directive restructuring EU energy taxation. The amendments seek preferential tax treatment for sustainable biofuels from non-food raw materials and agricultural by-products, and safeguards so renewable energy, including agri-photovoltaic systems, does not displace farmland or food production. They ask for gradual, proportionate tax increases with compensation such as energy efficiency incentives and support for vulnerable households, and for flexibility reflecting Member States' differing socio-economic conditions. They propose tax exemptions or reductions for energy used in agriculture, horticulture, forestry, fisheries and aquaculture, and lower minimum rates for waterborne navigation, fishing and freight transport. They also seek a stronger role for Parliament in overseeing delegated acts, expert consultation with affected production sectors, and broader review and monitoring provisions.

Committee position. The rapporteur proposes amendments to the proposed directive to reflect Member States' diverse socio-economic contexts, balance the energy transition with food security and agricultural productivity, introduce preferential tax mechanisms for sustainable biofuels, make tax increases gradual and compensated, and broaden review and monitoring provisions.

Key points

  1. The rapporteur proposes amendments so the energy taxation framework reflects Member States' diverse socio-economic contexts and balances the energy transition with food security and agricultural productivity.
  2. Renewable energy, including agri-photovoltaic systems, should be developed through integrated models compatible with farming and without loss of useful agricultural area.
  3. The directive should provide preferential tax mechanisms for sustainable biofuels derived from non-food raw materials and agricultural by-products.
  4. Tax increases should be gradual and proportionate, flanked by compensation such as energy efficiency incentives or support for vulnerable households.
  5. Member States should be able to apply flexible measures and derogations from minimum taxation levels in line with their national socio-economic characteristics.
  6. Minimum levels of taxation should be consistent with the principles of subsidiarity and proportionality.
  7. Member States may apply a level of taxation tapering to zero to energy products and electricity used for agricultural, horticultural or aquaculture activities, and in forestry, until affordable alternatives exist.
  8. Energy products intended for sectors such as agriculture, forestry, aquaculture and horticulture should be exempted, and energy products and electricity used in agriculture, horticulture, fisheries and aquaculture too.
  9. Fuel used for waterborne navigation should be taxed, but minimum levels for intra-EU regular service navigation, fishing and freight transport should be lower than for general motor fuel use.
  10. Sustainable alternative fuels and electricity for waterborne navigation should be exempted from taxation for a transitional period of ten years.
  11. The Commission should carry out consultations on delegated acts with the production sectors most involved, and Parliament should be more involved in oversight of delegated acts.
  12. The Commission should report every five years to the Council and the European Parliament, examining minimum taxation levels, innovation, renewable energy use in transport and the justification for exemptions.

Who is affected

  • Farmers and the agri-food sector: energy used in agriculture, horticulture, forestry, fisheries and aquaculture could be exempted or taxed at tapering rates.
  • Vulnerable households: tax increases should be flanked by support measures.
  • Waterborne navigation, fishing and freight transport: lower minimum tax levels and a ten-year exemption for sustainable alternative fuels and electricity.
  • Member States: may apply flexible measures, derogations and differentiated taxation reflecting national socio-economic conditions.
  • Producers of sustainable biofuels from non-food raw materials and agricultural by-products: preferential tax mechanisms.

Figures and deadlines

  • A transitional period of ten years for minimum rates starting from zero and increasing each year by one tenth of the final minimum rates.
  • A transitional period of ten years of zero minimum rates for sustainable biofuels and biogas, low-carbon fuels, renewable fuels of non-biological origin and electricity.
  • A ten-year exemption from taxation for sustainable alternative fuels and electricity used in waterborne navigation.
  • The Commission should report every five years and for the first time five years after 1 January 2023.
  • A 50% tax on biofuels from crops, whose emissions are 73% lower than fossil fuels, and 98.6% for other renewable fuels and electricity.
  • RED II's minimum threshold of 65%.
  • Blends of agricultural biofuels contain up to 85% renewable ethanol, reducing fine particulate matter by 90% and net greenhouse gas emissions by 79%.