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DRAFT OPINION (COM(2021)0563 – C90034/2022 – 2021/0213(CNS))

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

ITRE-PA-768158

Committee on Industry, Research and Energy · Rapporteur: Borys Budka

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The Committee on Industry, Research and Energy's draft opinion responds to the proposed Council directive restructuring EU taxation of energy products and electricity. It proposes amendments to the recitals and articles, covering social monitoring, energy poverty, renewables, and the tax base. It asks for a Social Monitor with reporting by Member States and the Commission, and a quantitative definition of energy poverty replacing the vulnerable consumer definition. It seeks mandatory tax exemptions for renewables, active consumers, PPAs and energy communities, and rules that tax only final consumption, avoiding double taxation of conversion and storage. It asks the Commission to adopt a common certification framework for the origin and source of electricity consumed, aided by grid digitalisation and improving consumer transparency.

Committee position. The rapporteur proposes amendments in four main areas: social monitoring and energy poverty reporting, a quantitative definition of energy poverty, mandatory exemptions for renewables and innovative activities, and a common certification framework for electricity origin. The committee submits these amendments to the Committee on Economic and Monetary Affairs as the committee responsible.

Key points

  1. The rapporteur supports the Commission's move to a tax rate structure based on energy content and environmental performance rather than volume, and calls for no exemptions for environmentally harmful activities.
  2. Member States should periodically report on how they use increased revenues to tackle the social consequences of the revised taxation, and the Commission should report on energy poverty and energy prices.
  3. The current vulnerable consumer definition should be replaced by a quantitative definition of energy poverty, with exemptions possible after the transition period.
  4. Tax exemptions for renewables should be mandatory, and exemptions should also cover active consumers, PPAs and energy communities.
  5. Taxation should apply only to final consumption; energy use within the energy value chain and any conversion or storage should not be taxed, and double taxation should be eliminated.
  6. The Commission should develop and adopt a common certification framework specifying the origin and source of electricity consumed, supported by grid digitalisation.
  7. Recitals are amended to add energy system integration principles, energy independence, food security for agricultural transport, and flexibility for Member States on fiscal measures.
  8. The automatic annual alignment of minimum tax levels to the harmonised index of consumer prices is deleted, along with the related delegated power.
  9. Member States may apply differentiated national rates to the same product if EU minimum levels and internal market and competition rules are respected.
  10. Fuel for waterborne navigation, including fishing, should be taxed, with lower minimum levels for intra-EU regular service navigation, fishing and freight, and a ten-year exemption for sustainable alternative fuels and electricity.
  11. Energy-intensive enterprises committing to climate protection and energy efficiency should receive tax reductions, linked to circular, zero-pollution, highly energy-efficient and renewable-based operations.
  12. The Commission should report every five years to the European Parliament and Council on the directive's application, examining minimum tax levels, innovation, market accessibility and cohesion effects.

Who is affected

  • Households in or at risk of energy poverty or transport poverty, who may be exempted from taxation for a maximum of ten years.
  • Renewable self-consumers, jointly acting self-consumers, energy communities and active consumers, who would benefit from exemptions.
  • Energy-intensive enterprises, which may receive tax reductions if they commit to climate and energy efficiency measures.
  • Member States, which must report on social measures and may apply differentiated rates and exemptions.
  • Vehicles transporting agricultural products for food use, which should get more advantageous tax rates.

Figures and deadlines

  • A 55% reduction in net greenhouse gas emissions by 2030 compared to 1990 is referenced in the amended recital.
  • The gradual increase in minimum levels of taxation is fixed at one tenth per year until 1 January 2033.
  • Sustainable alternative fuels and electricity for waterborne navigation should be exempted from taxation for ten years.
  • Households below 60% of national median equivalised disposable income may be exempted for a maximum of ten years.
  • Energy products with a market share of less than 1% in a Member State may get tax reductions not below Table B minimum levels.
  • The Commission shall report two years after entry into force and every two years thereafter on energy prices and energy poverty.
  • Member States shall report two years after entry into force and every two years thereafter on social measures.
  • The Commission shall review the directive every five years and report to the European Parliament and Council.