Revision of the Energy Taxation Directive: A Brief Overview of Key Novelties

Abstract

Tax law has always been an important tool to promote existing energy policies and investments, and it is understood that new E.U. rules on energy taxation have the potential to accelerate the energy transition process. Both the European Green Deal and Fit for 55 Package have pointed to the revision of the Energy Taxation Directive (E.T.D.) regulating the taxation of energy products and electricity. Besides, the idea of revising the legislation related to energy taxation has been emphasised in the European Climate Law which is binding in its entirety in all E.U. countries. The E.T.D. is an important instrument that has been in force since 2003. However, it is widely accepted that this instrument must be updated in light of the E.U. ’s Climate Change Policy and Sustainable Development Goals (S.D.G.s). Hence, on 13 April 2011, the E.U. Commission published a proposal for a Council Directive amending Directive 2003/96/EC. Should all procedural requirements be met, the revised E.T.D. is expected to enter into force next year; therefore, it is essential to evaluate the key novelties brought by the Revision of the Energy Taxation Directive. This paper aims to provide an analysis of the E.U.’s existing energy taxation policy and recent developments related to the revision of the E.T.D.. To do this: firstly, energy transition, taxation and the link between them will be outlined. Secondly, the European environmental tax policy system and the E.U. general legal framework on energy taxation will be explained by considering the novelties introduced by the E.U.’s Fit for 55 Package and the European Green Deal. Lastly, the E.T.D. and the revised E.T.D. will be comparatively evaluated together with the questions regarding business taxation.