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The Low Carbon Economy Ltd

16 Mar 2011 12:03:22

EU plans energy tax changes



EU plans energy tax changes
The European Union is looking at making significant changes to the system of energy taxation, which will hold benefits for green fuels.

Currently, the levy charged on energy means the tax on coal, one of the most carbon intensive fuels, is lower than that for bioethanol.

Under the proposed new system, tax would be split two ways, with a minimum tax being placed on both heating and motor fuels and other energy sources facing a €20 (£17) levy per tonne of CO2, a draft document acquired by Reuters reportedly said.

Plant biomass fuels would be exempt from the carbon tax and would pay a lower energy tax due to the fact they often absorb nearly as much CO2 as they produce.

Exemptions would also be provided for those taking part in the Emissions Trading Scheme and many households. The plans, if approved, would be brought in between 2013 and 2020, according to the news provider.

Recent research from npower found firms are concerned national efforts to effectively tax CO2 in the UK through a carbon floor price would be detrimental to business competiveness, believing instead initiatives should be more internationally focussed.  ADNFCR-1235-ID-800464474-ADNFCR


Discussion Thread  

21 Mar 2011


Minimum tax per 10 kWh for LPG and NG increased from present 10 cents to 36 cents in 2018
Minimum tax per 10 kWh for diesel increased from present 34 to 36 cents in 2018
Minimum tax per 10 kWh for petrol reduced from present 41 to 36 cents in 2018

The evaluation of CO2 advantages has very little impact - less than 0.3 cents/10 KWh difference between best and worst fossil fuel option, and less than 1.7 cent/10 kWh difference between fossil fuels and biofuels.

Fossil fuels use for heating or for electric power generation would have an energy tax which is only 1.6 % of the "energy" tax charged on motor fuels.

All of the above listed fuels will in principle have the same total fuel tax when comparing the tax on an equal amonut of energy content (the CO2 element is so small that it makes no difference).

The proposal would, if accepted, mean the end of the market for vehicles fuelled by NG/biomethane or LPG within the EU. We would then be completely dependent on crude oil based fuels (with or without mandated additions of liquid biofuels). Hardly the way to increase security of supply, and finding alternatives to crude oil with fast increasing prices. Also no support of fuels with low emissions of CO2, and toxic or carcinogenic matter.




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