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Kammersgaardsvej
16, DK-7760 Hurup Thy |
Hurup, May 14th 2001
The end of the
mineral oil directive?
National autonomy in energy taxation?
A new era for biofuels in transport?
Next step in the process on 5th June
2001!
In 1997, the European Commission has proposed a new energy product directive, COM/97/30, to replace the mineral oil directive from 1992, 92/81/EEC. See direct links below.
The basic aim of the proposed new directive is to stabilize greenhouse gas emissions through a new taxation system including all energy products. See excerpt 1) below.
Of special interest is a national autonomy which makes each member state free to exempt renewable energy products from taxation, including transport purposes. See excerpt 2) below.
The proposed new directive expressly mentions the national option of tax exemption of specific biofuels; see excerpt 3) below.
The proposed new directive was approved by the European Parliament in 1999 and sent to the European Council under ECOFIN for the final political treatment. According to experience, a proposed directive may delayed for many years, or even given up. In this case, the proposed directive has been at the lowest of three Council levels (group level) until 2001.
But this year the Swedish Presidency has accelerated the political procedure, and the proposal is currently being prepared at the medium level (permanent representation) for decision at the highest level (the Council). A Council conclusion about the proposed new energy product directive, COM/97/30, is scheduled on 5th June 2001 at the Council meeting in Luxembourg.
Depending on the Council Conclusion and the further negotiations, the proposed new directive may be finalised and implemented in full, or it may be divided into two separate directives concerning a) the structure of the energy taxation system and b) the level of energy taxation. The latter aspect b) concerning actual taxation rates is more problematic, whereas there seems to be a general agreement on the former aspect a) concerning national autonomy with the option of tax exemption of renewable energy alternatives to the mineral energy products, especially mineral oils for transport. In fact, the negotiations under the Swedish Presidency exclude aspect b) and concentrate upon aspect a). A separate directive on the structure of the energy taxation system to be implemented first may be the best instrument to ensure the progress.
Consequently, it should be possible within a reasonable period to finalise a new directive which permits a general tax exemption of renewable energy products used as alternatives to mineral oils for transport.
With this, a direct consequence of a new energy product directive is that the mineral oil directive, 92/81/EEC will be totally or partially repealed; this includes the provisions concerning alternatives to mineral oils for transport.
It is well known in wide circles that: The mineral oil directive has been the most serious obstacle to a more widespread use of biofuels in the European transport sector. Only Germany has had full power over its own energy policy in this field.
Direct links:
http://europa.eu.int/eur-lex/en/com/dat/1997/en_597PC0030.html
http://europa.eu.int/eur-lex/en/lif/dat/1992/en_392L0081.html
Commented excerpts from COM/97/30:
1. Excerpt from the initial text showing the aims of environmental protection in energy policy (key parts in bold, underlined text):
Whereas, at the Council meeting on energy/environment held in October 1990, the European Union set itself the objective of stabilizing CO2 emissions at 1990 levels by the year 2000;Whereas, as a party to the United Nations Framework Convention on Climate Change, the European Union has undertaken to take the measures required to stabilize greenhouse gas concentrations in the atmosphere at a level that will prevent dangerous interference with the climate system;Whereas the taxation of energy products is one of the instruments available for achieving these objectives;Whereas, in accordance with the guidelines laid down in the Commission White Paper on growth, competitiveness and employment, the introduction of new arrangements should not result in an increase in the overall tax burden in Members States;Whereas implementation of the principle of tax neutrality will contribute to the restructuring and the modernization of tax systems by encouraging behaviour conducive to greater protection of the environment and increased labour use;
2. Excerpt from the initial text showing the aim of national autonomy in energy policy (key parts in bold, underlined text):
Whereas, however, determination of the arrangements for ensuring tax neutrality is a matter for each Member State;Whereas energy prices are key parameters of Community energy and transport policies;Whereas taxation partly determines the price of energy products;Whereas the proper functioning of the internal market and the achievement of the objectives of other Community policies require minimum levels of taxation to be laid down at Community level for all energy products, including electricity;Whereas Member States should nevertheless be given the flexibility necessary to define and implement policies appropriate to national circumstances;Whereas the Member States wish to introduce or retain different types of taxation on energy products;Whereas, to that end, Member States should be permitted to comply with the Community minimum taxation levels by taking into account the total charge of taxes which they have chosen to apply (excluding VAT);
3. Full text of Article 14 listing the energy products which may be exempted by the individual member state (energy product types to explain CN codes added in square brackets in bold, underlined text):
Article 14 1. Without prejudice to other Community provisions, Member States may apply total or partial exemptions or reductions in the level of taxation to:(a) energy products used under fiscal control in the field of pilot projects for the technological development of more environmentally-friendly products or in relation to fuels from renewable resources;(b) energy products falling within CN codes 1507 to 1518 [vegetable oils and fractions/derivatives of animal/vegetable oils and fats including esters such as biodiesel/RME] , 2207 20 00 [bioethanol] and 2905 11 00 [derivatives of alcohols], 4401 [wood and waste products of wood including chips and pellets] and 4402 [charcoal];(c) forms of energy which are of solar, wind, tidal, geothermal origin or from biomass or waste;(d) forms of energy which are of hydraulic origin produced in hydroelectric installations with a capacity of less than 10 MW;(e) heat generated during the production of electricity;(f) energy products used for the carriage of goods and passengers by rail;(g) energy products used for navigation on inland waterways other than in private pleasure craft;(h) natural gas in Member States whose gas market is in the process of actual development for as long as the share of gas in the domestic and industrial market is less than 10 %, and for a period of no more than 10 years after the coming into force of this Directive.2. Member States shall be free to give effect to the exemptions or reductions in the level of taxation mentioned in this Article by refunding all or part of the amount of taxation paid. 3. The Commission shall report to the Council on the fiscal, economic, agricultural, energy, industrial and environmental aspects of the exemptions or reductions granted in accordance with Article 14 (1) (b) before 1 January 2001 and will make proposals as to whether they should be abolished, modified or extended.
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