Environmental organisations are urging European governments not to sign off on a law that, they say, would let some of the most polluting industries keep their tax privileges for another decade.
The Council of the European Union — the body where national ministers negotiate and adopt EU laws — is expected to take a position today on the revised Energy Taxation Directive. That is a framework that sets minimum tax levels on fuels and electricity across the bloc. Finance ministers will meet again in November for a final vote.
At a conference in Paris organised yesterday by Bloom, an environmental NGO, and Transport & Environment, another NGO funded by several sources, including the European Commission, campaigners said the proposal now on the table would “prolong fossil-fuel tax exemptions until 2035” and represents “a historic missed opportunity” to align Europe’s taxation system with its climate goals.
The Energy Taxation Directive dates back to 2003 and determines how fuels such as petrol, diesel, gas and electricity are taxed in every EU country. Over time, it has accumulated numerous exemptions, notably for aviation, shipping and industrial fishing.
According to figures shared at the Paris event, these sectors together escape an estimated €46.8 billion in taxes each year: €24 billion for shipping, €21 billion for aviation and €1.5 billion for fisheries.
Raphaël De Wael, responsible for EU affairs at Bloom and Jerôme du Boucher, responsible for aviation at T&E, called this “a gigantic loss of public revenue” that rewards fossil-fuel consumption and penalises cleaner industries.
“The Council should think twice before deciding to maintain the current tax-exemption regime in the revised ETD,” the conference heard.
“The EU must integrate environmental-protection requirements and a high level of protection in all its policies.”
In a separate letter sent to Belgian ministers on October 27, a coalition of eight NGOs – Blue Marine Foundation, Oceana, the European Environmental Bureau, the Community of European Railway (CER) and UNIFE, the European rail-supply industry — asked Belgium to withdraw the tax exemptions, “support an ambitious revision” of the directive and “show political courage and responsibility”.
They say continuing to exempt fossil fuels from taxation is “unwise and utterly unjust towards European companies working to decarbonise our society” and to citizens who already pay taxes on energy.
“Protecting competitiveness and promoting a prosperous EU economy are valid objectives,” the letter states, “but neither can exist in a deregulated climate.”
The NGOs warn that keeping tax breaks for aviation and shipping will undermine investment in cleaner transport modes such as rail, which already pays full energy taxes.
“Member States are jeopardising EU mobility by discriminating against one of the greenest transport modes,” they wrote.
Among their requests are the removal of all fossil-fuel incentives, the introduction of annual automatic indexation of energy-tax rates to inflation and the option for countries to impose higher taxation on polluting fuels.
They also call for maintaining mandatory minimum rates across the EU to prevent a “race to the bottom”.
Under the European Commission’s 2021 proposal, fuels would be taxed according to their energy content and environmental performance, rather than by volume — a shift meant to favour low-carbon alternatives. Successive Council presidencies, though, have weakened those plans.
The latest draft of the Danish presidency of the Council maintains tax exemptions for aviation, shipping and fishing until 2035 and keeps a “heavily reduced” indexation mechanism.
At the Paris event, Bloom ’s director Claire Nouvian called the situation “a regression under the pressure of industrial lobbies”.
The NGOs say the lost revenues could fund ecological and social transition at a time when the EU faces rising costs for climate adaptation and energy security. “It is irrational and irresponsible to forgo tens of billions in annual revenue expected under the Commission’s proposal,” the letter reads.
Today’s Council meeting is expected to confirm each government’s position ahead of the final vote by EU finance ministers on November 13.
If the compromise is approved, the new rules would start taking effect in 2026. If it fails, the 2003 directive — and its exemptions — will stay in force.
