16th Apr 2021

EU denies energy tax reform will boost diesel prices

  • Many European drivers currently opt for diesel cars due to the lower fuel costs (Photo: EUobserver)

The European Commission has said imminent proposals to overhaul EU energy taxation will not automatically result in higher diesel prices for consumers.

The plans, to be published on Wednesday (13 April), will call for fuels to be taxed on their energy content and CO2 emissions in future, rather than the volume-based system currently used.

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"The aim is not to increase rates for diesel,"commission spokesman David Boublil told journalists on Monday.

"The plan is that we should put all fuels on the same footing ... It will mean an adjustment to make sure they are taxed in the same way."

Informal discussions on overhauling the EU's energy taxation directive have been ongoing since the original document was approved in 2003, with diesel users currently enjoying lower taxation rates than petrol.

As a result, much of Europe's commercial transport industry has opted to use the cheaper fuel, including the vast majority of overland haulers.

Experts say the minimum diesel tax will rise under the new proposals however, reaching a similar rate to petrol by 2018. Since diesel contains more energy and carbon than petrol, minimum tax rates per litre for diesel are expected to eventually surpass their petrol equivalents.

Recent statements suggest EU member states are increasingly in favour of greater taxation on heavily polluting fossil fuels as a means of boosting renewable energy use.

The potential for higher diesel prices may prove unpopular with voters however, while questions of European taxation have traditionally raised hackles in Britain and Ireland.

But the commission argues that big prices changes are unlikely as many national governments already set diesel taxes which are above the EU minimum.

Reacting to German news reports that the country's diesel prices would rise, Boublil said: "The current minimum at the EU level for diesel is €330 per 1000 litres ... [whereas] in Germany the current minimum is €470 per 1,000 litres."

"The future minimum [based on Wednesday's proposals] will be closer to the current minimum than to what is applied in Germany now."

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The logic behind a European Commission's proposal on energy taxation is based on the concept of "fuel neutrality" but it could hurt alternative fuels the most.

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