The Energy Taxation Directive or ETD
(2003/96/EC) is a
European directive
A directive is a legal act of the European Union that requires member states to achieve a particular result without dictating the means of achieving that result. Directives first have to be enacted into national law by member states before thei ...
, which establishes the framework conditions of the
European Union
The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been des ...
for the taxation of
electricity
Electricity is the set of physical phenomena associated with the presence and motion of matter that has a property of electric charge. Electricity is related to magnetism, both being part of the phenomenon of electromagnetism, as described ...
,
motor
An engine or motor is a machine designed to convert one or more forms of energy into mechanical energy.
Available energy sources include potential energy (e.g. energy of the Earth's gravitational field as exploited in hydroelectric power g ...
and
aviation fuel
Aviation fuels are petroleum-based fuels, or petroleum and synthetic fuel blends, used to power aircraft. They have more stringent requirements than fuels used for ground use, such as heating and road transport, and contain additives to enhanc ...
s and most heating
fuel
A fuel is any material that can be made to react with other substances so that it releases energy as thermal energy or to be used for work. The concept was originally applied solely to those materials capable of releasing chemical energy but ...
s. The directive is part of
European Union energy law; its core component is the setting of minimum tax rates for all Member States.
Purpose and scope
The directive is intended to ensure the functionality of the EU internal energy market and to avoid distortions of competition through different tax systems. In addition, it should also contribute to a low-carbon, energy-efficient economy, that is, to exert a steering effect with the aim of protecting the environment and the climate.
For this purpose, it sets EU-wide minimum tax amounts for electricity and for fuels when they are used as motor fuel, aviation fuel or heating fuel. The minimum tax amounts vary according to the type of fuel (petrol, kerosene, gas oil, liquid and natural gas) and their use. When used as a heating fuel or when used in, for example, stationary engines, agriculture or construction machinery for public works, lower minimum amounts apply than when used as motor fuel. The Member States have extensive freedom in the design of taxes, the directive only requires that the
indirect tax
An indirect tax (such as sales tax, per unit tax, value added tax (VAT), or goods and services tax (GST), excise, consumption tax, tariff) is a tax that is levied upon goods and services before they reach the customer who ultimately pays the i ...
es reach the minimum amounts without
value-added tax
A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of tax that is assessed incrementally. It is levied on the price of a product or service at each stage of production, distribution, or sale to the end ...
(VAT).
There are a number of exceptions to the directive:
* Lower taxes are permitted for commercial diesel.
* Tax exemptions and reductions may be granted for environmental and health reasons.
* Tax exemptions are possible for renewable energy sources and electricity for public transport.
* Tax reductions are possible for energy-intensive businesses.
* Some energy-intensive sectors, such as the metal industry, as well as substances that can be used for various purposes, for example for both heating and the production of chemical substances, are exempt from the directive.
* There are also a number of special and transitional rules for many Member States.
Member States are advised to largely exempt commercial aviation and commercial shipping in the European Community's marine waters (referred to as 'air navigation and sea navigation'), but Member States are allowed to limit these exemptions (Preamble §23). For example, Member States may levy
taxes on kerosene (
jet fuel
Jet fuel or aviation turbine fuel (ATF, also abbreviated avtur) is a type of aviation fuel designed for use in aircraft powered by gas-turbine engines. It is colorless to straw-colored in appearance. The most commonly used fuels for commercial a ...
) below the minimum rate for domestic flights and flights between Member States that have concluded a separate bilateral agreement (Article 14(1)(b) and (2)).
Development
The directive replaced Directive 92/81/EEC and Directive 92/82/EEC –
which only harmonised mineral oil taxes – after ten years of negotiations. European primary law, which is the legal basis for the directive, requires a unanimous decision of the European Council for tax law requirements. Unanimous decisions are also required for changes to the directive. When they were introduced in 2004, the tax rates in most countries were above the minimum tax amounts. In 2008, the Council asked the Commission to come up with proposals on how to better align the Directive with the
energy and climate targets of the European Union. The Commission concluded in 2011 that the directive was unsustainable and that it provided the wrong incentives. It proposed an
amendment An amendment is a formal or official change made to a law, contract, constitution, or other legal document. It is based on the verb to amend, which means to change for better. Amendments can add, remove, or update parts of these agreements. The ...
that would have set the minimum rates based on energy content and CO
2 emissions. However, the proposal met with opposition from Luxembourg, Poland and, according to internal voices, Germany as well. In 2015 the Commission removed the proposal from its work programme.
According to the March 2020 feedback report of
Transport and Environment, 'the Energy Taxation Directive (ETD) has not been reviewed since 2003, and needs updating if the European Commission is serious about deploying its
European Green Deal
The European Green Deal, approved 2020, is a set of policy initiatives by the European Commission with the overarching aim of making the European Union (EU) climate neutral in 2050. An impact assessed plan will also be presented to increase the ...
.'
It is said to be revised in 2021.
ETC revision in 2021
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See also
* Aviation taxation and subsidies § European Union
* Energy efficiency in Europe (study)
The Energy efficiency in Europe study is part of the Odyssee project. It aims to monitor energy efficiency progress and -reduction for the EU-28 countries and Norway, understand the energy demand trends for European countries, compare the count ...
– a study as part of the Odyssee Mure project
*
* Energy policy of the European Union
* EU Renewable Energy Directive 2009/28/EC
The Renewable Energy Directive 20182018/2001 is a Directive in EU law that requires 32 percent of the energy consumed within the European Union to be renewable by 2030. This target is pooled among the member states.
Background
Before the 200 ...
* EU Energy Efficiency Directive 2012
The Energy Efficiency Directive 2012/27/EU (abbreviated EED) is a European Union directive which mandates energy efficiency improvements within the European Union.
It was approved on 25 October 2012 and entered into force on 4 December 20 ...
* European Union directive
A directive is a legal act of the European Union that requires member states to achieve a particular result without dictating the means of achieving that result. Directives first have to be enacted into national law by member states before thei ...
* German National Action Plan on Energy Efficiency
The German National Action Plan on Energy Efficiency (NAPE) (german: Nationale Aktionsplan Energieeffizienz) is the National Energy Efficiency Action Plan (NEEAP) for Germany.
(Available in German too).
The plan was commissioned under EU Energ ...
(abbreviated NAPE)
* Kerosene tax
The kerosene tax (German: ''Kerosinsteuer'', French: ''taxe kérosène''; Dutch: ''kerosinetaks'') is an ecotax on the kerosene-based jet fuel in commercial aviation, which can be levied within and by the European Union. The legal basis for it ...
* List of European Union directives
The following is a thematic list of European Union directives:
For a date based list, see the :European Union directives by number
Numbering
From 1 January 1992 to 31 December 2014, numbers assigned by the General Secretariat of the Council ...
References
External links
Council Directive 2003/96/EC of 27 October 2003, restructuring the Community framework for the taxation of energy products and electricity
*
{{DEFAULTSORT:Energy Taxation Directive
2003 in law
Energy law
Energy in the European Union
Energy policy in Europe
European Union directives
European Union tax law
European Green Deal