Clock ticking as EU tries to unblock energy taxation directive

(EurActiv, 19 Feb 2024) The French electricity sector fears that the revision of the EU’s energy taxation directive will fail before the June European elections, despite a last push by the Belgian EU presidency, which is seeking to break the deadlock in the Council of the EU.

French electricity bills rose by 8-10% on 1 February 2024, after changes brought to the “tariff shield” introduced in 2021 in response to the energy crisis caused by Russia’s war in Ukraine.

“The reason is very simple: a gradual phasing out of the tariff shield,” explained the office of Economy Minister Bruno Le Maire at the end of January, referring to the €90 billion that the shield had cost the state just two years after the start of the crisis.

At the same time, the French government also announced a decision to reintroduce a tax exemption on non-road diesel to appease angry farmers, who have been protesting across the country.

In other words, the government increased taxes on France’s highly decarbonised electricity while reducing taxes on a polluting fossil fuel.

“Our tax policy is totally out of step with our national objective of moving away from fossil fuels,” energy market expert Nicolas Goldberg reacted on X.

The situation is not unique to France: In Europe, coal is taxed at an average of €2.9 per megawatt-hour, while natural gas is taxed at €7/MWh. Electricity, by comparison, is taxed at €32.1/MWh, according to a recent report by the EU Court of Auditors.

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EurActiv, 19 Feb 2024: Clock ticking as EU tries to unblock energy taxation directive