DG TAXUD officers outlined the main elements of the forthcoming Commission proposal on a revised ETD:
Minimum energy taxation rates applicable in the EU27 Member States will be composed of two complementary but distinct elements:
A base rate expressed in terms of EUR per unit of energy content, in an effort to streameline the setting of rates across fuels and provide an incentive for efficient use;
A CO2 intensity rate reflecting the carbon intensity of the fuel used. This last part would only apply to installations which are not covered by the EU ETS.
The proposal is to adopt two sets of minimum energy taxation rates:
for businesses and for non-business consumers.
Motor fuel and heating fuels.
Based on indicative figures provided by DG TAXUD, the composite minimum rate for businesses will not increase significantly. On can note that the projected increase would be steeper for households.
As a result of the introduction of a CO2 intensity element, the level of taxation for natural gas and coal is modified and would bring a small comparative advantage to natural gas over the existing sitution.
Questions around the ”dual uses” exemption:
The main issue identified as being potentially problematic for industry was that of the taxation of energy products which serve a ”dual use”.
The draft proposal of early 2009 introduced the notion of ”dual uses” under which case the fuel consumption would be exempt.
DG TAXUD explained that ”dual use” referred to situations where either the fuel also serves as (a) a raw material for non-combustion purposes or (b) dual uses in specified sectors. Some stakeholders asked for greater clarity in setting the scope for this exemption and the example of the pulp&paper industry was brought to the attention of the Commission.
Potential issue for CHP operators:
COGEN Europe also drew the attention to the special situation which might arise for cogeneration installations.
Under the ETD, fuel input is taxed when used for heating purposes; however, fuel for electricity production is exempt as electricity is taxed on the output (i.e. quantities of electricity) rather than the fuel input.
As cogeneration installations produce both heat and electricity there might be a risk (if not an already existing situation in the Member States) that cogeneration installations are taxed under the ETD for their full fuel consumption rather than on a share attributable to the heat production.
Need to collect information and respond by end of summer:
COGEN Europe has until the 10th of September to respond to the DG TAXUD officers with potential issues and input. Input from national associations or operators concerning national situations is needed.
In particular, information suggesting full taxation based on fuel input or information related to national methodologies used to allocate fuel input between heat and electricity would be very welcome.
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