The European Commission has presented its proposal to overhaul -today outdated- rules on the taxation of energy products in the European Union. The revised Energy Taxation Directive will allow Member States to make the best possible use of taxation and support "sustainable growth".    Besides, it will favour renewable energy sources and encourage the consumption of energy sources emitting less CO2.

With this measure, the Commission wants to promote energy efficiency and consumption of more environmentally friendly products and to avoid distortions of competition in the Single Market. The new rules aim to restructure the way energy products are taxed to remove current imbalances and take into account both their CO2 emissions and energy content.

The Energy Taxation Directive already now sets forth minimum rates for the taxation of energy products used as motor fuels and heating fuels as well as electricity. Nonetheless, the Directive has become outdated because taxation based on volumes of energy products consumed cannot address EU's energy and climate change targets. This would be the reason why the revision is needed. Therefore, this initiative will help the EU meeting its targets on energy and climate change, as requested in the March 2008 European Council conclusions. The revised Directive would enter into force as of 2013. EU industry will have until 2023 to adapt itself to the new taxation structure.

In order to support "sustainable growth", Commission proposes splitting the minimum tax rate into two parts:

•       One would be based on CO2 emissions of the energy product and would be fixed at €20 per tonne of CO2.
•       The other one would be based on energy content, i.e. on the actual energy that a product generates measured in Gigajoules (GJ). The minimum tax rate would be fixed at €9.6/GJ for motor fuels, and €0.15/GJ for heating fuels.

Social aspects are taken into account with the option for Member States to completely exempt energy consumed by households for their heating, no matter what energy product is used. Moreover, it would mean a great opportunity for Member States to redesign their tax policies in a way that promotes jobs and employment.