Policy Position

Taxation on Energy Products and Electricity

Sep 01, 2023


The Energy Taxation Council Directive (2003/96/EC) sets a minimum taxation rate for energy products. It grants an exception for mineralogical processes through Article 4, which stipulates that the Directive does not apply to energy products used for “Mineralogical processes” falling in NACE-class 26 (rev. 1.1) “manufacture of other non-metallic mineral products”.

In 2011, the Commission presented a proposal to revise the existing Energy Taxation Directive which was withdrew in February 2015

The proposal introduced a CO2 tax based on the carbon content of the different fuels used in a sector, to mirror the carbon price signal mechanism, presented in the ETS. It also made a distinction between sectors covered by the EU ETS and those outside it, in order to avoid double taxation.

In 2017, the European Commission announced the beginning of a new evaluation of the 2003 Directive to assess whether it is still fit for purpose in spite of the developments in the energy sector and prices since 2003.

On 15th February 2019, the EC published “Towards a more efficient and democratic decision making in EU tax policy”. In its communication, the EC showed his willingness to move away from unanimity in taxation and to introduce qualified majority voting instead. This would facilitate a potential approval of a revised Energy Taxation Directive by the Council, after several failures of the attempts to modify it in the past.

In addition, on 9th April 2019 the EC published “A more efficient and democratic decision making in EU energy and climate policy” claiming for a passerelle clause in taxation. This passarelle would allow to switch from voting by unanimity to qualified majority voting by 2025.

For the moment being, the revision would require consultation of the European Parliament and unanimity in the Council for its adoption (following the special legislative procedure).

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