Sponsorship Link
The European Union's executive outlined plans on Wednesday to tax high-energy fuels, a move which users fear could push up the price of diesel but which EU officials hope will fight global warming.
/
The blueprint, which could become EU law by 2013, attempts to make taxes on motor fuels, in particular, more environmentally friendly by raising the minimum levy on polluting diesel to bring it into line with petrol.
But the framework, which carmakers and motorists worry could inflate the price of diesel because its high-energy content puts it in line for steeper taxes, has put Brussels on a collision course with Europe's biggest car producer, Germany.
Under the plans, Germany's tax on diesel would have to rise from 47 cents per liter to 75 cents in 2020, undermining Berlin's subvention for the fuel, which supports carmakers such as BMW and Daimler.
Must Read
Reuters reported draft details of the plan last month, including the move to split the tax into carbon and energy content components.
Follow us
Chancellor Angela Merkel has already said she opposes the Brussels initiative, even though it would be phased in over a decade.
"Our common goal is a more resource-efficient, greener and more competitive EU economy," said Algirdas Semeta, the European commissioner in charge of taxation. "This proposal sets a strong CO2 price signal for businesses and consumers."
Over the next decade, the European Union plans to cut by a fifth its emissions of carbon dioxide, the gas most blamed for climate change.
But the current system of taxing energy use across Europe undermines that ambition, because it puts the lowest levies on the biggest polluter, coal, and imposes the highest burden on one of the least carbon-intensive, bioethanol.
European countries also vary in their approach to taxing energy.
Semeta plans to change all that with a new fuel tax that includes a levy on carbon emissions and a minimum tax on motor and heating fuels. Under the scheme, tax on coal would rise.
The planned overhaul of Europe's 240 billion euro ($347 billion) annual taxation of energy would also make green fuels cheaper.
Fuels made from plant biomass -- such as wood pellets, bioethanol or biodiesel -- would be taxed less, because in some cases they can absorb almost as much carbon when they are grown as is released when they are burned.
The scheme would extend environmental controls beyond industry to households and consumers.
Taxation of carbon emissions is used by Denmark, Sweden and Ireland, while Britain, Germany and the Netherlands have various eco-friendly taxes.
Semeta's attempt to overhaul fuel taxes last summer stalled over concerns about the impact on business. He also faces long-standing resistance from countries to interference from Brussels on tax.
"Any tax proposal is not going to be an easygoing issue," Semeta told journalists.
He defended the impact of the tax measures on fuel prices. "Germany now is taxing diesel at a much higher level than ... in the proposal," he said.
