The European Union is considering a 10-year exemption from energy taxes on aviation and shipping fuels, according to a draft proposal obtained by Reuters. The move would postpone taxation until 2035 and extend the long-standing tax breaks enjoyed by these sectors.
The draft, prepared under Denmark’s rotating EU presidency, would only impose minimum taxation before 2035 on small aircraft with up to 19 seats and on private pleasure boats. Larger airlines and shipping companies would remain exempt during the decade-long transition. Negotiators are scheduled to debate the text in Brussels on Friday, with the presidency aiming for a deal by November.
The overhaul is part of the stalled revision of the Energy Taxation Directive, first adopted in 2003 to set EU-wide minimum excise rates. The European Commission’s Green Deal proposal in 2021 sought to phase in fuel taxation across transport sectors, but repeated pushback from governments has delayed progress.
Industry groups have mounted intensive lobbying campaigns. Airlines argue that without tax relief, uptake of sustainable aviation fuel (SAF) will remain minimal because it currently costs two to five times more than conventional kerosene. Shipping operators make a similar case for renewable marine fuels, citing both high production costs and supply bottlenecks, according to Euractiv.
The Commission’s own assessments note that ending exemptions could generate billions in revenue while providing incentives for cleaner fuels. Still, countries heavily dependent on tourism and maritime trade remain cautious, warning that higher transport costs could weaken growth.
Because EU tax policy requires unanimous approval, any one member state could block the draft. Diplomats involved in the talks told Reuters that northern states are more inclined to support taxation, while southern tourism economies remain strongly resistant.
By Charles Kennedy for Oilprice.com
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