The European Commission on July 14 adopted its “Green Deal” package of proposals to address climate change through various policy measures, including revisions to the tax system applicable to energy products and a new carbon border adjustment mechanism.
“We are updating our two-decades old energy taxation rules to encourage the use of greener fuels and reduce harmful energy tax competition,” Commissioner for Economy Paolo Gentiloni said. “And we are proposing a carbon border adjustment mechanism that will align the carbon price on imports with that applicable within the EU.”
The proposed revisions to the EU’s Energy Taxation Directive would change the way energy products are taxed in the EU. The changes would introduce a new structure of tax rates based on energy content and the environmental impacts of fuels and electricity. The revisions would also bring more products into scope and remove current exemptions.
The new carbon border adjustment mechanism would put a carbon price on imports of certain products to correspond to the carbon price that would have been paid had the goods been produced under the EU’s carbon pricing rules. “In full respect of our WTO commitments,” Gentiloni said, “this will ensure that our climate ambition is not undermined by foreign firms subject to more lax environmental requirements.”
As a concerned Australian, the underlying objective and approach of the EU is to be commended!