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Above the Italian city of Padua, an airplane flies beneath the jet stream of another plane. The photo was taken on September 18, 2013. David Gray/REUTERS/File Photo (Reuters) – BRUSSELS, 4 JULY (Reuters) – According to a document seen by Reuters, the European Commission has devised plans to establish an EU-wide minimum tax rate for polluting aviation fuels as part of its efforts to reach more ambitious climate change targets. The European Commission is working on a plan to restructure EU energy taxation as part of a package of measures it will propose on July 14 to fulfill a goal of cutting EU greenhouse gas emissions by 55 percent by 2030 compared to 1990 levels. Aviation, which is exempt from EU fuel taxes, is targeted in a draft of the Commission’s tax plan. The exemption “does not align with current climate issues and policies,” according to the document, which also claims that EU tax rules favor fossil fuels over renewables and need to be rewritten to meet the bloc’s climate ambitions. The plan would impose a minimum tax on energy items used as aircraft fuel for flights within the EU across the entire EU. The minimum tax rate on aviation fuel would begin at zero in 2023 and gradually climb over a 10-year period until it reaches the maximum rate. The ultimate rate was not specified in the proposed plan. During that 10-year period, sustainable fuels such as renewable hydrogen and advanced biofuels would be exempt from EU minimum taxes. The Commission has declined to comment on the draft plan, which may be revised before it is published. DIFFICULT POLITICALLY? It may be politically difficult to introduce the proposals. Changes to EU tax rates require unanimous consent from all 27 EU countries, implying that a single state might veto them. EU countries are responsible for setting their own national taxes, while Brussels can set minimum rates for the entire bloc. The taxes would be based on the energy content of a fuel as well as its environmental performance, making polluting fuels more expensive. The goal is to persuade airlines to transition to sustainable fuels like e-kerosene in order to reduce greenhouse gas emissions. High costs have limited their adoption, and they account for less than 1% of Europe’s jet fuel use. In order to stimulate demand for sustainable fuels, Brussels is set to propose standards for airlines to utilize a minimum share of sustainable fuels next month. Cargo-only flights, as well as “pleasure flights” and “business aviation,” would be exempt from the EU’s minimum tax rate. This could include personal use of an aircraft or commercial usage of a plane that is not available for public hire. Member states could choose to levy the gasoline used by those aircraft on a national level. In addition, the draft plan would impose minimum tax rates on polluting fuels used in EU waterways navigation, fishing, and freight transport. Kate Abnett contributed reporting, and there was also further reporting. Sabine Siebold wrote it, while John Chalmers and Barbara Lewis edited it. The Thomson Reuters Trust Principles are our standards./nRead More

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