Despite European and international commitments to halt biodiversity loss and climate change, EU governments continue to provide billions in fossil fuel subsidies that drive degradation of our environment, contribute to the climate crisis and prevent industries’ green transition.
Lower taxes or tax exemptions are allowed for commercial fuel in the aviation, transport, fisheries, energy generation and maritime sectors, and for the production and extraction of coal, gas and oil. In the fishing sector for example, large industrial scale vessels benefit the most from fossil fuel subsidies, while small-scale low-impact fishers are most negatively impacted by the destruction caused.
What is the Impact of These Subsidies?
These harmful fossil fuel subsidies are incompatible with the EU’s international commitments, with the EU’s internal climate and environmental objectives set out in the European Green Deal1, and with the EU’s diplomacy to promote a global fossil fuel phase out. Their continuation would hamper European and international progress towards achieving climate neutrality, ending biodiversity decline, and delivering on the UN Sustainable Development Goals.
Who is Responsible?
European decisions makers, primarily the European Commission and EU Council are responsible for reviewing the Energy Taxation Directive. The Directive currently allows (and in some cases, requires) that fossil fuels do not get taxed. This Directive is being reviewed and provides a once-in-a-generation opportunity to assign a price to negative environmental costs that come from energy production and use, and to shift the fiscal burden from households to polluters.
What is the Solution?
The elimination of environmentally harmful subsidies, including fossil fuel exemptions, is necessary to internalise the true costs of certain activities, to incentivise decarbonisation, to achieve the zero-pollution ambition and to promote a just transition to a sustainable and green economy. EU decision-makers must tax all energy products and activities according to their energy and carbon content and to internalise pollution costs and impacts on the environment.
Who and What Will Benefit From Ending Fossil Fuel Subsidies?
By eliminating fossil fuel subsidies we can replot the course of climate change towards climate neutrality, improve the health of our environment – from the quality of our air to our ocean ecosystems, and shift the fiscal burden from households to polluters.