EU Policies and Regulation on CO2, Renewables and Energy Efficiency: A Critical Assessment of Recent Experiences - Green Energy and Efficiency: An Economic Perspective - page 24

eld of environmental taxation, OECD
reports are very useful 8 as they take a broad statistical basis into account and carry
out a thorough review of both academic literature and the legislation in force.
An analysis of a signi

In analysing European experiences in the

cant number of OECD publications on energy and
environmental taxation, as well as of the statistics drawn up by the OECD in this

eld , 9 cant conclusions.

First, the indicators used to compare the burden of environmental taxation in
different countries should be carefully scrutinised, as in many cases they may be
dependent on

leads to at least two signi

nal energy consumption trends, how consumption is structured or how
taxes are designed. For example, the overall revenue value of an ad valorem tax (e.g.
the tax on electricity in Spain) is not as dependent on energy consumption trends as a
tax levied at a rate based on units of energy (e.g. liquid hydrocarbons in transport).
Second, an analysis of energy and environmental taxation should be supple-
mented by the introduction of regulatory concepts that impose charges on energy
consumers in order to nance energy-related, environmental or social policies. This

is the case, for example, of the costs incurred by electricity consumers in order to

nance the meeting of the renewable energies target in many European countries,
i.e. a public policy target that is derived from European regulations.
In October 2003, the European Commission passed Directive [ 5 ] 2003/96/EC on
energy taxation, which came into force on 1 January 2004. This Directive sets the
minimum levels of taxation applicable to energy products intended for the pro-
duction of motor and heating fuels, as well as for the production of electricity,
although in the latter case the Member States may introduce exemptions on a dis-
cretionary basis. They may also apply exemptions to biofuels, among others, and to
special sectors. The Directive acknowledges the political and structural particulari-
ties of each Member State, meaning that there are also exceptions for speci

c cases.
The tax base, according to Directive [ 5 ] 2003/96/EC, is the volume consumed in
the case of petroleum-based products, and the energy content is the case of coal, gas
and electricity.
Some dysfunctions were detected in this system. For example, there is no clear
price signal for CO 2 emissions or energy content; nor are there suf ciently strong

incentives for the development and use of alternative energies. There is also double
taxation in the case of the industries that are subject to the European emissions
trading market. In view of this, the European Commission issued a draft Directive
in 2011 for which the appraisal process is still open.
In order to correct the inef ciencies found in the previous Directive, the most

important addition in the new proposal is to divide the energy tax into two parts: one
based on CO 2 emission levels and the other on energy content, both of which are
to be equally applied to all energy products (apart from some exceptional cases).

8 The following reports are of particular interest: (1) OECD [ 23 ] Environmentally Related Taxes
in OECD Countries. Issues and Strategies. Paris; and (2) OECD [ 24 ] Taxing Energy Use. A
Graphical Analysis, Paris.
9 OECD [ 24 ] Taxing Energy Use. A Graphical Analysis, Paris.