EU Green Deal – Revision of the Energy Taxation Directive

EU Green Deal – Revision of the Energy Taxation Directive

October 2021

EU Green Deal – Revision of the Energy Taxation Directive

Joint industry position

Policy Amendment Request: Keep mineralogical processes outside the scope of the Energy Taxation Directive, by including them in the list of exemptions to which the Directive shall not apply, as per Article 3.1 (b).

We, the undersigned associations acknowledge the publication of the Fit for 55 Package as the most significant cluster of measures the EU has ever published at the same time, to achieve the same goal, namely the EU carbon neutrality by 2050. It is our firm conviction that these measures should set up the basis of a coherent, achievable environmental and socio-economic policy framework allowing the implementation of most efficient measures to reduce greenhouse gas emissions while ensuring that long-term goals, as well as the international competitiveness of EU industry is not undermined.

Nevertheless, the undersigned associations would like to raise a concern with regards to Article 3(1) of the Energy Taxation Directive proposal, where the current tax exemption for mineralogical processes has been removed from both the article itself as well as from the preamble. In this context, we request the EU to retain the tax exemption for mineralogical process in the directive for the following reasons:

The Energy Taxation Directive should avoid overlap with other EU measures such as ETS or CBAM while ensuring the legal certainty, long-term goals as well as the international competitiveness of the industry. The level of GHG reduction requested through the ETS directive (-61% between 2005 and 2030) combined with the continuous increase in carbon prices (~60€/t in 2021) are already adding huge costs to the industry. In this respect, imposing new set of limitations in the energy tax proposal to achieve the same decarbonisation target could be highly detrimental for sectors which need to invest at the same time into their energy transition. The scrapping of several electricity levies, subsidies, or additional taxes, which would result in counter-productive effects for the EU climate goals, should be avoided. They should not be proposed without a thorough sectoral and national impact assessment. Alignment of taxation of energy products and electricity with EU energy and climate policies should only be done after a careful consideration of regional and national level potential.

Including mineralogical processes in the scope of the Directive would lead to a severe cost burden for the industry. Increasing the cost burden on selected industrial sectors will hinder not only the capital-intensive investments into new low-carbon technologies but also the achievement of the Fit for 55 Package main objectives.

To reach carbon neutrality in the manufacturing of mineralogical products, European manufacturers must deploy massive and long-term efforts (R&D, process innovation, investments etc.), which require predictable and coherent framework conditions. As the industry moves towards decarbonization, increased electrification will become the main energy source to achieve a climate neutral production. Excluding mineralogical processes from the exemption list would therefore not only increase production costs for conventional production technologies but also severely undermine future low-carbon processes. Furthermore, even if the energy and trade intensity as well as the carbon leakage status of the mineralogical industry have already been acknowledged in the ETS Directive, the industry is already confronted with the fact that several mineralogical industrial sectors are not compensated for indirect carbon costs associated to electricity. In addition, the EU Commission plans to increase electricity costs for several mineralogical sectors by drastically cutting reductions on electricity levies through the EU state aid guidelines on Climate, Environment and Energy.

Additional expenses would lead not only to a carbon but also an investment leakage, fewer jobs, less production, and less innovation.

Including mineralogical process in the scope of the Directive will distort the level playing field in the single market. Like the chemical, electrolytic and metallurgical processes, mineralogical processes are currently exempted from the scope of the EU Energy Taxation Directive (ETD). Removing the mineralogical processes from the exemption list, while keeping other processes would lead to a severe disruption in the level playing field among EU industries. The competitiveness of European manufacturers has already been exposed to severe pressure deriving from non-EU imports and even dumping and the current proposed amendment would only increase this burden.

The criteria and methodology based on which the mineralogical processes have been excluded from the exemption list are missing from both the revised directive as well as from the Impact Assessment accompanying it. It is unclear and therefore, uncertain which processes will continue to be covered by the tax exemption. Even more, the ETD does not define further those exceptions nor provide any detailed definitions or list of chemical reduction, electrolytic, metallurgical, and mineralogical processes.