The price for climate protection

Excise duties, which include energy as well as electricity tax, are harmonized within the EU.

The legal premise is primarily the Energy Tax Directive, which has to be implemented by the member states in the form of national laws. In Germany, this was realized by way of the Energy Tax Law and the Electricity Tax Law as well as the accompanying executive orders (EnergieStV, StromStV).

The energy tax is for
Gasoline vehicles: 0.65 euros/l
Diesel vehicles: 0.47 euros/l.

Until the end of 2026, natural gas vehicles are subject to a gradually diminishing reduced energy tax instead of the normal 31.80 euros/MWh amounting to

• 13.90 euros/MWh until 31.12.2023
• 18.38 euros/MWh until 31.12.2024
• 22.85 euros/MWh until 31.12.2025
• 27.33 euros/MWh until 31.12.2026

Note: The use of liquefied petroleum gas (LPG) as a fuel at a reduced tax rate is also possible until December 31, 2022.

 Link: Further information on the Customs page.

Reforming the Energy Tax Directive

With its European Green Deal, the EU Commission has announced a comprehensive reform of the European regulatory framework for climate policy. In addition to tightening the climate targets for 2030, reduction is also to proceed beyond 2030 to achieve the major goal of decarbonizing the European Union by 2050.

We support the idea of the Green Deal in terms of a more comprehensive and more systematic approach to climate protection in the EU that is as effective and efficient as possible. The VDA would like to see the focus placed above all on a cross-sectoral achievement of the climate targets set, because only then can climate policy be successful.

Above all, the German automotive manufacturers and suppliers support the principle of more overarching, market-based incentives as part of climate policy. We are convinced that only then will we be able to achieve the climate targets set, which are by far the most ambitious in the world. This includes pricing the climate impact of energy sources correctly and effectively. We are in favor of an effective, EU-wide and cross-sectoral minimum CO₂ price, accompanied by the expansion of the EU Emissions Trading System (ETS) to the non-ETS sectors, because only a CO₂ volume- and price-based system can create these overarching, market-based incentive systems at the lowest possible abatement costs. We recognize that the existing EU ETS is effective and contributes decisively to the secure fulfillment of the targets in the sectors concerned.

An important building block for achieving this goal of decarbonization is the taxation and thus the pricing of energy carriers, because costs are a decisive factor in changing the behavior of users and consumers and, likewise, are significantly influenced by the taxation of energy carriers. Energy taxation could also help to align the different CO₂ abatement costs in the ETS and non-ETS countries to the extent that full integration and thus holistic CO₂ trading can be implemented more quickly.

The EU Commission has announced its plans to reform the EU Energy Tax Directive. We at the VDA expressly welcome this, as the existing directive has been in force since October 2003 – in other words, for almost 20 years. The new, ambitious goals laid out in the Green Deal can only be achieved with a reform of the European energy tax that focuses on the fossil CO₂ content of the fuel used to determine the level of tax. Important climate policy goals and technical developments in the field of renewable energy sources, such as modern, synthetic climate-neutral fuels or electricity from additional renewable sources, are not yet or insufficiently reflected and encouraged in the current directive.

In principle, various models are available – at both EU and national level – that should be examined with regard to their financial, environmental, and social aspects, as well as political feasibility (e.g., reduction of taxes to the minimum rate and the addition of a CO₂ component; complete switch from energy to CO₂ content). All the approaches have their advantages and disadvantages and may have different impacts; a detailed impact assessment should therefore compare and evaluate these proposals.

• Alignment with CO₂ content: In the future, the Energy Tax Directive should be based as far as (politically) possible on the CO₂ content of the energy sources. The basic principle should be: The greater the amount of potential fossil CO₂emissions, the higher the taxation. The CO₂ intensity for the energy sources is laid out in the "Renewable Energy Directive (Directive [EU] 2018/2001)", which should be referred to if additional bureaucracy is to be avoided.
• Zero tax rate for climate-neutral energy sources: Practically carbon-neutral energy sources, such as renewable electricity, advanced biofuels, and synthetic fuels (e-fuels), should be tax-exempt to encourage the market ramp-up of these technologies.
• Harmonized requirements for e-mobility: This incentive also includes comprehensive and uniform EU-wide requirements, especially with regard to how electromobility is taxed (e.g., charging the batteries during manufacture). Different regulations in the individual member states should be avoided.
• Avoid double taxation: The interaction between novel regulations in the Energy Tax Directive with other instruments (SESTA, EU ETS) must be carefully analyzed as part of an impact assessment to ensure appropriate taxation and avoid double burdens as far as possible.

• Raise legal certainty while lowering tax complexity:

1. Replace optional tax exemptions with mandatory ones: To create a level playing field in the EU for energy taxes as effectively as possible, mandatory and clear exemptions should apply to all member states wherever possible. The more harmonized the system, the more effective it will be for climate protection. Undesirable side effects, such as "fuel tanking tourism", can then be avoided and risks mitigated under state aid law. In addition, there will be fewer questions regarding such laws.
2. Clear definitions: To improve legal certainty and uniformity in its practical application within the EU, the Directive should also provide for clear definitions (e.g., taxable object, operator, person entitled to discharge, main tank).
3. Further tax simplifications: For example, being able to pass on electricity generated from renewable energies to third parties without paying electricity tax, provided that the majority of the electricity (> 50%) is consumed by the company itself, as well as an electricity tax exemption for the balanced use of biomass, synthetic gas, or hydrogen, if these are fed into existing natural gas pipelines, etc.