Table of Contents

Environmental Taxation and Green Fiscal Reform

Environmental Taxation and Green Fiscal Reform

Theory and Impact

Critical Issues in Environmental Taxation series

Edited by Larry Kreiser, Soocheol Lee, Kazuhiro Ueta, Janet E. Milne and Hope Ashiabor

Against a backdrop of intense political interest it is more important than ever to explore the role of fiscal policy in achieving environmental sustainability. Environmental Taxation and Green Fiscal Reform skilfully explores the various ranges of environmental and energy policies needed for an environmentally sustainable future.

Chapter 4: Inherent logic of EU energy taxes: toward a balance between market protection and environment protection

Álvaro Antón Antón and Marta Villar Ezcurra

Subjects: economics and finance, environmental economics, public finance, environment, energy economics, energy policy and regulation, environmental law, law - academic, environmental law, tax law and fiscal policy, politics and public policy, environmental politics and policy


The road transport sector is excluded from the EU’s Emission Trading System (hereinafter, ETS) due to the difficulties of measuring the CO2 emissions associated with it. Energy taxes could play a complementary role to ETS in that sector to achieve the EU’s CO2 reduction targets. However, currently, many EU Member States have used different energy taxes on the road transport sector, mainly for revenue-raising purposes. This situation is largely the result of the fact that these taxes must conform to the internal logic of the EU Energy Tax Directive (hereinafter, ETD), which harmonized energy taxation of electricity and energy products used as motor fuels or as heating fuels in the EU. This implies that the underlying purpose of these harmonized taxes is to tax all energy products regardless of their environmental performance. Consequently, it can be stated that the real inherent logic of harmonized energy taxes in the EU, and, thus, their real objective, is not the protection of the environment, but to ensure the proper functioning of the internal market. Among EU Member States, this situation has prevented a true transition from a general energy taxation system, focused on revenue collection, to a truly environmental energy taxation system based on the carbon content of each energy product.

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