Energy Taxation Directive (ETD)
The information provided on this page is based on the European Commission Proposal dated July 2021. Key elements are subject to change before the definitive measures are adopted.
The EU’s Fit for 55 proposal includes the maritime industry in the scope of its decarbonization and GHG reduction measures for the first time. This means that several existing measures are being expanded, including a revision of the Energy Taxation Directive (ETD) is included in Fit for 55. Adopted in 2003, the ETD would be updated to:
The ETD currently employs a taxation mechanism that allows subsidies in favor of fossil fuels. Under the new revision, the fuels that pollute most will be taxed at higher rates.
Working from a basis aligned with the established climate goals for 2030, there are three possible ETD variations under discussion:
By combining the EU ETS and ETD, both carbon content and other pollutants will be reduced from fuel content
Most options consider a transitional phase of ten years or more once the revised ETD is in force. During this period several alternative fuels will be exempt from taxation. These fuels may include:
As concerns the shipping industry, energy products and electricity produced from fossil fuels used in waterborne navigation will be subject to taxation. Taxes will be calculated according to the net calorific value of the fuel. Tax exemptions will initially incentivize the use of sustainably produced alternative fuels, electricity and shore-side electricity used by vessels at berth.
The ETD proposal is still subject to change as it remains under discussion at both the EU Parliament and EU Council.* Points raised have included:
* The Council is not legally obligated to take the Parliament’s position into account, but it cannot make a decision without it.
The ETD will no doubt influence the choice of marine fuel used in EU waters. However, like all of Fit for 55, the final form of the ETD update has yet to be decided, though it will become clearer in the months ahead. Ship owners and operators can rely on Bureau Veritas experts to provide up to date information and advice on this and all Fit for 55 measures impacting them.
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