EU economy and finance ministers gathered in Lisbon today (22 May) for an informal ECOFIN meeting organized by the Portuguese Presidency of the Council of the European Union. The ministers discussed the economic recovery from the pandemic and how European green taxes could stimulate and encourage a fairer, faster climate transition.
The meeting was a chance to discuss the ‘carbon border adjustment mechanism’ (CBAM) and the review of energy taxation, with a view to favouring renewable energy sources over more polluting energy sources, such as fossil fuels. The review is part of the EU’s climate transition efforts to reach the goals of the European Green Deal.
In July, the European Commission will put forward its Fit for 55 package, which will include an overhaul of EU climate and energy legislation. Commission Executive Vice President for the Economy Valdis Dombrovskis acknowledged that the CBAM, in particular, was not going to be easy, and said that the proposal would be a gradual one introduced over time and probably focused initially on the more energy intensive sectors, such as cement and steel.
Dombrovskis said that in order to be WTO compliant the EU would have to phase out free emission allocations as it phased in the CBAM.
In energy taxation the EVP said that areas such as maritime and aviation fuel consumption would be considered.
In response to a question Dombrovskis recognized that the principle of unanimity in the area of taxation makes decision making more difficult, but pointed to recent success in the fight against base erosion and profit shifting.