Wednesday, September 30, 2020
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Polish Electricity Association concerned over changes to energy taxation

The Polish Electricity Association (PKEE) is concerned that in order to reach the climate goals presented by the European Green Deal, possible amendments to the existing energy taxation rules might be discussed.

However, the decision to revise the Energy Taxation Directive (ETD) 1 can only be undertaken after a rigorous impact assessment and in line with well-established Treaty rules regarding the adoption of tax policy measures.

The European Commission is proposing the implementation of financial solutions aimed at strengthening the European Green Deal. At the same time, it is also considering moving away from unanimity in the Council in favour of a qualified majority voting when adopting the new EU taxation policy. However, the PKEE argues that any changes regarding the taxation of energy products would require the unanimity principle.

Since the marginal price of electricity is still determined by coal-fired power plants, the rapid increase of the European Emission Allowances (EUA) prices translated directly into a significant increase of the energy prices in Poland as a whole. Adding another tax-based price component will result in energy-intensive users relocating outside the EU (carbon leakage) or within the EU.

The PKEE recalls how a number of exemptions and tax reliefs have already been introduced in order to maintain the competitiveness of the European economy in relation to third countries. To minimise the risk of carbon leakage, the carbon footprint of products imported from countries with no climate policy measures in place should be addressed through the carbon border adjustment mechanism currently discussed within the EU.

That’s why the PKEE believes that the unanimity principle is needed more than ever. In fact, voting by the qualified majority could not guarantee that the adopted measures will take into account the regional circumstances of all the Member States.

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