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Blame game erupts after energy tax talks collapse in EU Parliament

by editor

BRUSSELS — Efforts to pass a key climate law before this year’s European election have stalled after talks in the Parliament collapsed on Thursday. 

MEPs made a fresh attempt to find an agreement on the EU’s outdated Energy Taxation Directive earlier this year after Belgium revived long-stalled talks among member countries.

Revising the law is seen as crucial to the bloc’s climate efforts. The current legislation gives jet fuel a free pass, promotes the use of diesel, and generally does nothing to incentivize the use of renewable energy or cleaner alternative fuels like hydrogen over fossil fuels.

Thursday’s negotiations among the Parliament’s lead lawmakers, however, ended without agreement — but with plenty of finger-pointing. 

Left-leaning groups accuse Johan Van Overtveldt, a Flemish nationalist lawmaker in charge of negotiating a deal, of deliberately stalling the file over the past two years — and of blocking progress after it was rushed into another round of negotiations in January.

The renewed talks followed pressure from the Belgian government, which is keen to close out the file ahead of June’s European election, said Joachim Schuster, the lead negotiator on the file for the center-left Socialists and Democrats (S&D).

Van Overtveldt “is the reason for the time pressure,” Schuster claimed, accusing him of using “delay tactics” and demanding ever more concessions. 

“This has been the worst file of this mandate,” said a Parliament official working on the legislation, who was granted anonymity to speak about internal discussions. 

The official claimed that Van Overtveldt — a member of the right-wing European Conservatives and Reformists group, which has sought to weaken numerous climate laws — had not acted as “an honest broker.” 

The Belgian lawmaker, however, rejected assertions he was responsible for the talks collapsing. 

“Those who say that I was the saboteur, I can only see one reason why they do that, and that is because they themselves have at the end of the day dynamited the possible agreements that we were looking for,” Van Overtveldt said. 

That’s “absurd,” according to Schuster: “We were prepared to get an agreement, but not under any and all conditions.” 

The current legislation gives jet fuel a free pass, promotes the use of diesel, and does not incentivize the use of renewable energy | Justin Tallis/AFP via Getty Images

Delays, delays and more delays

The revised law — the only file in the bloc’s 2021 Fit for 55 climate legislation package that has not been finished — is meant to bring the taxation of energy products in line with the EU’s goal of becoming climate-neutral by 2050. 

The current version, in force since 2003, disregards the environmental impact of different fuels and effectively exempts kerosene used for air travel from taxation. 

But little progress has been made since the Commission, the bloc’s executive branch, proposed the revision two years ago. 

The directive faced two key obstacles in the Council: Tax matters require unanimous agreement among EU countries, and no government wanted to touch a bill that was seen as increasing energy prices. 

In the Parliament, Van Overtveldt repeatedly requested a new impact assessment from the Commission, claiming the energy crisis following Russia’s invasion of Ukraine had rendered the 2021 text outdated. 

“Two years of standstill because of ridiculous questions to the Commission,” the Parliament official complained. “It’s sad.” 

Schuster said: “He always put questions to the Commission, they answered, he had more questions. Those are typical delay tactics when you don’t want a file to progress.” 

Van Overtveldt said he had always kept to the required deadlines. 

MEPs had been hoping to find agreement by the next economic affairs committee meeting on March 20 to send the file to a full plenary vote at April’s final pre-election session of the Parliament. 

While MEPs can offer only an opinion on tax matters, a stance by the Parliament is a necessary step in the EU’s legislative process — meaning the file is now stuck, even if capitals managed to find agreement in the coming weeks.

That’s a major blow to Belgium, which has used its presidency of the Council to have another stab at passing the long-blocked legislation. 

The work can continue under the next Parliament, but that would leave the talks in the hands of the next holder of the rotating Council presidency — Hungary, whose government has been skeptical of the EU’s climate efforts. 

Lawmaker Johan Van Overtveldt said he had always kept to the required deadlines | Laurie Dieffembacq/AFP via Getty Images

‘Sad’ and ‘frustrated’

Thursday’s talks among MEPs collapsed over several issues, Schuster and the official said. 

Disputes arose over adapting taxation levels to inflation over time; over timelines for taxing aviation and maritime fuels; and over language that could allow nuclear energy to benefit from exemptions and reductions.

Left-wing groups also opposed what the Parliament official described as a last-minute change on taxation levels for electricity. 

Van Overtveldt’s draft compromise text circulated to MEPs this week, seen by POLITICO, suggests that “the use of electricity as an energy product should enjoy a 10-year maximum tax rate of zero percent.” 

In effect, “that’s a ban on taxing electricity,” the official said. Both he and Schuster said other negotiators had been under the impression the Parliament would suggest a “minimum” rate of zero, leaving the decision on how much to tax electricity entirely up to governments. 

“We were prepared to take a zero rate but we have always understood this as a minimum,” Schuster said. Van Overtveldt “assumed that it’s a maximum taxation — that the zero rate is prescribed. That doesn’t work for us.” 

The economic affairs committee could still reach an agreement at another meeting in April, but at that point the deadline to submit bills for plenary vote before the election will have passed. 

The law’s revision still faces significant hurdles among EU countries as well. A spokesperson for the Belgian Council presidency said discussions were “very difficult” as “the positions of the member states are almost impossible to reconcile … but we will move ahead.”

“This is the second attempt to reform this file,” the Parliament official said, referring to a failed revision effort in the 2010s. “I’m pretty frustrated.” 

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