Proposal for a COUNCIL DECISION authorising Italy to apply a reduced rate of excise duty to certain mineral oils, when used for specific purposes, in accordance with the procedure provided for in Article 8(4) of Directive 92/81/EEC

(presented by the Commission)

EXPLANATORY MEMORANDUM

Under Article 8(4) of Council Directive 92/81/EEC on the harmonisation of the structures of excise duties on mineral oils [1], the Council, acting unanimously on a proposal from the Commission, may authorise any Member State to introduce exemptions from, or reductions in, excise duties on grounds of specific policy considerations.

[1] OJ L 316, 31.10.92, p. 12. Directive as last amended by Directive 94/74/EC (OJ L 365, 31.12.94, p. 46).

The Italian authorities have informed the Commission that they wish to exempt from excise duty the water content of stabilised water/diesel emulsions and water/heavy fuel oil emulsions. The water/diesel emulsion will be used as motor fuel and also as heating fuel. The water/heavy fuel oil emulsion will be used as heating fuel and also for industrial purposes.

Articles 2(2) and 2(3) of Directive 92/81/EEC make the water content of water/mineral oil emulsions subject to duty when the emulsion is used as heating fuel or as motor fuel. However, the water content in the emulsion does not contribute to energy release but simply aids fuel combustion, thus reducing pollutant emissions. The Italian authorities therefore wish to exempt the water content from duty.

Italy therefore requests authorisation to exempt the relevant water content of water/diesel and water/heavy fuel oil emulsions from excise duty from 1 October 2000. The specific policy consideration is to ensure fair and equitable charging and to encourage the use of a more environmentally friendly fuel. The resultant differentiated rates of excise duty on these fuels will all respect the minimum rates of excise duty set out in Directive 92/82/EEC [2].

[2] OJ L 316, 31.10.92, p. 19. Directive as last amended by Directive 94/74/EC (OJ L 365, 31.12.94, p. 46).

In accordance with Directive 92/81/EEC, the other Member States have been informed of this request.

Directive 92/81/EEC provides for the Commission to review such exemptions and reductions periodically. If the Commission considers that they may no longer be applied because they distort competition or the operation of the internal market or are incompatible with Community policy on protection of the environment, it is to present appropriate proposals to the Council.

In any event, on the basis of a proposal from the Commission, this derogation must be reviewed no later than 31 December 2005 when the authorisation granted by this Decision expires. The Council will review the situation on the basis of a Commission Proposal and decide whether the authorisation granted under Article 1 of this Decision should be withdrawn, modified or confirmed.

Proposal for a

COUNCIL DECISION

authorising Italy to apply a reduced rate of excise duty to certain mineral oils, when used for specific purposes, in accordance with the procedure provided for in Article 8(4) of Directive 92/81/EEC

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to Council directive 92/81/EEC of 19 October 1992 on the harmonisation of the structures of excise duties on mineral oils [3], and in particular Article 8(4) thereof,

[3] OJ L 316, 31.10.92, p. 12. Directive as last amended by Directive 94/74/EC (OJ L 365, 31.12.94, p. 46).

Having regard to the proposal from the Commission,

Whereas:

(1) Pursuant to Article 8(4) of Directive 92/81/EEC, the Council, acting unanimously on a proposal from the Commission may authorise any Member State to introduce exemptions or reductions in the excise duty charged on mineral oils for specific policy considerations.

(2) The Italian authorities have informed the Commission that they wish to exempt from excise duty the water content of stabilised water/diesel emulsions and water/heavy fuel oil emulsions. The water/diesel emulsion will be used as motor fuel and also as heating fuel. The water/heavy fuel oil emulsion will be used as heating fuel and also for industrial purposes.

(3) Articles 2(2) and 2(3) of Directive 92/81/EEC make the water content of water/mineral oil emulsions subject to duty when the emulsion is used as heating fuel or as motor fuel. However, the water content in the emulsion does not contribute to energy release but simply aids fuel combustion, thus reducing pollutant emissions. The Italian authorities therefore wish to exempt the water content from duty.

(4) The other Member States have been informed thereof.

(5) The Commission and all the Member States accept that the application of an exemption from excise duty of the water content of water/diesel emulsions and water/heavy fuel oil emulsions will not give rise to distortions of competition or hinder the operation of the internal market.

(6) This decision does not prejudice the outcome of any future state aid procedures that may be undertaken in accordance with Articles 87 and 88 of the Treaty, nor does it override the requirement for Member States to notify instances of potential state aid to the Commission under Article 88 of the Treaty.

(7) The Commission regularly reviews reductions and exemptions to check that they do not distort competition or the operation of the internal market or are incompatible with Community policy on protection of the environment.

(8) To ensure fair and equitable duty charging and to encourage the use of more environmentally friendly fuels, Italy has requested authorisation to exempt the relevant water content of water/diesel and water/heavy fuel oil emulsions from excise duty from 1 October 2000.

(9) The resultant differentiated rates of excise duty on these fuels will all respect the minimum rates of excise duty set out in Directive 92/82/EEC [4].

[4] OJ L 316, 31.10.92, p. 19. Directive as last amended by Directive 94/74/EC (OJ L 365, 31.12.94, p. 46).

(10) The Council will review this decision on the basis of a proposal from the Commission no later than 31 December 2005 when the authorisation granted by this decision expires.

HAS ADOPTED THIS DECISION:

Article 1

In accordance with Article 8(4) of Council Directive 92/81/EEC, Italy is authorised to apply differentiated rates of excise duty on water/diesel emulsions and water/heavy fuel oil emulsions from 1 October 2000 until 31 December 2005 provided that the differentiated rates are in accordance with the obligations laid down in Council Directive 92/82/EEC of 19 October 1992 on the approximation of the rates of excise duties on mineral oils [5], and in particular the minimum rates of excise duty provided for in Articles 5 and 6 thereof.

[5] OJ L 316, 31.10.92, p. 19. Directive as last amended by Directive 94/74/EC (OJ L 365, 31.12.94, p. 46).

Article 2

This Decision is addressed to Italy.

Done at Brussels,

For the Council

The President