Proposal for a Council Decision authorising Denmark, in accordance with Article 8(4) of Directive 92/81/EEC, to apply a differentiated rate of excise duty to petrol distributed by petrol stations meeting certain standards of equipment and operation
Date: 2001-05-16
Institutions: European Commission
Subjects: Denmark, distributive trades, environmental protection, excise duty, marketing standard, petrol

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 16.5.2001
COM(2001) 261 final

Proposal for a

COUNCIL DECISION

authorising Denmark, in accordance with Article 8(4) of Directive 92/81/EEC, to apply a
differentiated rate of excise duty to petrol distributed by petrol stations meeting certain
standards of equipment and operation

(presented by the Commission)

EXPLANATORY MEMORANDUM

1.

PRESENTATION OF THE REQUEST

By letter dated 16 February 2001, Denmark, in accordance with Article 8(4) of Council
Directive 92/81/EEC of 19 October 1992 on the harmonisation of the structures of excise
duties on mineral oils1, requested authorisation to introduce a differentiated rate of excise duty
on petrol distributed by petrol stations meeting more stringent standards of equipment and
operation.

The Danish authorities have observed a threat of serious pollution to soil and groundwater as
a result of leaks from underground tanks. It is MTBE which is regarded as problematic2.
Leakage of MTBE into groundwater does not represent a real health problem as this substance
is only harmful when highly concentrated, but even minute quantities of MTBE in
groundwater impart an unpleasant taste and smell to water, and water containing negligible
quantities of MTBE would be undrinkable.

This is why the Danish Parliament (Folketing) adopted on 20 December 2000 Law No 1297
(«Lov om energiafgift af mineralolieprodukter m.v.») imposing an energy tax on mineral oil
products, etc. Its purpose is to protect soil and groundwater from leaks from underground
tanks as soon as possible by creating a tax incentive for petrol stations that implement in
advance the provisions applicable from 31 December 2004. The more stringent standards
governing equipment and operation of petrol stations are contained in the Ministerial Order
on the prevention of soil and groundwater pollution from petrol-distribution installations3.

The tax incentive in question is designed to encourage petrol stations to invest earlier with a
view to reducing pollutant emissions. The incentive takes the form of a differentiated rate of
excise duty. The duty on petrol distributed by petrol stations satisfying the more stringent
standards would be reduced by DKK 0.03 per litre compared with the duty on petrol not
delivered by such petrol stations.

1

2

3

OJ L 316, 31.10.1992, p. 12, as last amended by Directive 94/74/EC (OJ L 365, 31.12.1994, p. 46).
Methyl tertiary butyl ether (MTBE), a substance that raises the octane number and has been added to
unleaded petrol since the mid-1980s.
Notification of the Order was made by the Ministry for the Environment and Energy pursuant to
Directive 98/34/EC of the European Parliament and of the Council of 22 June 1998 laying down a
procedure for the provision of information in the field of technical standards and regulation (OJ L 204,
21.7.1998, p. 37), as amended by Directive 98/48/EC (OJ L 217, 5.8.1998, p. 18).

2

January

From 1
31 December 2001
without
more stringent standards

application

to

of

January

to
From 1
31 December 2001 with
application
more
stringent standards

of

Leaded
(lead
petrol
content above 0.013 g/l),
at 15°C

Unleaded
petrol
(maximum lead content
0.013 g/l), at 15°C

Leaded petrol distributed
by petrol
stations with
fume return system, at
15°C4

petrol
Unleaded
distributed
petrol
stations with fume return
system, at 15°C

by

DKK 4.582 /l

DKK 4.552 /l

DKK 3.937 /l

DKK 3.907 /l

DKK 4.552 /l

DKK 4.522 /l

DKK 3.907 /l

DKK 3.877 /l

The Danish authorities have specified that
92/82/EEC will be adhered to.5

the minimum rates laid down in Directive

The date of the law's entry into force will be set when the Commission and the Council have
approved it. The differential excise rate will be applicable until 31 December 2004, on which
date the more stringent standards governing equipment and operation of petrol stations issued
by the Ministry for the Environment and Energy will come into force.

The total loss of revenue to the Danish state will be roughly DKK 190 million.

The Danish authorities believe that the planned scheme will not distort competition with
foreign petrol stations, the great bulk of petrol consumed in Denmark being purchased on
Danish territory, i.e. in the country of consumption. The tax incentive scheme is general,
optional and accessible to all Danish petrol stations. The Danish authorities have notified the
Commission of the scheme under the rules for state aids.

2.

EVALUATION BY THE COMMISSION

Under 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 further exemptions or
reductions for specific policy considerations.

4

5

See Council Decision 95/585/EC of 22.12.1995.
OJ L 316, 31.10.1992, p. 19, as last amended by Directive 94/74/EC (OJ L 365, 31.12.1994, p. 46).

3

By letter dated 16 February 2001, Denmark, in accordance with Article 8(4) of Council
Directive 92/81/EEC, requested authorisation to introduce a differentiated rate of excise duty
on petrol distributed by petrol stations meeting more stringent standards of equipment and
operation.

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

The excise duty on petrol distributed by petrol stations already satisfying the standards that
will become compulsory on 1 January 2005, would be reduced by DKK 0.03 (
0.004) per
litre6. The information provided by the Danish authorities shows that
the minimum
Community rates laid down in Articles 3 and 4 of Directive 92/82/EEC are adhered to.

€

For 1000 l of fuel

Leaded petrol

Unleaded petrol

Community minimum

€

337

€

287

Lowest duty in 2001

DKK 4522 -

€

606

DKK 3877 -

€

520

The Commission also examined the measure notified by the Danish authorities in the light of
Articles 87 and 88 of the EC Treaty. The Commission concluded that the aids in question
were compatible with the common market7.

The Commission considers that the desire to reduce pollutant MTBE emissions is consistent
with the environmental protection policy,
in particular the protection of groundwater.
However, the Commission's proposed Decision does not prejudice any future conclusions of
the evaluation of MTBE-related risks carried out under Council Regulation (EEC) No 793/93
of 23 March 1993 on the evaluation and control of the risks of existing substances.8

3.

DECISION

In accordance with Article 8(4) of Council Directive 92/81/EEC, the Commission proposes
that the Council authorise Denmark to apply a reduced rate of excise duty of a maximum of
DKK 0.03 per litre petrol distributed by petrol stations meeting more stringent standards of
equipment and operation until 31 December 2004.

These reduced rates of excise duty must comply with the requirements of Council Directive
92/82/EEC of 19 October 1992 on the approximation of the rates of excise duties on mineral
oils, and in particular the minimum rates laid down in Articles 3 and 4 thereof.

6

7

8

Using the indicative average exchange rate in February 2001.
XXX give references to dossier and date of decision when decision is formally taken XXX.
OJ L 84, 5.4.1993, p. 1.

4

Proposal for a

COUNCIL DECISION

authorising Denmark, in accordance with Article 8(4) of Directive 92/81/EEC, to apply a
differentiated rate of excise duty to petrol distributed by petrol stations meeting certain
standards of equipment and operation

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, and in particular Article 8(4) thereof9,

Having regard to the proposal from the Commission,

Whereas:

(1)

(2)

(3)

(4)

(5)

(6)

Under 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.

Denmark has requested authorisation to apply until 31 December 2004 a reduced rate
of excise duty of a maximum of DKK 0.03 per litre on petrol distributed by petrol
stations meeting the more stringent standards of equipment and operation.

The purpose of these standards, which will be compulsory from 1 January 2005, is to
speed up investment aimed at protecting soil and groundwater from leaks of methyl
tertiary butyl ether (MTBE) from underground tanks.

The other Member States have been informed of this request by the Danish authorities.

The proposed reduction in excise duty is a tax incentive consistent with the objective.

The Commission has adopted a decision that the state aids set up by the measure in
question are compatible10.

(7) While leakage of MTBE into groundwater does not represent a real health problem as
this substance is only harmful when highly concentrated, even minute quantities of
MTBE in groundwater impart an unpleasant taste and smell to water, and water
containing negligible quantities of MTBE would be undrinkable. The measure is
sought on environmental grounds - the benefits in terms of protection of groundwater
are known.

9

10

OJ L 316, 31.10.1992, p. 12, as last amended by Directive 94/74/EC (OJ L 365, 31.12.1994, p. 46).
XXX give references to dossier and date of decision when decision is formally taken XXX.

5

(8)

(9)

(10)

This Decision does not prejudice any future conclusions of the evaluation of MTBE-
related risks carried out under Council Regulation (EEC) No 793/93 of 23 March 1993
on the evaluation and control of the risks of existing substances11.

The measure envisaged by Denmark complies with the minimum rates of excise duty
referred to in Articles 3 and 4 of Directive 92/82/EEC12.

The Council will review this decision on the basis of a proposal from the Commission
no later than 31 December 2004, 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, Denmark is hereby
authorised to apply a reduced rate of excise duty of a maximum of DKK 0.03 per litre on
petrol distributed by petrol stations meeting more stringent standards of equipment and
operation designed to reduce leakage of methyl tertiary butyl ether into groundwater.

Article 2

These reduced rates of excise duty must comply with the requirements of Council Directive
92/82/EEC of 19 October 1992 on the approximation of the rates of excise duties on mineral
oils, and in particular the minimum rates laid down in Articles 3 and 4 thereof.

Subject to a prior review by the Council, on the basis of a proposal from the Commission, this
authorisation shall expire on 31 December 2004.

Article 3

Article 4

This Decision is addressed to Denmark.

Done at Brussels,

For the Council
The President

11

12

OJ L 84, 5.4.1993, p. 1.
OJ L 316, 31.10.1992, p. 19, as last amended by Directive 94/74/EC (OJ L 365, 31.12.1994, p. 46).

6