Proposal for a COUNCIL DIRECTIVE amending Directive 2003/96/EC restructuring the Community framework for the taxation of energy products and electricity
Date: 2011-04-13
Institutions: European Commission
Subjects: electrical energy, energy-generating product, tax system

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EUROPEAN COMMISSION 

Brussels, 13.4.2011 
COM(2011) 169 final 

2011/0092 (CNS) 

Proposal for a 

COUNCIL DIRECTIVE 

amending Directive 2003/96/EC restructuring the Community framework for the 
taxation of energy products and electricity 

{SEC(2011) 409 final} 
{SEC(2011) 410 final} 

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EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

•  Grounds for and objectives of the proposal 

Traditionally, energy taxes have been levied for several reasons, in particular to raise revenue, 
but also to influence consumer behaviour towards a more efficient use of energy and cleaner 
energy sources. In order to ensure the proper functioning of the Internal Market several key 
aspects  of  energy  taxation  are  already  governed  at  EU  level  under  Council  Directive 
2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of 
energy products and electricity1 (hereafter also referred to as "the Energy Taxation Directive" 
or "the ETD"). 

Since the time the ETD was adopted, the underlying policy framework changed radically. In 
the areas of energy and climate change, concrete and ambitious policy objectives have been 
defined  for  the  period  until  2020.  The  climate  and  energy  policy  package  adopted  in  2009 
provides a policy framework to implement these objectives in a cost-effective and fair way. 
Taxes on energy represent one instrument at the disposal of Member States for the purposes 
of  reaching  the  objectives  set.  For  example  the  impact  assessment  underpinning  the 
Commission  proposal  for  the  climate  and  energy  policy  package2  showed  that  the  overall 
welfare  and  cost-efficiency  can  be  increased  if  revenue  generating  instruments,  such  as 
taxation,  are  used  to  reduce  emissions  in  the  sectors  not  subject  to  the  Community  scheme 
under  Directive  2003/87/EC3  (hereafter  also  called  the  EU  ETS  [EU  Emission  Trading 
Scheme]). 

For  a  proper  framework  to  be  available  for  the  use  of  energy  taxation  in  this  new 
environment, the March 2008 European Council requested to bring the Directive more closely 
into line with the EU's energy and climate change objectives4. The present proposal, therefore, 
aims at the following objectives: 

(1) 

(2) 

(3) 

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Ensure  consistent  treatment  of  energy  sources  within  the  ETD  in  order  to  provide  a 
genuine  level  playing  field  between  energy  consumers  independent  from  the  energy 
source used. 

Provide an adapted framework for the taxation of renewable energies. 

Provide  a  framework  for  the  use  of  CO2  taxation  to  complement  the  carbon  price 
signal established by the ETS while avoiding overlaps between the two instruments. 

OJ L 283, 31.10.2003, p. 51. 
SEC(2008) 85 vol. II, pp.51 et seq.  
Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a 
scheme for greenhouse gas emission allowance trading within the Community and amending Council 
Directive 96/61/EC (OJ L 275, 25.10.2003, p. 32). 
European Council of 13-14 March 2008, Presidency conclusions (7652/1/08 rev.1, 20/05/2008). 

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•  General context 

This proposal intends to bring about the necessary adaptations of some of the basic provisions 
of the Energy Taxation Directive, ensuring a higher degree of consistency in the way energy 
taxes contribute to the objectives of less and cleaner energy consumption in the EU. The ETD 
in its present version raises notably the following problems: 

Firstly,  it  does  not  ensure  the  desirable  degree  of  consistency  in  the  treatment  of  the  basic 
fossil  energy  sources  and  electricity.  Taking  into  account  the  energy  content  of  the  various 
products, minimum levels of taxation vary substantially according to the product concerned. 
Hence, some products are favoured over others, the most favourable treatment being reserved 
to  coal.  This  also  implies  that  certain  businesses  can  be  better  off  compared  to  others, 
depending on the energy source they use.  

Secondly, the price signal the Energy Taxation Directive introduces via its minimum levels of 
taxation  is  not  properly  related  to  the  need  to  combat  climate  change.  The  terms  of  the 
Directive  are  not  well  adapted  to  ensure  the  proper  functioning  of  the  internal  market  in 
circumstances  where  Member  States  resort  to  CO2-related  taxation  in  order  to  reduce  CO2 
emissions. 

Thirdly, in spite of the growing market relevance of renewable fuels, their tax treatment under 
the  ETD  still  relies  on  rules  developed  at  a  time  when  these  fuels  were  niche  alternatives 
without major market significance. Standard taxation of renewable fuels is based on volume 
and on the rate applicable to the fossil product replaced by the renewable product concerned. 
The lower energy content of renewable fuels is not taken into account, and thus the same tax 
rate leads to a comparatively higher burden compared to the competing fossil fuels. Member 
States can only correct this effect and, where necessary, compensate differences in production 
costs by applying favourable tax treatment according to Article 16 of the ETD. The standard 
tax  treatment  of  renewable  fuels  is  therefore  not  adapted  to  their  characteristics  and  any 
adaptation  can  only  take  the  form  of  optional  de-taxation  subject  to  a  strict  State  aid 
assessment. 

Fourthly,  taxes  on  energy  are  levied  under  the  Energy  Taxation  Directive  in  the  same  way 
whether or not, in a particular case, the limitation of CO2 emissions is ensured through the EU 
ETS. As a result, mechanisms of Union law intended to limit such emissions may overlap in 
certain  cases  and  may  be  completely  missing  in  others.  Both  situations  are  undesirable, 
because of the ensuing cost-efficiency losses and/or distortions in the internal market.  

•  Existing provisions in the area of the proposal 

Council Directive 2003/96/EC defines the taxable energy products, the uses that make them 
subject  to  tax  and  the  minimum  levels  of  taxation  applicable  to  each  product  depending  on 
whether it is used as propellant, for certain industrial and commercial purposes or for heating. 

•  Consistency with other policies and objectives of the Union 

This proposal is in line with the main policies and objectives of the Union. Its aim is to ensure 
that, with regard to the taxation of energy, the internal market continues to function properly 
in  a  context  where  Member  States  will  need  to  contribute  to  the  fulfilment  of  the  EU 
objectives in the field of energy and climate change. Also, for the sake of coherence with the 

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Climate and Energy Package adopted in 2009, this proposal shall take effect from 1 January 
2013. 

2. 

RESULTS  OF  CONSULTATIONS  WITH  THE  INTERESTED  PARTIES  AND  IMPACT 
ASSESSMENT 

•  Consultation of interested parties 

The present proposal has been formulated against the background of a wide range of external 
contributions.  These  contributions  took  the  form  of  feedback  received  in  the  course  of  a 
public consultation opened through the green paper on market based instruments5 and direct 
consultations  with  Member  States  and  other  stakeholders.  External  studies  have  also  been 
commissioned by DG TAXUD for the purposes of the impact assessment.  

The  green  paper  on  market-based  instruments,  amongst  other  things,  set  out  the  areas  in 
which  changes  to  the  ETD  could  be  envisaged  and  outlined  potential  ways  forward.  In 
particular, it raised the question whether the ETD should not be restructured with a view to 
better reflect the fact that energy taxation serves more than one objective (revenue generation 
and energy savings on the one hand, environmental considerations on the other). 

•  Impact assessment 

In order to examine how the different policy objectives could best be addressed, a number of 
approaches were examined and compared to the baseline scenario (business as usual). In this 
scenario, no further changes would be made to the existing energy taxation framework, fully 
applicable  to  all  Member  States  once  the  remaining  transitional  periods  have  expired.  By 
definition,  the  ETD  would  not  be  brought  more  closely  in  line  with  the  EU’s  energy  and 
climate  change  objectives.  The  results  of  two  courses  of  action,  namely  ETD  revision  at  a 
later stage and tax co-ordination instead of such revision, would be comparable to the baseline 
scenario, inter alia because they would not lead to timely results. The following approaches 
were examined: 

–  Revision of the existing tax treatment of the various energy sources according to a single 
criterion: the tax treatment of the various products could be aligned on the basis of their 
respective  energy  content  with  a  view  to  render  energy  taxes  more  neutral  and  to  limit 
negative  effects  on  the  operation  of  other  instruments  and  policies  (policy  option  1); 
alternatively,  the  alignment  could  be  based  on  the  respective  CO2  content  of  the  various 
products in order to make energy taxes systematically reflect the CO2 performance of the 
products concerned with a view to support the achievement of EU objectives in the field of 
climate change (policy option 2). 

–  Revision  of  the  structure  of  the  Directive  taking  into  account  the  different  objectives 
behind  energy  taxes  (revenue  generation  and  energy  savings  on  the  one  hand, 
environmental  considerations  on  the  other):  This  approach  would  lead  to  the  creation  of 
specific  CO2-related  taxes  at  national  level  and  would  require  that  other  taxes  levied  on 
energy be neutral, i.e. that they do not differentiate between energy sources, in order not to 

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Green  paper  on  market  based  instruments  for  environment  and  related  policy  purposes  -  COM(2007) 
140, 28.3.2007. 

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affect  the  proper  operation  of  CO2-related  taxes.  This  approach  translated  into  policy 
option 3 and two transport specific policy options 5 and 6.  

–  Introduction of an additional uniform CO2-related tax: such a tax would be imposed on 
top of the taxes already levied under the ETD in a way that complements the EU emission 
trading scheme (option 4).  

The effects of  the  different  approaches were tested in the impact assessment.  The  results of 
the  assessment  are  summarised  in  the  impact  assessment  report.  Having  regard  to  how  the 
various  policy  options  contribute  to  the  objectives  set  out  above,  as  well  as  to  the  need  to 
respect  Member  States'  budgetary  interests  as  well  as  considerations  of  equity,  a  preferred 
policy set based on policy option 3 and transport policy option 6 was identified in the impact 
assessment. The present proposal is based on this preferred policy set. 

The  impact  assessment  showed  that  the  objectives  set  out  above  can  be  achieved  without 
economic costs and that the revision can potentially bring economic benefits, in particular if 
additional revenue from general energy consumption taxation or CO2-related taxation would 
be  used  to  reduce  the  employers'  social  security  contributions.  The  impact  assessment  also 
showed that the ETD revision would not create an undue burden on businesses and would not 
lead to competitiveness losses at sectoral level. Moreover, joint revision of taxation of motor 
and  heating  fuels  reduces  the  risk  of  negative  distributional  impacts,  a  risk  often  linked  to 
policies  that  tend  to  increase  the  costs  of  heating.  In  this  context,  the  impact  assessment 
confirmed  the key  advantage  of taxation which, in addition to its influence on behaviour of 
consumers,  generates  revenue  that  can  be  used  to  finance  accompanying  measures  and 
thereby  indicated  how  distributional  concerns  can  be  addressed.  However,  it  also  emerges 
from  the  impact  assessment  that  the  distributional  impacts  on  households  differ  from  one 
Member State to another, more than any other single impact and thus the continuation of the 
possibility to exempt households from taxation at national level seems justified. 

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

•  Summary of the proposed action 

The Commission proposes with effect from 2013: 

1.  To  introduce  an  explicit  distinction  between  energy  taxation  specifically  linked  to  CO2-
emissions  attributable  to  the  consumption  of  the  products  concerned  (CO2-related  taxation) 
and energy taxation based on the energy content of the products (general energy consumption 
taxation). 

CO2-related taxation would be based on the reference CO2 emission factors set out in point 11 
of  Annex  1  to  Commission  Decision  2007/589/EC6.  General  energy  consumption  taxation 
would be based on the net calorific value of the energy products and electricity as set out in 

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Commission  Decision  2007/589/EC  of  18  July  2007  establishing  guidelines  for  the  monitoring  and 
reporting  of  greenhouse  gas  emissions  pursuant  to  Directive  2003/87/EC  of  the  European  Parliament 
and of the Council (OJ L 229, 31.8.2007, p. 1). 

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Annex  II  to  Directive  2006/32/EC7  and,  in  the  case  of  biomass  or  products  made  of 
biomass,in Annex III of Directive 2009/28/EC8. 

However, the specific CO2 emission factors and net calorific values for biomass or products 
made  of  biomass  for  which  Article  17  of  Directive  2009/28/EC  lays  down  sustainability 
criteria (biofuels and bioliquids as defined in Article 2(h) and (i) of this Directive), only apply 
as  far  as  these  criteria  are  respected  (see  Article  1,  point  (1)  of  the  proposal,  concerning 
Article  1  of  the  ETD).  As  a  consequence,  biofuels  or  bioliquids  not  complying  with  these 
criteria would be taxed on the basis of the CO2 emission factor and of the net calorific value 
of the equivalent motor or heating fuel. 

Economic efficiency pleads in favour of introducing CO2-related taxes as a complement to the 
EU emission trading scheme. However, Member States should also be able to continue to tax 
consumption of motor fuels and heating fuels for other purposes, i.e. revenue generation, not 
related  to  reductions  of  greenhouse  gases.  To  allow  for  such  diversified  objectives  and  to 
ensure to the extent possible that all of them can be pursued in a consistent manner, taxation 
other than CO2-related taxation should be linked to the energy content of the energy sources. 

2.  To  extend  the  scope  of  the  Energy  Taxation  Directive  –  when  it  comes  to  CO2-related 
taxation  –  to  energy  products  in  principle  falling  within  the  scope  of  Directive  2003/87/EC 
and  at  the  same  time  to  provide  for  an  obligatory  exemption  from  CO2-related  taxation  in 
cases subject to the Community scheme under that Directive. 

The  set  of  amendments  will  ensure  that  the  ETD  complements  Directive  2003/87/EC 
seamlessly, as regards the need for a price signal attached to CO2 emissions (see in particular 
Article 1, points (1) and (4)(a) of the proposal, concerning Articles 1 and 4(2) of the ETD), 
while  avoiding  overlaps  between  the  EU  emission  trading  scheme,  on  the  one  hand,  and 
taxation  serving  the  same  purpose,  on  the  other  (see  Article  1,  point  (11)(a)(ii)  of  the 
proposal, concerning Article 14 of the ETD). 

Moreover,  there  is  a  need  to  limit  the  potential  cost  impact  of  CO2-related  taxation  on  the 
sectors  or  sub-sectors  deemed  to  be  exposed  to  a  significant  risk  of  carbon  leakage  in  the 
sense of Article 10a(13) of Directive 2003/87/EC. Accordingly, it is necessary to provide for 
transitional  measures  so  as  to  avoid  an  undue  cost  impact  while  maintaining  environmental 
effectiveness  of  CO2-related  taxation.  In  this  regard,  inspiration  should  be  drawn  from  the 
regime of free allocation of greenhouse gas emission allowances under Directive 2003/87/EC 
(see  proposed  new  Article  14a  of  the  ETD  [Article  1,  point  (12)  of  the  proposal]).  Other 
sectors  or  sub-sectors  of  the  economy  may  also  be  subject  to  carbon  leakage.  As  far  as  the 
agricultural sector is concerned, the Commission is currently preparing a report examining the 
risk of carbon leakage in that sector. As soon as this report is available, the Commission will 
take appropriate follow-up action to ensure that all sectors susceptible to carbon leakage are 
subject to the same treatment under the future ETD, either by ensuring the conclusions of the 
report  are  taken  into  consideration  during  the  ongoing  discussions  in  the  Council  on  the 
proposal  revising  the  ETD  or,  should  the  report  not  be  available  before  the  adoption  of  the 
proposal, by way of a separate legislative initiative. 

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Directive 2006/32/EC of the European Parliament and of the Council of 5 April 2006 on energy end-use 
efficiency  and  energy  services  and  repealing  Council  Directive  93/76/EEC  (OJ  L  114,  27.4.2006,  p. 
64). 
Directive  2009/28/EC  of  the  European  Parliament  and  of  the  Council  on  the  promotion  of  the  use  of 
energy from renewable sources (OJ L 140, 5.6.2009, p. 16). 

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For purposes other than CO2-related taxation, the scope of the ETD remains unchanged. 

3.  To  revise  the  minimum  levels  of  taxation,  ensuring  in  particular  that  they  reflect  CO2 
emissions  and  net  calorific  value  in  a  consistent  manner  for  the  various  energy  sources, 
providing for transitional periods where necessary (see Article 1, points (6), (7), (8) and (23) 
of  the  proposal,  concerning  Articles  7,  8  and  9  of  the  ETD,  as  well  as  Annex  I  to  the 
Directive). 

To ensure consistent treatment, equally, of taxable products for which no specific minimum 
levels of taxation are established, the Commission also proposes to amend Article 2(3) of the 
Energy Taxation Directive (see Article 1, point (2)(b) of the proposal, concerning Article 2(3) 
and (4) of the Directive). In case Decision 2007/589/EC, Directive 2006/32/EC or Directive 
2009/28/EC, does not contain a reference value applicable to the energy product concerned, 
Member  States  shall  refer  to  relevant  available  information  on  its  net  calorific  value  and/or 
CO2 emission factors. Moreover, the real value of the minimum levels of taxation should be 
preserved.  The  minimum  rates  of  general  energy  consumption  taxation  should  at  regular 
intervals  be  automatically  aligned  to  take  into  account  the  evolution  of  their  real  value  in 
order  to  preserve  the  current  level  of  rate  harmonisation;  to  reduce  the  volatility  stemming 
from energy and food prices, this alignment should be made on the basis of the changes in the 
EU-wide  harmonised  index  of  consumer  prices  excluding  energy  and  unprocessed  food  as 
published by Eurostat (see Article 1, point (4)(b) of the proposal, concerning a new paragraph 
4 to be added to Article 4 of the ETD). Since CO2-related taxation complements the operation 
of  Directive  2003/87/EC,  the  market  price  of  the  emission  allowances  should  be  closely 
monitored  in  the  five  yearly  review  of  the  Directive  set  out  in  Article  1,  point  (21)  of  the 
proposal. 

4.  To  require  that,  when  Member  States  set  national  levels  of  taxation,  they  replicate  the 
relationship between the minimum levels of taxation fixed in the ETD for the various energy 
sources (see Article 1, point (4)(b) of the proposal, concerning a new paragraph 3 to be added 
to Article 4 of the ETD). 

This requirement is meant to ensure that consistent treatment of energy sources extends to the 
levels of taxation fixed nationally (above the minimum levels set in the ETD). For motor fuels 
it would seem appropriate to provide for a transitional period until 2023, having regard to the 
important differences in the rates applied to different motor fuels in several Member States. 

5. To abolish the possibility for Member States to differentiate between the tax treatment of 
commercial and non-commercial use of gas oil as motor fuel (see Article 1, point (6) of the 
proposal, replacing Article 7 of the ETD). 

The  possibility  for  Member  States  to  apply  a  lower  level  of  taxation  to  commercial  than  to 
non-commercial use of gas oil as motor fuel would appear to be no longer compatible with the 
requirement to improve energy efficiency and the need to address the growing environmental 
impact of transport. The Commission therefore proposes to abolish this possibility. 

In light of this approach, the 2007 proposal regarding Article 7 of the ETD9, becomes without 
object and is thus withdrawn.  

6. To simplify the structure of the minimum tax levels where possible. 

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COM(2007) 52, 13.3.2007. 

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The  existing  differentiation  between  business  and  non-business  use  of  the  energy  products 
used for heating and of electricity is abolished (see Table C in the Annex to the proposal). The 
minimum levels of taxation for some industrial and commercial uses of motor fuels (see Table 
B in the Annex to the proposal) are aligned with the minimum levels of taxation applicable to 
the  same  products,  in  case  they  are  used  as  heating  fuels  (see  Table  C  in  the  Annex  to  the 
proposal).  Finally,  given  that  leaded  petrol  has  become  a  fringe  product,  the  Commission 
proposes not to differentiate any longer between leaded and unleaded petrol and to set a single 
minimum level of taxation for both products (see Table A in the Annex to the proposal). 

7. To limit the exemption of Article 14(1)(a) for energy products used to produce electricity to 
general energy consumption taxation (see Article 1, point (11)(b) of the proposal) and to add 
a  new  point  in  Article  14  to  exempt  from  taxation,  for  a  limited  time  period  of  eight  years, 
electricity  produced  on  shore  and  directly  provided  to  vessels  while  at  berth  in  a  port  (see 
Article 1, point (11)(a)(ii) of the proposal). 

In its current form, Article 14(1)(c) obliges Member States to exempt from taxation electricity 
produced  on  board  a  craft,  including  while  at  berth  in  a  port  while  Article  15(1)(f)  allows 
Member States to extend this tax exemption to inland waterways. In some harbours a cleaner 
alternative  exists  with  the  use  of  shore-side  electricity  (i.e.  connection  to  the  on-shore 
electricity grid). This technology is still at an early stage of development. In order to set a first 
incentive  for  its  development  and  application,  the  Commission  proposes  to  exempt  from 
energy taxation shore-side electricity provided to ships while at berth in port. This exemption 
should  apply  during  a  period  of  eight  years  (starting  from  the  time  limit  for  transposition 
contained in the present proposal). This period will also provide the opportunity to elaborate, 
for the subsequent period, a more comprehensive framework allowing shore-side electricity to 
optimally develop. That framework could also comprise regulatory measures. Works on this 
framework  could  be  initiated  as  soon  as  common  technical  standards  for  on-shore  power 
the  International  Organization  for 
supply  systems  will  have  been  adopted  within 
Standardization.  

In order to establish a comprehensive and consistent CO2 price signal outside the EU emission 
trading  scheme,  a  new  paragraph  3  should  be  added  to  Article 14 to limit the exemption of 
Article  14(1)(a)  for  energy  products  used  to  produce  electricity  to  general  energy 
consumption  taxation.  However,  this  should  not  apply  to  energy  products  used  to  produce 
electricity on board a craft, as it is very difficult in practice to distinguish between the use of 
energy products for this purpose and energy products used for navigation. 

8. To provide for a tax credit concerning CO2-related taxation for installations belonging to 
sectors or sub-sectors deemed to be exposed to a significant risk of carbon leakage (cf. new 
Article 14a of the ETD, formulated in Article 1, point (12) of the proposal). 

There is a need to limit the potential cost impact of CO2-related taxation on the sectors or sub-
sectors deemed to be exposed to a significant risk of  carbon leakage in the  sense of Article 
10a(13) of Directive 2003/87/ECAccordingly, transitional measures that avoid an undue cost 
impact while maintaining environmental effectiveness of CO2-related taxation are needed, in 
a similar way as achieved with free allocation of greenhouse gas emission allowances under 
Directive  2003/87/EC.  In  order  to  maintain  the  full  incentive  to  reduce  emissions,  this  tax 
credit  should  be  based  on  the  historic  energy  consumption  of  an  installation  concerned  in  a 
specified reference period (either from 1 January 2005 to 31 December 2008 or, alternatively, 
from 1 January 2009 to 31 December 2010). The amount of the tax credit should moreover 
reflect  the  CO2  tax  that  would  have  been  incurred  by  the  installation  on  the  basis  of  the 

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historic  consumption  figures  under  the  assumption  that  a  CO2-efficient  reference  fuel  had 
been used. For the purpose of this "fuel benchmark", the emission factor of natural gas shall 
be used to mirror the approach adopted under Commission Decision xxx/xxx on determining 
transitional  Union-wide  rules  for  harmonised  free  allocation  pursuant  to  Article  10a  of 
Directive 2003/87/EC10.  

9. To maintain the flexibility left by the Energy Taxation Directive, in particular the existing 
rule  that  Member  States  are  free  to  apply  more  than  only  one  tax  on  energy  consumption. 
Nevertheless,  the  Commission  proposes  to  revise  some  of  the  existing  options,  namely  the 
ones  that  contradict  the  objectives  that  the  present  proposal  intends  to  achieve,  and, 
generally,  to  ensure  consistency  with  the  new  general  rules  proposed.  More  precisely,  the 
Commission proposes the following: 

–  To  limit  the  scope  of  Article  2(4)  [new  Article  3],  concerning  instances  to  which  the 
Directive  does  not  apply,  to  general  energy  consumption  taxation,  in  order  to  establish  a 
comprehensive  and  consistent  CO2  price  signal  outside  the  EU  emission  trading  scheme. 
Moreover, Article 2(4) excludes so far from the scope of the Directive electricity when it 
accounts for more than 50% of the cost of a product [cf. the fourth indent of point (b) of 
the provision]. Yet, this rule risks distorting competition in the internal market and should 
be removed (see Article 1, point (3) of the proposal, new Article 3). 

–  To  abolish  Article  9(2)  which  provides  for  lower  minimum  levels  of  taxation  for  gas  oil 
used  for  heating  purposes  in  three  Member  States.  This  provision  adds  to  the 
inconsistencies in the way various energy consumers are treated on the internal market (see 
Article 1, point (8) of the proposal).  

–  To  limit  as  much  as  possible  the  optional  reductions  and  exemptions  of  Article  15  to 
general energy consumption taxation in order to establish a comprehensive and consistent 
CO2  price  signal  outside  the  EU  emission  trading  scheme  (see  Article  1,  point  (13)(a)  of 
the proposal). This would however not apply to points (f) and (h) to (l) of Article 15(1), for 
the following reasons: 

–  Member  States  should  continue  to  benefit  from  full  flexibility  for  applying 
exemptions or reductions to the benefit of households and charitable organisations 
for social reasons (point (h); cf. also details below); 

–  It  is  proposed  to  phase  out  the  possibility  to  apply  exemptions  or  reductions  to 
natural gas and LPG, since these products are not of renewable origin (point (i); 
cf. also details below); 

–  The  exemptions  or  reductions  for  energy  products  supplied  for  used  as  fuel  for 
navigation  on  inland  waterways  in  point  (f),  are  based  on  international 
conventions at least for some of the waterways concerned; the dredging operations 
in  navigable  waterways  and  ports  in  point  (k)  constitute  complementary 
operations; 

–  The  exemptions  or  reductions  for  aircraft  and  ships  in  point  (j)  mirror  similar 
exemptions applied for VAT purposes and are related to the activities benefiting 

10 

OJ L , , p.. 

EN 

9 

   EN 

                                                 
from an exemption under Article 14(1)(b) and (c) which are based on international 
conventions; 

–  Coal gas referred to in point (l) falling within CN code 2705 is a product mainly 
occurring  in  the  steel  industry  as  a  by-product  of  fuel  use  in  metallurgical 
processes. It resulted from the consultation with Member States that subjecting it 
to  taxation  would  create  a  disproportional  administrative  burden  for  both 
businesses involved and administrations. 

–  To  amend  Article  15(1)(h)  so  as  to  permit  tax  advantages  for  heating  use  by  households 
independently from the energy source used, i.e. to remove the exclusion of certain sources 
such  as  heating  oil.  The  Commission  acknowledges  that  Member  States  might  consider 
necessary tax advantages of the like, but takes the view that all energy sources should be 
put on an equal footing (see Article 1, point (13)(a)(i) of the proposal). 

–  To amend Article 15(3) which allows Member States to apply a level of taxation down to 
zero  to  energy  products  and  electricity  used  in  agricultural,  horticultural  or  piscicultural 
works, and in forestry (see Article 1, point (13)(b) of the proposal). This provision adds to 
the inconsistencies in the way different business sectors are treated on the internal market, 
bearing  in  mind  in  particular  that  agriculture  is  one  of  the  important  sectors  largely  left 
outside the EU Emission Trading Scheme. Hence, as regards general energy consumption 
taxation,  it  is  necessary  to  link  the  application  of  that  option  to  a  counterpart  ensuring 
advances in the field of energy efficiency. As regards CO2 related taxation the treatment of 
the  sectors  concerned  should  be  aligned  to  the  rules  applying  to  industrial  sectors. 
Exemptions  from  CO2  related  taxation  should  therefore  only  apply  in  so  far  as  this  is 
necessary to avoid the risk of carbon leakage. 

–  To amend Article 5 so as to make clear that tax differentiation based on criteria listed in 
this  Article  should  not  extend  to  CO2-related  taxation  (see  Article  1,  point  (5)  of  the 
proposal).  Moreover,  the  possibility  to  apply  a  lower  level  of  taxation  to  motor  fuel 
consumed  by  taxis  is  used,  in  practice,  for  diesel  fuel  only.  In  light,  also,  of  the  new 
framework  proposed,  this  possibility  should  be  removed  entirely  (including  for  general 
energy  consumption  taxation),  since  it  is  no  longer  compatible  with  the  objective  of 
policies  promoting  alternative  fuels,  as  well  as  policies  promoting  alternative  energy 
carriers and the use of cleaner vehicles in urban transport. 

–  To  amend  Article  16  so  as  to  remove  the  option  for  Member  States  to  provide  for  an 
exemption or tax reduction for biofuels by 2023 (see Article 1, point (14) of the proposal). 
In  the  medium  term,  this  provision  will  no  longer  be  necessary,  in  view  of  the  changes 
proposed  to  the  general  rules  of  the  ETD,  which  indeed  take  sufficiently  account  of  the 
specificities of fuels that wholly or partly consist of biomass or products made of biomass 
(see Article 1, point (1) of the proposal). In the case of liquefied petroleum gas (LPG) and 
natural gas used as propellants, advantages in the form of lower minimum levels of general 
energy  consumption  taxation  or  the  possibility  to  exempt  those  energy  products  from 
taxation on the basis of Article 15(1)(i) are no longer justified, in particular in the light of 
the  need  to  increase  the  market  share  of  renewable  energy  sources.  These  advantages 
should  therefore  be  removed  by  2023  as  well  (see  Article  1,  point  (13)(a)(i)  of  the 
proposal).  

EN 

10 

   EN 

10. To align Directive 2003/96/EC to Council Directive 2008/118/EC concerning the general 
arrangements  for  excise  duty  and  repealing  Directive  92/12/EEC11  (see  Article  1,  points 
(11)(a)(i), (17) and (18) of the proposal, concerning Articles 14, 20 and 21 of the ETD). 

11. To update the list of energy products in articles 2(1) and 20(1) of Directive 2003/96/EC, 
so as to include certain biofuels, updating and modernising as such the provisions relating to 
the  application  of  the  control  and  movement  provisions  of  Directive  2008/118/EC.  In 
addition, products under CN code 3811 should be made subject to the control and movement 
provisions of Directive 2008/118/EC taking into account the risk of tax evasion, avoidance or 
abuse they represent (see Article 1, points (2)(a) and (17) of the proposal, concerning Articles 
2 and 20 of the ETD). 

12.  To  make  reference  to  the  version  presently  applicable  of  the  combined  nomenclature  in 
Article 2(5) of Directive 2003/96/EC. Moreover, Article 2(5) of the ETD should be aligned to 
the  new  legal  framework  obtaining  under  the  TFEU,  following  the  entry  into  force  of  the 
Lisbon Treaty (see Article 1, point (2)(b) and (21) of the proposal).  

13.  To  delete  Articles  18a  and  18b,  since  these  transitional  provisions  of  the  ETD  have 
become obsolete (see Article 1, point (16) of the proposal). 

14.  To  grant  Spain  and  France  the  possibility  to  introduce  higher  rates  of  general  energy 
consumption  taxation  in  some  parts  of  their  territory,  recognising  the  long-term  process  of 
decentralisation that is being carried out by them (see Article 1, point (15) of the proposal, 
concerning Article 18 of the ETD). 

In view of its particular administrative structure and in order to facilitate the execution of the 
financial  autonomy  of  its  Autonomous  Communities,  Spain  should  be  authorised  to  apply 
regionally higher levels of general energy consumption taxation. The same applies to France 
given the need to strengthen the financial capacity of the administrative regions in the process 
of decentralisation. However, it needs to be ensured that equal treatment between competing 
energy  sources  is  maintained.  Moreover,  it  must  be  ensured  that  any  differentiation  of  the 
kind does not hinder the proper functioning of the internal market and does not affect intra-
EU circulation of energy products. 

Other  Member  States  wishing  to  introduce  a  similar  system  of  regional  tax  differentiation 
would have to request the Commission to submit a proposal to modify the ETD on the basis 
of Article 113 of the Treaty on the Functioning of the European Union. 

15. In order to ensure free movement whilst at the same time respecting security requirements 
applicable  to  commercial  motor  vehicles  and  special  containers,  the  definition  of  standard 
tanks of such vehicles in Article 24 of Directive 2003/96/EC should be updated so as to reflect 
the fact that fuel tanks are not exclusively fitted to commercial vehicles by their manufacturer 
(see  Article  1,  point  (19)  of  the  proposal).  This  issue  was  brought  to  the  attention  of  the 
Commission  by  federations  of  transport  companies,  pointing  out  that  some  Member  States 
systematically  carried  out  controls  on  the  respect  of  this  definition  and  taxed  motor  fuel  in 
tanks that did not fall within its scope. The issue has also been discussed with Member States 
at a recent meeting of the Committee on Excise Duty, which concluded that a modification of 
the definition in Article 24 was the only possible way to resolve this issue. 

11 

OJ L 9, 14.1.2009, p. 12. 

EN 

11 

   EN 

                                                 
16. To introduce an obligation for the Commission to submit to the Council, every five years 
and  for  the  first  time  by  the  end  2015,  a  report  on  the  application  of  the  Energy  Taxation 
Directive  and,  where  appropriate,  a  modification  proposal  (see  Article  1,  point  (21)  of  the 
proposal). The report by the Commission shall, inter alia, examine the minimum level of CO2-
related  taxation  in  the  light  of  the  evolution  of  the  market  price  in  the  EU  of  the  emission 
allowances,  the  impact  of  innovation  and  technological  developments  (as  regards  energy 
efficiency, the use of electricity in transport, the use of alternative fuels such as biofuels and 
hydrogen,  the  impact  of  Carbon  Capture  and  Storage,  etc.)  and  the  justification  for  the  tax 
exemptions  and  reductions  laid  down  in  this  Directive.  As  regards  the  exemptions  and 
reductions, particular attention should be paid to the exemptions for energy products used in 
air  and  maritime  transport  (Article  14(1)(b)  and  (c)  of  the  ETD)  respectively  taking  into 
account their treatment under the EU ETS and the results of international negotiations within 
the IMO (International Maritime Organisation) on the use of global market-based instrument 
internalising  the  external  cost  of  CO2  emissions,  to  the  exemption  for  shore-side  electricity 
(proposed Article 14(4) of the ETD) and to the impact on households. In any event, the list of 
sectors  or  sub-sectors  deemed  to  be  exposed  to  a  significant  risk  of  carbon  leakage  for  the 
purposes of Article 14a of this Directive shall be the subject of regular review, in particular 
taking into account the availability of emerging evidence (see point 2 above).  

•  Legal basis 

Treaty on the Functioning of the European Union, in particular Article 113 thereof. 

•  Subsidiarity principle 

The  proposal  falls  under  shared  Union  and  Member  State  competence.  Therefore,  the 
subsidiarity  principle  applies.  Article  113  of  the  Treaty  on  the  Functioning  of  the  European 
Union  provides  that  the  Council  shall  adopt  provisions  for  the  harmonisation  of  legislation 
concerning  excise  duties  to  the  extent  that  such  harmonisation  is  necessary  to  ensure  the 
establishment and the functioning of the internal market. 

The ETD revision and its timing need to be seen in the broader context of the EU energy and 
climate change agenda. The EU is currently setting the framework of legislation which should 
enable the ambitious 2020 targets to be reached. The objective to bring the ETD more closely 
in line with the objectives and goals can only be implemented by means of an act adopted by 
the Union, amending the ETD. 

•  Proportionality principle 

The proposal complies with the proportionality principle for the following reasons. 

The objectives of the current review are best achieved by amending the current Directive to 
the effect explained above. The proposal is mainly concerned with some essential components 
of  the  Directive:  the  structure  of  taxation  and  the  relationship  between  the  respective  tax 
treatment of the various energy sources. 

The proposal is in all respects limited to what is necessary in order to achieve the objectives 
pursued. 

•  Choice of instruments 

EN 

12 

   EN 

Proposed  instruments:  Directive.  In  this  area  already  covered  by  an  existing  Directive, 
Member  State  should  continue  to  retain  an  important  margin  of  flexibility,  as  explained 
above.  Other  means  than  a  Directive  amending  Directive  2003/96/CE  would  thus  be 
inadequate. 

4. 

BUDGETARY IMPLICATIONS 

The proposal has no implications for the budget of the Union. 

EN 

13 

   EN 

2011/0092 (CNS) 

Proposal for a 

COUNCIL DIRECTIVE 

amending Directive 2003/96/EC restructuring the Community framework for the 
taxation of energy products and electricity 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 113 thereof, 

Having regard to the proposal from the European Commission12, 

After transmission of the draft legislative act to the national Parliaments, 

Having regard to the opinion of the European Parliament13, 

Having regard to the opinion of the European Economic and Social Committee14, 

Acting in accordance with a special legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

Council Directive 2003/96/EC15 was adopted in order to ensure the proper functioning 
of  the  internal  market  as  regards  the  taxation  of  energy  products  and  electricity.  In 
accordance with Article 6 of the Treaty, environmental protection requirements have 
been integrated into the terms of that Directive, in the light, in particular, of the Kyoto 
protocol. 

It  is  necessary  to  ensure  that  the  internal  market  continues  to  function  properly  in  a 
context of new requirements relating to the limitation of climate change, to the use of 
renewable  energy  sources  and  to  energy  savings,  as  endorsed  by  the  Presidency 
Conclusions  of  the  European  Council  of  8-9  March  2007  and  of  11-12  December 
2008.  

Taxation related to CO2 emissions can be a cost-effective means for Member States to 
achieve  the  reductions  of  greenhouse  gasses  necessary  according  to  Decision 
406/2009/EC  of  the  European  Parliament  and  the  Council  of  23  April  2009  on  the 
effort of Member States to reduce their greenhouse gas emissions to meet the Union’s 

12 
13 
14 
15 

OJ C , , p. . 
OJ C , , p. . 
OJ C , , p. . 
OJ L 283, 31.10.2003, p. 51. 

EN 

14 

   EN 

                                                 
greenhouse gas emission reduction commitments up to 202016 as regards sources not 
covered by the Union scheme under Directive 2003/87/EC of the European Parliament 
and  of  the  Council  of  13  October  2003  establishing  a  scheme  for  greenhouse  gas 
emission  allowance  trading  within  the  Community  and  amending  Council  Directive 
96/61/EC17.  In  view  of  the  potential  role  of  CO2-related  taxation,  the  proper 
functioning of the internal market requires common rules on that taxation.  

(4)  Member States should, however, be able, as hitherto, to use energy taxation on heating 
fuels,  motor  fuels  and  electricity  for  a  variety  of  purposes  not  necessarily  nor 
specifically or exclusively related to the reduction of greenhouse gases. 

(5) 

(6) 

Therefore, provision should be made for energy taxation to consist of two components, 
CO2-related  taxation  and  general  energy  consumption  taxation.  In  order  for  energy 
taxation  to  adapt  to  the  operation  of  the  Union  scheme  under  Directive  2003/87/EC 
Member  States  should  be  required  to  explicitly  distinguish  between  those  two 
components.  This  would  also  allow  distinct  treatment  of  fuels  that  are  biomass  or 
made from biomass. 

Each  of  those  components  should  be  calculated  on  the  basis  of  objective  criteria, 
allowing  for  equal  treatment  of  different  energy  sources.  For  the  purposes  of  CO2-
related taxation, reference should be made to CO2-emissions caused by the use of each 
energy  product  concerned,  using  the  reference  CO2  emission  factors  set  out  in 
Commission  Decision  2007/589/EC  of  18  July  2007  establishing  guidelines  for  the 
monitoring  and  reporting  of  greenhouse  gas  emissions  pursuant  to  Directive 
2003/87/EC  of  the  European  Parliament  and  of  the  Council18.  For  the  purposes  of 
general energy consumption taxation, reference should be made to the energy content 
of the various energy products and of electricity as referred to in Directive 2006/32/EC 
of  the  European  Parliament  and  of  the  Council  of  5  April  2006  on  energy  end-use 
efficiency  and  energy  services  and  repealing  Council  Directive  93/76/EEC19.  In  this 
context,  account  should  be  taken  of  the  environmental  advantages  of  biomass  or 
products  made  of  biomass.  These  products  should  be  taxed  on  the  basis  of  the  CO2 
emission factors specified in Decision 2007/589/EC for biomass or products made of 
biomass and of their energy content as specified in Annex III to Directive 2009/28/EC. 
Biofuels and bioliquids defined in Article 2(h) and (i) of Directive 2009/28/EC of the 
European Parliament and of the Council of 23 April 2009 on the promotion of the use 
of energy from renewable sources20 are by far the most important category concerned. 
Since  the  environmental  advantages  of  these  products  vary,  depending  on  whether 
they comply with the sustainability criteria laid down in Article 17 of that Directive, 
the specific reference values for biomass and  products  made of  biomass  should only 
apply where these criteria are met. 

(7) 

CO2-related taxation should be adapted to the operation of Directive 2003/87/EC so as 
to complement it effectively. That taxation should apply to all uses, including those for 
purposes other than heating, of energy products causing CO2 emissions in installations 
within  the  meaning  of  that  Directive,  provided  that  the  installation  concerned  is  not 

16 
17 
18 
19 
20 

OJ L 140, 5.6.2009, p. 136. 
OJ L 275, 25.10.2003, p. 32. 
OJ L 229, 31.8.2007, p. 1. 
OJ L 114, 27.4.2006, p. 64. 
OJ L 140, 5.6.2009, p. 16. 

EN 

15 

   EN 

                                                 
subject  to  the  emission  trading  scheme  under  that  Directive.  However,  since  the 
cumulative  application  of  both  instruments  would  not  allow  emission  reductions 
beyond those attained, overall, through the emission trading scheme alone, but would 
merely  increase  the  total  cost  of  these  reductions,  CO2  related  taxation  should  not 
apply to consumption in installations subject to the Union scheme. 

(8) 

(9) 

In the interest of fiscal neutrality, the same minimum levels of taxation should apply 
for  each  component  of  energy  taxation,  to  all  energy  products  put  to  a  given  use. 
Where equal minimum levels of taxation are thus prescribed, Member States should, 
also  for  reason  of  fiscal  neutrality,  ensure  equal  levels  of  national  taxation  on  all 
products concerned. Where needed, transitional periods for the purposes of equalising 
those levels should be foreseen. 

The  minimum  levels  of  CO2-related  taxation  should  be  fixed  in  the  light  of  the 
national targets for Member States as laid down in Decision 406/2009/EC on the effort 
of  Member  States  to  reduce  their  greenhouse  gas  emissions  to  meet  the  Union’s 
greenhouse  gas  emission  reduction  commitments  up  to  2020.  Since  that  Decision 
recognises  that  efforts  to  reduce  their  greenhouse  gas  emissions  should  be  fairly 
distributed between the Member States, transitional periods should be fixed for certain 
Member States. 

(10)  The minimum levels of general energy consumption taxation should be developed, in 
general, on the basis of the current minimum levels of taxation. This also implies that 
the minimum level of general energy consumption taxation applicable to motor fuels 
should remain higher than for heating fuels. 

(11) 

It  should  be  ensured  that  the  minimum  levels  of  taxation  preserve  their  intended 
effects.  Since  CO2-related 
the  operation  of  Directive 
taxation  complements 
2003/87/EC, the market price of the emission allowances should be closely monitored 
in the periodic review of the Directive, incumbent on the Commission. The minimum 
levels  of  general  energy  consumption  taxation  should  at  regular  intervals  be 
automatically aligned to take into account the evolution of their real value in order to 
preserve  the  current  level  of  rate  harmonisation;  to  reduce  the  volatility  stemming 
from  energy  and  food  prices,  this  alignment  should  be  made  on  the  basis  of  the 
changes  in  the  Union-wide  harmonised  index  of  consumer  prices  excluding  energy 
and unprocessed food as published by Eurostat. 

(12) 

In the field of motor fuels, the more favourable minimum level of taxation applicable 
to  gas  oil,  a  product  originally  put  to  business  use  for  the  most  part  and  thus 
traditionally taxed at a lower level, creates a distortive effect with regard to petrol, its 
main competing fuel. Article 7 of Directive 2003/96/EC therefore provides for the first 
steps of a gradual alignment to the minimum level of taxation applicable to petrol. It is 
necessary to complete this alignment and gradually move to a situation where gas oil 
and petrol are taxed at an equal level. 

(13)  As  regards  the  possibility  for  Member  States  to  apply  a  lower  level  of  taxation  to 
commercial than to non-commercial use of gas oil as motor fuel, this provision would 
appear to be no longer compatible with the requirement to improve energy efficiency 
and  the  need  to  address  the  growing  environmental  impact  of  transport  and  should 
therefore be deleted. Article 9(2) of Directive 2003/96/EC authorises certain Member 
States  to  apply  a  reduced  rate  on  heating  gas  oil.  That  provision  is  no  longer 

EN 

16 

   EN 

compatible  with  the  proper  functioning  of  the  internal  market  and  with  the  wider 
objectives of the Treaty. It should therefore be deleted. 

(14)  There is a need to limit the potential cost impact of CO2-related taxation on the sectors 
or  sub-sectors  deemed  to  be  exposed  to  a  significant  risk  of  carbon  leakage  in  the 
meaning of Article 10a(13) of Directive 2003/87/EC. Accordingly, it is appropriate to 
provide for corresponding transitional measures which, however, should also preserve 
the environmental effectiveness of CO2-related taxation. 

(15)  Article  5  of  Directive  2003/96/EC  permits  the  application  of  differentiated  rates  of 
taxation in certain cases. However, in order to ensure the consistency of the CO2 price 
signal,  the  possibility  for  Member  States  to  differentiate  national  rates  should  be 
restricted to general energy consumption taxation. Moreover, the possibility to apply a 
lower  level  of  taxation  to  motor  fuel  used  by  taxis  is  no  longer  compatible  with  the 
objective  of  policies  promoting  alternative  fuels  and  energy  carriers  and  the  use  of 
cleaner vehicles in urban transport and should thus be removed. 

(16)  The  rules  on  optional  tax  reductions  and  exemptions  contained  in  Article  15  of 
Directive 2003/96/EC should be adapted in the light of experience gathered and of the 
new framework created by this Directive. The possibility for Member States to apply 
those  optional  reductions  and  exemptions  should  as  much  as  possible  be  limited  to 
general  energy  consumption  taxation  in  order  to  establish  a  comprehensive  and 
consistent CO2 price signal outside the Union emission trading scheme.  

(17)  Exemption or reductions to the benefit of households and charitable organisations may 
form part of social measures defined by Member States. The possibility to apply such 
exemptions  or  reductions  should,  for  reasons  of  equal  treatment  between  energy 
sources,  be  extended  to  all  energy  products  used  as  heating  fuel  and  electricity.  In 
order  to  ensure  that  their  impact  on  the  internal  market  remains  limited,  such 
exemptions and reductions should be applied only to non-business activities. 

(18) 

In  the  case  of  liquefied  petroleum  gas  (LPG)  and  natural  gas  used  as  propellants, 
advantages  in  the  form  of  lower  minimum  levels  of  general  energy  consumption 
taxation or the possibility to exempt those energy products from taxation are no longer 
justified, in particular in the light of the need to increase the market share of renewable 
energy sources and should therefore be removed in the medium term.  

(19)  Directive  2003/96/EC  obliges  Member  States  to  exempt  from  taxation  fuel  used  for 
navigation  in  Community  waters  as  well  as  electricity  produced  on  board  a  craft, 
including  while  at  berth  in  a  port.  Moreover,  Member  States  may  extend  this 
favourable tax treatment to inland waterways. In some harbours a cleaner alternative 
exists with the use of shore-side electricity which, however, is taxable. In order to set a 
first  incentive  for  the  development  and  application  of  this  technology,  pending  the 
adoption  of  a  more  comprehensive  framework  in  the  matter,  Member  State  should 
exempt the use of shore-side electricity by ships while at berth in a port from energy 
taxation.  This  exemption  should  apply  during  a  period  long  enough  in  order  not  to 
discourage port operators from making the necessary investments but at the same time 
be time-limited in such a way that its maintenance, in full or in part, is made subject to 
a new decision in due time. 

EN 

17 

   EN 

(20)  Article 15(3) of Directive 2003/96/EC allows Member States to apply to agricultural, 
horticultural  and  piscicultural  works  as  well  as  to  forestry  not  only  the  provisions 
generally  applicable  to  business  uses  but  also  a  level  of  taxation  down  to  zero.  An 
examination  of  that  option  has  revealed  that  as  far  as  general  energy  consumption 
taxation  is  concerned  its  maintenance  would  be  contrary  to  the  Union's  wider  policy 
objectives unless it is linked to a counterpart ensuring advances in the field of energy 
efficiency.  As  regards  CO2  related  taxation  the  treatment  of  the  sectors  concerned 
should be aligned to the rules applying to industrial sectors.  

(21)  The general rules introduced by this Directive take account of the specificities of fuels 
that  are  biomass  or  made  of  biomass  complying  with  the  sustainability  criteria  laid 
down in Article 17 of Directive 2009/28/EC with regard both to their contribution to 
the CO2-balance and to their lower energy content per quantitative unit, as compared 
to  some  of  the  competing  fossil  fuels.  Consequently,  the  provisions  in  Directive 
2003/96/EC authorising reductions or exemptions for those fuels should be removed in 
the medium term. For the interim period, it should be ensured that the application of 
these provisions is made consistent with the general rules introduced by this Directive. 
Biofuels and bioliquids defined in Article 2(h) and (i) of Directive 2009/28/EC should 
therefore only benefit from additional tax advantages applied by Member States if they 
fulfil the sustainability criteria laid down in Article 17 of this Directive. 

(22) 

In the absence of a more far-reaching harmonisation in the area of heating fuels used 
for  business  purposes,  Member  States  with  levels  of  taxation  above  the  minimum 
levels  prescribed  in  that  area  should  continue  to  be  able  to  provide  for  certain 
reductions.  The  applicable  conditions  should  distinguish  between  general  energy 
consumption  taxation  and  CO2-related  taxation,  since  those  two  elements  pursue 
different  objectives.  Furthermore,  it  should  be  made  clear  that  references  to  tradable 
permit  schemes  in  Article  17  of  Directive  2003/96/EC  do  not  include  the  Union 
scheme under Directive 2003/87/EC. 

(23) 

In view of their particular administrative structure and under certain conditions, Spain 
and  France  should  be  allowed  to  apply  regionally  higher  levels  of  general  energy 
consumption taxation to energy products and electricity. 

(24)  Directive  2003/96/EC  should  be  aligned  to  Council  Directive  2008/118/EC  of  16 
December  2008  concerning  the  general  arrangements  for  excise  duty  and  repealing 
Directive 92/12/EEC21. 

(25)  The list of energy products in Articles 2(1) and 20(1) of Directive 2003/96/EC should 
be  updated  so  as  to  include  certain  biofuels,  in  order  to  ensure  a  unified  and 
standardised treatment of these biofuels and reference should be made in Article 2(5) 
of  Directive  2003/96/EC  to  the  version  presently  applicable  of  the  combined 
nomenclature.  Taking  into  account  the  risk  of  tax  evasion,  avoidance  or  abuse  they 
represent,  products  under  CN  code  3811  should  be  made  subject  to  the  control  and 
movement provisions of Directive 2008/118/EC. 

(26) 

In  order  to  ensure  free  movement  whilst  at  the  same  time  respecting  security 
requirements  applicable  to  commercial  motor  vehicles  and  special  containers,  the 
definition  of  standard  tanks  of  such  vehicles  in  Article  24  of  Directive  2003/96/EC 

21 

OJ L 9, 14.1.2009, p. 12. 

EN 

18 

   EN 

                                                 
should be updated so as to reflect the fact that fuel tanks are not exclusively fitted to 
commercial vehicles by their manufacturer. 

(27)  Since  certain  transitional  provisions  of  Directive  2003/96/EC  have  become  obsolete, 

they should be deleted. 

(28)  Every  five  years  and  for  the  first  time  by  the  end  of  2015,  the  Commission  should 
report to the Council on the application of this Directive, examining in particular the 
minimum level of CO2-related taxation in the light of the evolution of the market price 
in  the  EU  of  the  emission  allowances,  the  impact  of  innovation  and  technological 
developments and the justification for the tax exemptions and reductions laid down in 
this Directive, including for fuel used for the purpose of air and maritime navigation. 
The list of sectors or sub-sectors deemed to be exposed to a significant risk of carbon 
leakage  shall  be  the  subject  of  regular  review,  in  particular  taking  into  account  the 
availability of emerging evidence. 

(29) 

It  is  appropriate  to  amend  certain  provisions  of  Directive  2003/96/EC  concerning 
implementing powers in order to ensure consistency with the provisions introduced by 
the Treaty on the Functioning of the European Union. This should be done through the 
granting of delegated powers to the Commission. 

(30)  The  Commission  should  be  empowered  to  adopt  delegated  acts  in  accordance  with 
Article 290 of the Treaty on the Functioning of the European Union in order to update 
the  codes  of  the  Combined  Nomenclature  for  the  products  referred  to  in  Directive 
2003/96/EC, as well as the reference to the applicable Combined Nomenclature. It is 
necessary that the powers are delegated to the Commission for an indeterminate time, 
in order to allow the rules to be adjusted, if needed. 

(31)  Since the objectives of the action to be taken, notably to ensure the proper functioning 
of the internal market in the context of new requirements in the fields of energy and 
environment, cannot be sufficiently achieved by the Member States and can therefore 
be better achieved at Union level, the Union may adopt measures, in accordance with 
the  principle  of  subsidiarity  as  set  out  in  Article  5  of  the  Treaty  of  the  European 
Union.  In  accordance  with  the  principle  of  proportionality,  as  set  out  in  that  Article, 
this Directive does not go beyond what is necessary to achieve those objectives. 

(32)  Directive 2003/96/EC should therefore be amended accordingly, 

HAS ADOPTED THIS DIRECTIVE: 

Article 1 

Directive 2003/96/EC is amended as follows: 

(1) 

Article 1 is replaced by the following: 

"Article 1 

1. 

Member  States  shall  impose  taxation  on  energy  products  and  electricity  in 
accordance with this Directive. 

EN 

19 

   EN 

2. 

Member  States  shall  distinguish  between  CO2-related  taxation  and  general  energy 
consumption taxation. 

CO2-related taxation shall be calculated in EUR/t of CO2 emissions, on the basis of 
the  reference  CO2  emission  factors  set  out  in  point  11  of  Annex  I  to  Commission 
Decision  2007/589/EC  of  18  July  2007  establishing  guidelines  for  the  monitoring 
and reporting of greenhouse gas emissions pursuant to Directive 2003/87/EC of the 
European  Parliament  and  of  the  Council(*).  The  CO2  emission  factors  specified  in 
this Decision for biomass or products made of biomass shall in the case of biofuels 
and  bioliquids  defined  in  Article  2(h)  and  (i)  of  Directive  2009/28/EC  only  apply 
where  the  product  concerned  complies  with  the  sustainability  criteria  laid  down  in 
Article 17 of Directive 2009/28/EC of the European Parliament and of the Council of 
23 April 2009 on the promotion of the use of energy from renewable sources (**). 
Where biofuels and bioliquids do not comply with those criteria, Member States shall 
apply the reference CO2 emission factor for the equivalent heating fuel or motor fuel 
for which minimum levels of taxation are specified in this Directive. 

General energy consumption taxation shall be calculated in EUR/GJ on the basis of 
net  calorific  value  of  the  energy  products  and  electricity  as  set  out  in  Annex  II  to 
Directive  2006/32/EC of the European Parliament and the Council of 5 April 2006 
on  energy  end-use  efficiency  and  energy  services  and  repealing  Council  Directive 
93/76/EEC (***). In the case of biomass or products made of biomass the reference 
values shall be those set out in Annex III to Directive 2009/28/EC. However, in the 
case  of  biofuels  and  bioliquids  defined  in  Article  2(h)  and  (i)  of  Directive 
2009/28/EC, these reference values shall only apply where the product complies with 
the sustainability criteria laid down in Article 17 of this Directive. In this case, they 
shall apply both to motor fuels and heating fuels. Where biofuels and bioliquids do 
not comply with these criteria, Member States shall apply the reference values for the 
equivalent  heating  fuel  or  motor  fuel  for  which  minimum  levels  of  taxation  are 
specified in this Directive. 

Where  Directive  2006/32/EC,  Decision  2007/589/EC  or  Directive  2009/28/EC,  as 
the case may be, do not contain an emission factor and/or net calorific value for the 
product concerned, Member States shall refer to relevant available information on its 
CO2 emission factor and/or net calorific value. 

For the purpose of this Directive 'biomass' shall mean the biodegradable fraction of 
products,  waste  and  residues  from  biological  origin  from  agriculture  (including 
vegetal and animal substances), forestry and related industries including fisheries and 
aquaculture, as well as the biodegradable fraction of industrial and municipal waste. 

3. 

4. 

Where part of an energy product consists of biomass or products made of biomass, 
CO2 emission factors and net calorific value relevant to this part shall be determined 
in  accordance  with  paragraph  2,  independently  from  the  CN  code  under  which  the 
energy product falls as a whole. 

Unless otherwise specified, the provisions of this Directive shall apply both to CO2- 
related taxation and to general energy consumption taxation. 

(*) OJ L 229, 31.8.2007, p. 1. 

(**) OJ L 140, 5.6.2009, p. 16. 

EN 

20 

   EN 

(***) OJ L 114, 27.4.2006, p. 64." 

(2) 

Article 2 is amended as follows: 

(a) 

Paragraph 1 is amended as follows: 

(i) 

Point (h) is replaced by the following: 

"(h) 

falling within CN codes 2909 19 10 and 3824 90 91;" 

(ii)  The following points (i) and (j) are added: 

"(i) 

falling within CN codes 2207, 2208 90 91 and 2208 90 99 if these are intended 
for  use  as  heating  fuel  or  motor  fuel  and  are  denatured  in  accordance  with 
Article 27(1)(a) and (b) of Directive 92/83/EC; 

(j) 

falling within CN codes 2909 19 90, 3823 19 90 and 3824 90 97, if these are 
intended for use as heating fuel or motor fuel." 

(b) 

Paragraphs 3, 4 and 5 are replaced by the following:  

"3. 
When intended for use, offered for sale or used as motor fuel or heating fuel, 
energy products other than those for which minimum levels of taxation are specified 
in  this  Directive  shall  be  taxed  according  to  use,  at  the  rates  for  the  equivalent 
heating fuel or motor fuel, calculated in accordance with Article 1(2) and (3). 

Products other than energy products, if intended for use, offered for sale or used as 
motor  fuel,  shall  be  taxed  at  the  rates  for  the  equivalent  motor  fuel,  calculated  in 
accordance with Article 1(2) and (3). 

Additives and extenders to motor fuels, other than water, shall be taxed at the rates 
for the equivalent motor fuel.  

Hydrocarbons other than those listed in paragraph 1 and intended for use, offered for 
sale or used for heating purposes shall be taxed at the rates for the equivalent energy 
product, in accordance with Article 1(2) and (3). This subparagraph shall not apply to 
peat.  

4. 
CO2-related  taxation  shall,  subject  to  Article  14(1)(d)  of  this  Directive, 
apply  to  uses  of  energy  products  giving  rise  to  carbon  dioxide  emissions  from 
installations  as  defined  in  Article  3(e)  of  Directive  2003/87/EC  of  the  European 
Parliament  and  of  the  Council  of  13  October  2003  establishing  a  scheme  for 
greenhouse  gas  emission  allowance  trading  within  the  Community  and  amending 
Council Directive 96/61/EC(*), whether or not those installations reach the threshold 
values indicated in Annex I to that Directive. 

Where  energy  products  are  used  according  to  the  first  subparagraph,  for  a  purpose 
other than as motor fuel, they shall be treated as heating fuel for the purposes of this 
Directive. 

References in this Directive to codes of the Combined Nomenclature shall 
5. 
be  to  those  of  Commission  Regulation  (EC)  No  861/2010  of  5  October  2010 

EN 

21 

   EN 

amending  Annex  I  to  Council  Regulation  (EEC)  No  2658/87  on  the  tariff  and 
statistical nomenclature and on the Common Customs Tariff(**). 

Where  the  Regulation  referred  to  in  the  first  subparagraph  is  replaced  or  where  an 
amendment to the Combined Nomenclature necessitates a modification of the codes 
referred  to  in  this  Directive,  the  Commission  shall  adopt  a  delegated  act  in 
accordance with Article 27 and subject to the conditions of Articles 27a and 27b in 
order to modify the codes of the Combined Nomenclature of the products referred to 
in  this  Directive  or  in  order  to  modify  the  reference  provided  for  in  the  first 
subparagraph  so  as  to  align  it  to  the  applicable  version  of  the  Combined 
Nomenclature. 

That delegated act must not result in any changes in the minimum tax rates applied in 
this Directive or to the addition or removal of any energy products and electricity. 

__________  

(*) OJ L 275, 25.10.2003, p.32. 

(**) OJ L 284, 29.10.2010, p. 1." 

(c) The following paragraph 6 is added: 

"6. 
For the purposes of points (a), (d), (i) and (j) of paragraph 1 of this Article, 
and points (a), (g), (i) and (j) of Article 20(1), products destined for supply shall be 
considered to be intended for use as heating fuel or motor fuel when the supplier is 
aware, or should reasonably be aware, that the recipient intends to use the products 
as  heating  fuel  or  motor  fuel.  Products  referred  in  point  (a)  of  paragraph  1  of  this 
Article and point (a) of Article 20(1) shall not be considered to be intended for use as 
heating fuel or motor fuel if they are supplied to a producer of goods referred to in 
point (h) of paragraph 1 of this Article and point (h) of Article 20(1)." 

(3) 

Article 3 is replaced by the following: 

Without prejudice to Article 2(4), this Directive shall not apply to: 

"Article 3 

(a) 

output  taxation  of  heat  and  the  taxation  of  products  falling  within  CN-codes  4401 
and 4402; 

(b) 

the following uses of energy products and electricity: 

–  energy products for purposes other than as motor fuels or as heating fuels, 

–  dual use of energy products 

An  energy  product  has  a  dual  use  when  it  is  used  both  as  heating  fuel  and  for 
purposes other than as motor fuel and heating  fuel. The use  of energy  products for 
chemical reduction and in electrolytic and metallurgical processes shall be regarded 
as dual use, 

EN 

22 

   EN 

–  electricity  used  principally  for  the  purposes  of  chemical  reduction  and  in 

electrolytic and metallurgical processes, 

–  mineralogical processes 

 "Mineralogical  processes"  shall  mean  the  processes  classified  in  the  NACE 
nomenclature  under  code  DI  23  "manufacture  of  other  non-metallic  mineral 
products"  in  Council  Regulation  (EC)  No  1893/2006  of  20  December  2006 
establishing the statistical classification of economic activities NACE Revision 2 and 
amending Council Regulations (EEC) No 3037/90 as well as certain EC Regulations 
on specific statistical domains*). 

 However, Article 20 shall apply to energy products used as provided for in point (b) 
of the first paragraph of this Article. 

________  

(*)OJ L 393, 30.12.2006, p. 1." 

(4) 

Article 4 is amended as follows: 

(a) Paragraph 2 is replaced by the following: 

"2. 
For  the  purposes  of  this  Directive  "level  of  taxation"  shall  be  the  total 
charge  levied  in  respect  of  all  indirect  taxes  (except  value  added  tax,  hereinafter 
"VAT") calculated: 

(a) 

(b) 

as regards CO2-related taxation, in accordance with the second subparagraph of 
Article 1(2), at the time of release for consumption; 

as  regards  general  energy  consumption  taxation,  in  accordance  with  the  third 
subparagraph of Article 1(2), at the time of release for consumption." 

(b) The following paragraphs 3 and 4 are added: 

Without  prejudice  to  the  exemptions,  differentiations  and  reductions 
"3. 
provided for in this Directive, Member States shall ensure that where equal minimum 
levels of taxation are laid down in Annex I in relation to a given use, equal levels of 
taxation are fixed for products put to that use. Without prejudice to Article 15(1)(i), 
for  motor  fuels  referred  to  in  Annex  I  Table  A,  this  shall  apply  as  from  1  January 
2023. 

For the purposes of  the first  subparagraph, each use for which a minimum level of 
taxation  is  identified,  respectively,  in  Tables  A,  B  and  C  in  Annex  I  shall  be 
considered to be a single use. 

The  minimum  levels  of  general  energy  consumption  taxation  laid  down  in 
4. 
this Directive shall be adapted every three years starting from 1 July 2016 in order to 
take  account  of  the  changes  in  the  harmonised  index  of  consumer  prices  excluding 
energy  and  unprocessed  food  as  published  by  Eurostat.  The  Commission  shall 
publish  the  resulting  minimum  levels  of  taxation  in  the  Official  Journal  of  the 
European Union. 

EN 

23 

   EN 

The minimum levels shall be adapted automatically, by increasing or decreasing the 
base amount in euro by the percentage change in that index over the three preceding 
calendar years. If the percentage change since the last adaptation is less then 0.5%, 
no adaptation shall take place." 

(5) 

Article 5 is amended as follows: 

(a) The introductory phrase is replaced by the following: 

"Provided  that  they  respect  the  minimum  levels  of  taxation  prescribed  by  this 
Directive, differentiated rates of general energy consumption taxation may be applied 
by Member States, under fiscal control, in the following cases:" 

(b) The third indent is replaced by the following: 

"– 
for  the  following  uses:  local  public  passenger  transport  (excluding  taxis), 
waste  collection,  armed  forces  and  public  administrations,  disabled  people, 
ambulances;" 

(6) 

Article 7 is replaced by the following:  

"Article 7 

As  from  1  January  2013,  from  1  January  2015  and  from  1  January  2018,  the 
minimum  levels  of  taxation  applicable  to  motor  fuels  shall  be  fixed  as  set  out  in 
Annex I, Table A." 

(7) 

In Article 8, paragraph 1 is replaced by the following: 

"1. 
As  from  1  January  2013,  the  minimum  levels  of  taxation  applicable  to 
products used as motor fuels for the purposes set out in paragraph 2 of this Article 
shall be fixed as set out in Annex I, Table B." 

(8) 

Article 9 is replaced by the following: 

"Article 9 

As from 1 January 2013, the minimum levels of taxation applicable to heating fuels shall be 
fixed as set out in Annex I, Table C." 

(9) 

Article 10 is replaced by the following:  

"Article 10 

As  from  1  January  2013,  the  minimum  levels  of  taxation  applicable  to  electricity 
shall be fixed as set out in Annex I Table D." 

(10) 

In Article 12, paragraph 2 is replaced by the following: 

"2. 
temperature of 15°C." 

When  volume  units  are  applied,  the  volume  shall  be  measured  at  a 

EN 

24 

   EN 

(11)  Article 14 is amended as follows: 

(a) Paragraph 1 is amended as follows: 

(i) the introductory phrase is replaced by the following: 

"In addition to the general provisions set out in Council Directive 2008/118/EC of 16 
December  2008  concerning  the  general  arrangements  for  excise  duty  and  repealing 
Directive 92/12/EEC(*) on exempt uses of taxable products, and without prejudice to 
other  Union  provisions,  Member  States  shall  exempt  the  following  from  taxation 
under conditions which they shall lay down for the purpose of ensuring the correct 
and  straightforward  application  of  such  exemptions  and  of  preventing  any  evasion, 
avoidance or abuse: 

_________  

(*) OJ L 9, 14.1.2009, p.12." 

(ii) 

in point (a), the second sentence is replaced by the following: 

"However,  Member  States  may,  for  reasons  of  environmental  policy  other  than  the 
reduction  of  CO2  emissions,  subject  these  products  to  taxation  without  having  to 
respect the minimum levels of taxation laid down in this Directive." 

(iii) the following points (d) and (e) are added: 

"(d)  as regards CO2-related taxation, energy products used for activities subject to, 
and  not  excluded  from,  the  Union  scheme  within  the  meaning  of  Directive 
2003/87/EC; 

(e) 

until  31  December  2020,  electricity  directly  provided  to  vessels  berthed  in 
ports." 

(b) The following paragraph 3 is added: 

In  the  case  of  uses  referred  to  in  point  (a)  of  paragraph  1,  except  uses  for 
"3. 
producing electricity on board a craft, the exemption shall apply only from general 
energy consumption taxation." 

(12)  The following Article 14a is inserted: 

"Article 14a 

1. 

2. 

Until  31  December  2020,  Member  States  shall  provide  a  credit  concerning  CO2-
related taxation with respect to the use of energy products by installations belonging 
to  sectors  or  sub-sectors  deemed  to  be  exposed  to  a  significant  risk  of  carbon 
leakage. 

The amount of the tax credit shall correspond to the median annual consumption of 
energy products, expressed in gigajoules (GJ), of the installation during the reference 
period, for purposes other than those referred to in Article 7, multiplied by 0,00561 
and by the minimum level of CO2-related taxation as laid down in Annex I, Table C. 

EN 

25 

   EN 

 
The reference period referred to in the first sentence of this paragraph shall be either 
the period from 1 January 2005 to 31 December 2008 or the period from 1 January 
2009 to 31 December 2010. The amount of the tax credit shall not exceed the CO2-
related  tax  on  the  use  of  energy  products  by  the  installation  during  the  period 
concerned. 

For installations that have not been in operation during the reference period, Member 
States shall base the level of the tax credit on the installed capacity of the installation 
multiplied by an average capacity utilisation factor applying the methodology as laid 
down  in  Commission  Decision  XXX  on  determining  transitional  Union-wide  rules 
for harmonised free allocations pursuant to Article 10a of Directive 2003/87/EC(*). 

Where  a  Member  State  applies  a  level  of  CO2-related  taxation  exceeding  the 
minimum level prescribed by this Directive, it may, for the purposes of determining 
the  amount  of  the  tax  credit  under  paragraph  2,  refer  to  a  level  of  CO2-related 
taxation up to the national level. 

For the purposes of paragraphs 1 to 4, "sectors or sub-sectors deemed to be exposed 
to a significant risk of carbon leakage" shall be those that have been determined as 
such on the basis of Article 10a(13) of Directive 2003/87/EC. 

3. 

4. 

5. 

_______  

(*) OJ L 

(13)  Article 15 is amended as follows: 

(a) Paragraph 1 is amended as follows: 

(i) 

point (h) and (i) are replaced by the following: 

"(h)  energy  products  used  as  heating  fuel  and  electricity  if  used  by  households 
and/or  by  organisations  recognised  as  charitable  by  the  Member  State 
concerned.  In  the  case  of  such  charitable  organisations,  Member  States  shall 
confine  the  exemption  or  reduction  to  use  for  the  purpose  of  non-business 
activities.  Where  mixed  use  takes  place,  taxation  shall  apply  in  proportion  to 
each type of use. If a use is insignificant, it may be treated as nil; 

(i)  Until 1 January 2023, natural gas and LPG used as propellants;" 

(ii) 

the following subparagraph is added: 

"Points (a) to (e) and (g) only apply for general energy consumption taxation." 

(b) Paragraph 3 is replaced by the following: 

Member  States  may  apply  a  level  of  general  energy  consumption  taxation 
"3. 
down  to  zero  on  the  consumption  of  energy  products  and  electricity  used  for 
agricultural, horticultural, aquacultural works and in forestry. The beneficiaries shall 
be  subject  to  arrangements  that  must  lead  to  increased  energy  efficiency  broadly 
equivalent  to  those  that  would  have  been  achieved  if  the  standard  Union  minimum 
rates had been observed." 

EN 

26 

   EN 

(1) 

Article 16 is amended as follows: 

(a) Paragraph 1 is amended as follows: 

(i) the introductory phrase is replaced by the following: 

"Until 1 January 2023, Member States may, without prejudice to paragraph 5 of this Article, 
apply  an  exemption  or  a  reduced  rate  of  general  energy  consumption  taxation  under  fiscal 
control on the taxable products referred to in Article 2 of this Directive where such products 
are  made  up  of,  or  contain,  one  or  more  of  the  following  products  and  where,  as  far  as 
biofuels and bioliquids defined in Article 2(h) and (i) of Directive 2009/28/EC are concerned, 
these  products  comply  with  the  sustainability  criteria  laid  down  in  Article  17  of  that 
Directive:" 

(ii) the third subparagraph is deleted. 

(b) Paragraph 4, 6 and 8 are deleted. 

(14)  Articles 17 and 18 are replaced by the following: 

"Article 17 

1. 

Provided the minimum levels of taxation prescribed in this Directive are respected on 
average  for  each  business,  Member  States  may  apply  tax  reductions  from  general 
energy consumption taxation to energy products used for heating purposes or for the 
purposes of Article 8(2)(b) and (c) and on electricity in the following cases: 

(a) 

in favour of energy-intensive business 

An ‘energy-intensive business’ shall mean a business entity, as referred to in Article 
11, where either the purchases of energy products and electricity amount to at least 
3,0 % of the production value or the national energy tax payable amounts to at least 
0,5  %  of  the  added  value.  Within  this  definition,  Member  States  may  apply  more 
restrictive concepts, including sales value, process and sector definitions. 

‘Purchases  of  energy  products  and  electricity’  shall  mean  the  actual  cost  of  energy 
purchased  or  generated  within  the  business.  Only  electricity,  heat  and  energy 
products that are used for heating purposes or for the purposes of Article 8(2)(b) and 
(c) are included. All taxes are included, except deductible VAT. 

‘Production  value’  shall  mean  turnover,  including  subsidies  directly  linked  to  the 
price of the product, plus or minus the changes in stocks of finished products, work 
in  progress  and  goods  and  services  purchased  for  resale,  minus  the  purchases  of 
goods and services for resale. 

‘Added  value’  shall  mean  the  total  turnover  liable  to  VAT  including  export  sales 
minus the total purchases liable to VAT including imports; 

(b) 
where agreements are concluded with business entities as referred to in Article 11 or 
associations  of  such  business  entities,  or  where  tradable  permit  schemes  or  equivalent 
measures are implemented, as far as they lead to improvements in energy efficiency. 

EN 

27 

   EN 

2. 

3. 

Provided the minimum levels of taxation prescribed in this Directive are respected on 
average  for  each  business,  Member  States  may  apply  tax  reductions  from  CO2-
related taxation to energy products used for heating purposes or for the purposes of 
Article  8(2)(b)  and  (c)  where  agreements  are  concluded  with  business  entities  as 
referred to in Article 11 or associations of such business entities, or where tradable 
permit  schemes  or  equivalent  measures  are  implemented,  as  far  as  they  lead  to 
objectives concerning the reduction of CO2 emissions. 

For the purposes of paragraphs 1 and 2, 'tradable permit schemes' shall mean tradable 
permit  schemes  other  than  the  Union  scheme  within  the  meaning  of  Directive 
2003/87/EC. 

Article 18 

1. 
Notwithstanding Article 4(3), Spain may provide that the levels of the general energy 
consumption  taxation  applied  by  any  Autonomous  Community  may  be  higher  than  the 
corresponding national levels of taxation (regional differentiation). The applicable rules have 
to meet the following conditions: 

(a) 
corresponding national level of taxation by more than 15%;  

the  level  of  taxation  applied  by  any  Autonomous  Community  must  not  exceed  the 

(b) 
where during a movement of energy products under a duty suspension arrangement 
to  Spain  from  another  Member  State,  an  irregularity  has  occurred  or  is  deemed  to  have 
occurred in Spain, within the meaning of Article 10 of Directive 2008/118/EC involving the 
chargeability  of  excise  duty,  the  person  who  guaranteed  the  payment  in  accordance  with 
Article 18 of that Directive is not to be held liable to pay the difference between the level of 
taxation  applied  by  any  Autonomous  Community  and  the  national  level,  unless  that  person 
participated in the irregularity or offence. 

Notwithstanding  Article  4(3),  France  may  provide  that  the  levels  of  the  general 
2. 
energy consumption taxation applied at the level of the French regions may be higher than the 
corresponding national levels of taxation (regional differentiation). The applicable rules have 
to meet the following conditions: 

(a) 
corresponding national level of taxation by more than 15%;  

The  level  of  taxation  applied  by  any  regional  authority  must  not  exceed  the 

(b) 
Where during a movement of energy products under a duty suspension arrangement 
to  France  from  another  Member  State,  an  irregularity  has  occurred  or  is  deemed  to  have 
occurred in France, within the meaning of Article 10 of Directive 2008/118/EC, involving the 
chargeability  of  excise  duty,  the  person  who  guaranteed  the  payment  in  accordance  with 
Article 18 of that Directive is not to be held liable to pay the difference between the level of 
taxation  applied  by  any  regional  authority  and  the  national  level,  unless  that  person 
participated in the irregularity or offence. 

3. 
Portugal  may  apply  levels  of  general  energy  consumption  taxation  on  energy 
products  and  electricity  consumed  in  the  Autonomous  Regions  of  the  Azores  and  Madeira 
lower that the minimum levels of taxation laid down in this Directive in order to compensate 
for the transport costs incurred as a result of the insular and dispersed nature of these regions. 

EN 

28 

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4. 
Greece may apply levels of general energy consumption taxation up to EUR 0.6 per 
GJ lower than the minimum levels laid down in this Directive on gas oil used as propellant 
and on petrol consumed in the departments of Lesbos, Chios, Samos, the Dodecanese and the 
Cyclades  and  on  the  following  islands  in  the  Aegean:  Thasos,  North  Sporades,  Samothrace 
and Skiros. 

5. 
Bulgaria, the Czech Republic, Estonia, Latvia, Lithuania, Hungary, Poland, Romania 
and Slovakia may, for uses referred to in Articles 8 and 9, apply a transitional period until 1 
January  2021  to  introduce  CO2-related  taxation.  If  the  Union  decides  that  the  levels  of 
greenhouse  gas  emissions  be  reduced  by  2020  by  more  than  20%  compared  to  the  levels 
attained in 1990, the Commission shall examine the application of these transitional periods 
and, if appropriate, present a proposal with a view to shortening them and/or modifying the 
minimum levels of CO2-related taxation as set out in Annex I." 

(15)  Articles 18a and 18b are deleted.  

(16)  Article 20 is replaced by the following: 

"Article 20 

1. 
and IV of Directive 2008/118/EC: 

Only the following energy products shall be subject to the provisions of Chapters III 

(a) 
heating fuel or motor fuel; 

products  falling  within  CN  codes  1507  to  1518,  if  these  are  intended  for  use  as 

(b) 

products falling within CN codes 2707 10, 2707 20, 2707 30 and 2707 50; 

(c) 
products  falling  within  CN  codes  2710  11  to  2710  19  69.  However,  for  products 
falling  within  CN  codes  2710  11  21,  2710  11  25  and  2710  19  29,  Chapters  III  and  IV  of 
Directive 2008/118/EC shall apply only to bulk commercial movements; 

(d) 

(e) 

products falling within CN codes 2711 (except 2711 11, 2711 21 and 2711 29); 

products falling within CN code 2901 10; 

(f) 
2902 44; 

products falling within CN codes 2902 20, 2902 30, 2902 41, 2902 42, 2902 43 and 

(g) 
these are intended for use as heating fuel or motor fuel; 

products  falling  within  CN  code  2905  11  00,  which  are  not  of  synthetic  origin,  if 

(h) 

products falling within CN codes 2909 19 10 and 3824 90 91; 

(i) 
products  falling  within  CN  codes  2207,  2208  90  91  and  2208  90  99  if  these  are 
intended  for  use  as  heating  fuel  or  motor  fuel  and  are  denatured  in  accordance  with  Article 
27(1)(a) and (b) of Directive 92/83/EC; 

(j) 
are intended for use as heating fuel or motor fuel; 

products falling within CN codes 2909 19 90, 3823 19 90, and 3824 90 97, if these 

(k) 

products falling within CN code 3811. 

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2. 
Member States may, pursuant to bilateral arrangements, dispense with some or all of 
the provisions of Chapters III and IV of Directive 2008/118/EC in respect of some or all of 
the  products  referred  to  in  paragraph  1  of  this  Article,  insofar  as  they  are  not  covered  by 
Articles 7, 8 and 9 of this Directive. Such arrangements shall not affect Member States which 
are  not  party  to  them.  All  such  bilateral  arrangements  shall  be  notified  to  the  Commission, 
which shall inform the other Member States." 

(17)  Article 21 is amended as follows: 

(a)  In  paragraph  1,  the  words  "Directive  92/12/EEC"  are  replaced  by  "Directive 
2008/118/EC"; 

(b) Paragraph 2 is deleted; 

(c)  In  the  first  and  fourth  subparagraphs  of  paragraph  5,  the  words  "For  the  purpose  of 
applying  Articles  5  and  6  of  Directive  92/12/EEC  are  replaced  by  "For  the  purpose  of 
applying Articles 2 and 7 of Directive 2008/118/EC". 

(18) 

In Article 24, paragraph 2 is replaced by the following: 

"2. 

For the purposes of this Article, 

'standard tanks' shall mean: 

–  the tanks permanently fixed to a motor vehicle by the manufacturer or by a third party and 
which, according to the registration documents or the certificate of roadworthiness of the 
vehicle,  comply  with  the  applicable  technical  and  security  requirements,  and  whose 
permanent fitting enables fuel to be used directly, both for the purpose of propulsion and, 
where  appropriate,  for  the  operation,  during  transport,  of  refrigeration  systems  and  other 
systems. Gas tanks fitted to motor vehicles designed for the direct use of gas as a fuel and 
tanks  fitted  to  the  other  systems  with  which  the  vehicle  may  be  equipped  shall  also  be 
considered to be standard tanks; 

–  the  tanks  permanently  fixed  to  a  special  container  by  the  manufacturer  or  a  third  party 
which,  according  to  the  registration  documents  of  the  container,  comply  with  the 
applicable technical and security requirements, and whose permanent fitting enables fuel to 
be used directly for the operation, during transport, of the refrigeration systems and other 
systems with which special containers are equipped. 

'Special  container'  shall  mean  any  container  fitted  with  specially  designed  apparatus  for 
refrigeration systems, oxygenation systems, thermal insulation systems or other systems." 

(19)  Article 27 is replaced by the following: 

"Article 27 

Exercise of the delegation 

1. 
the Commission for an indeterminate period of time. 

The power to adopt delegated acts referred to in Articles 2(5) shall be conferred on 

2. 

As soon as the Commission adopts a delegated act, it shall notify it to the Council. 

EN 

30 

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3. 
conditions laid down in Articles 27a and 27b." 

The  power  to  adopt  delegated  acts  is  conferred  on  the  Commission  subject  to  the 

(20)  The following Articles 27a, 27b and 27c are inserted: 

"Article 27a 

Revocation of the delegation 

1. 
the Council. 

The delegation of powers referred to in Articles 2(5) may be revoked at any time by 

2. 
Where  the  Council  has  commenced  an  internal  procedure  for  deciding  whether  to 
revoke  the  delegation  of  powers,  it  shall  endeavour  to  inform  the  Commission  within  a 
reasonable  time  before  the  final  decision  is  taken,  indicating  the  delegated  powers  which 
could be subject to revocation and possible reasons for a revocation. 

3. 
The decision of revocation shall put an end to the delegation of the powers specified 
in that decision. It shall take effect immediately or at a later date specified therein. It shall not 
affect the validity of the delegated acts already in force. It shall be published in the Official 
Journal of the European Union. 

Article 27b 

Objection to delegated acts 

1. 
date of notification.  

The Council may object to a delegated act within a period of [three] months from the 

2. 
If, on the expiry of this period, the Council has not objected to the delegated act, it 
shall be published in the Official Journal of the European Union and shall enter into force on 
the date stated therein.  

The delegated act may be published in the Official Journal of the European Union and enter 
into force before the expiry of that period if the Council has informed the Commission of its 
intention not to raise objections. 

3. 
shall state the reasons for objecting to the delegated act. 

If  the  Council  objects  to  a  delegated  act,  it  shall  not  enter  into  force.  The  Council 

Article 27c 

Informing the European Parliament 

The  European  Parliament  shall  be  informed  of  the  adoption  of  delegated  acts  by  the 
Commission  of  any  objection  formulated  to  them,  or  the  revocation  of  the  delegation  of 
powers by the Council." 

(21)  Article 29 is replaced by the following: 

EN 

31 

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"Article 29 

Every five years and for the first time by the end of 2015, the Commission shall submit to the 
Council a report on the application of this Directive and, where appropriate, a proposal for its 
modification. 

The  report  by  the  Commission  shall,  inter  alia,  examine  the  minimum  level  of  CO2-related 
taxation,  the  impact  of  innovation  and  technological  developments,  in  particular  as  regards 
energy  efficiency,  the  use  of  electricity  in  transport  and  the  justification  for  the  exemptions 
and  reductions,  including  for  fuel  used  for  the  purpose  of  air  and  maritime  navigation,  laid 
down  in  this  Directive.  The  report  shall  take  into  account  the  proper  functioning  of  the 
internal market, the real value of the minimum levels of taxation and the wider objectives of 
the Treaty. 

In any event, the list of sectors or sub-sectors deemed to be exposed to a significant risk of 
carbon leakage for the purposes of Article 14a of this Directive shall be the subject of regular 
review, in particular taking into account the availability of emerging evidence." 

(22)  Annex I is replaced by the text in the Annex to this Directive. 

(23)  Annexes II and III are deleted. 

Article 2 

1. 
Member States shall adopt and publish, by 31 December 2012 at the latest, the laws, 
regulations and administrative provisions necessary to comply with this Directive. They shall 
forthwith communicate to the Commission the text of those provisions and a correlation table 
between those provisions and this Directive. 

They shall apply those provisions from 1 January 2013.  

When  Member  States  adopt  the  provisions  referred  to  in  the  first  and  third  subparagraphs, 
those  provisions  shall  contain  a  reference  to  this  Directive  or  be  accompanied  by  such  a 
reference  on  the  occasion  of  their  official  publication.  Member  States  shall  determine  how 
such reference is to be made. 

2. 
of national law which they adopt in the field covered by this Directive. 

Member States shall communicate to the Commission the text of the main provisions 

This Directive shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union. 

Article 3 

Article 4 

EN 

32 

   EN 

This Directive is addressed to the Member States. 

Done at Brussels,  

For the Council 
The President 

EN 

33 

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ANNEX  

"ANNEX I 

Table A. - Minimum levels of taxation applicable from 1 January 2013 to motor fuels for the 
purposes of Article 7 

CO2-related 
taxation  

General energy 
consumption 
taxation 

General energy 
consumption 
taxation 

General energy 
consumption 
taxation 

1 January 2013 

1 January 2013 

1 January 2015 

1 January 2018 

20 €/t CO 2 

9.6 €/GJ 

9.6 €/GJ 

9.6 €/GJ

20 €/t CO 2 

8.2 €/GJ 

8.8 €/GJ 

9.6 €/GJ

20 €/t CO 2 

8.6 €/GJ 

9.2 €/GJ 

9.6 €/GJ

20 €/t CO 2 

1.5 €/GJ 

5.5 €/GJ 

9.6 €/GJ 

20 €/t CO 2 

1.5 €/GJ 

5.5 €/GJ 

9.6 €/GJ 

Petrol  

CN codes 
2710 11 31, 2710 11 41, 
2710 11 45, 2710 11 49, 
2710 11 51 and 2710 11 
59 

Gas oil 

CN codes 
2710 19 41 to 2710 19 
49 

Kerosene 

CN codes 
2710 19 21 and 2710 19 
25 

LPG 

CN 
codes 
2711  12  11  to  2711  19 
00 

Natural gas 

CN 
codes  
2711 11 00 and 2711 21 
00 

EN 

34 

   EN 

 
 
 
 
 
Table B. - Minimum levels of taxation applicable from 1 January 2013 to motor fuels used for 
the purpose set out in Article 8(2)  

CO2-related 
taxation  

General energy 
consumption 
taxation 

Gas oil 

20 €/t CO 2 

CN codes 
2710 19 41 to 2710 19 49 

Kerosene 

20 €/t CO 2 

CN codes 
2710 19 21 and 2710 19 25 

LPG 

20 €/t CO 2 

CN 
2711 12 11 to 2711 19 00 

codes

Natural gas 

20 €/t CO 2 

CN 
2711 11 00 and 2711 21 00 

codes 

0.15 €/GJ 

0.15 €/GJ 

0.15 €/GJ 

0.15 €/GJ 

EN 

35 

   EN 

 
Table C. – Minimum levels of taxation applicable from 1 January 2013 to heating fuels  

CO2-related 
taxation  

General energy 
consumption 
taxation 

Gas oil 

20 €/t CO 2 

CN codes 
2710 19 41 to 2710 19 49 

Heavy fuel oil 

20 €/t CO 2 

CN codes 
2710 19 61 to 2710 19 69 

Kerosene 

20 €/t CO 2 

CN codes 
2710 19 21 and 2710 19 25 

LPG 

20 €/t CO 2 

CN 
2711 12 11 to 2711 19 00 

codes

Natural gas 

20 €/t CO 2 

CN 
codes
2711 11 00 and 2711 21 00 

Coal and coke 

20 €/t CO 2 

CN 
2701, 2702 and 2704 

codes

0.15 €/GJ 

0.15 €/GJ 

0.15 €/GJ 

0.15 €/GJ 

0.15 €/GJ 

0.15 €/GJ 

Table D. - Minimum levels of taxation applicable from 1 January 2013 to electricity 

CO2-related 
taxation  

General energy 
consumption 
taxation 

0.15 €/GJ" 

Electricity 

CN code 2716 

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36 

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LEGISLATIVE FINANCIAL STATEMENT FOR PROPOSALS 

1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1. 

Title of the proposal/initiative  

Review of Directive 2003/96/EC 

1.2. 

Policy area(s) concerned in the ABM/ABB structure22  

14 05 Taxation Policy 

1.3. 

Nature of the proposal/initiative  

X The proposal/initiative relates to a new action  

(cid:133) The proposal/initiative relates to a new action following a pilot project/preparatory action23  

(cid:133) The proposal/initiative relates to the extension of an existing action  

(cid:133) The proposal/initiative relates to an action redirected towards a new action  

1.4. 

Objectives 

1.4.1.  The Commission's multiannual strategic objective(s) targeted by the proposal/initiative  

Sustainable growth – for a resource efficient, greener and more competitive economy (Europe 
2020) 

1.4.2. 

Specific objective(s) and ABM/ABB activity(ies) concerned  

Specific objective No.3. 

To develop new tax initiatives and actions to support EU policy objectives (for example in the 
field of environmental and energy policy) 

ABM/ABB activity(ies) concerned 

Title 14 Taxation and Customs Union; ABB 05 Taxation Policy 

22 
23 

ABM: Activity-Based Management – ABB: Activity-Based Budgeting. 
As referred to in Article 49(6)(a) or (b) of the Financial Regulation. 

EN 

37 

   EN 

                                                 
1.4.3.  Expected result(s) and impact 

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted. 

Coherence of Energy Taxation Directive with the priorities of the Europe 2020 Strategy and 
coherence with Emission Trading System (ETS) 

Environmentally-harmful  incentives  in  current  directive  removed;  positive  incentives  in 
favour of e.g. biofuels set. 

A  Contribution  to  the  reduction  of  CO2  emissions,  increase  of  employment  and  economic 
growth. 

Consistent treatment of energy sources in the Energy Taxation Directive and therefore creation 
of a real level playing field between different energy consumers. 

1.4.4. 

Indicators of results and impact  

Specify the indicators for monitoring implementation of the proposal/initiative. 

CO2-price signal for sectors falling outside the Emission Trading System (ETS). 

Real implicit tax rate on energy (ITR on energy) 

1.5. 

Grounds for the proposal/initiative  

1.5.1.  Requirement(s) to be met in the short or long term  

The EU has set itself a series of demanding, legally binding climate change and energy targets 
to be met by 2020. These are spelled out in the Europe 2020 Strategy setting as a priority of 
sustainable growth, more resource efficient, greener and more competitive economy. 

1.5.2.  Added value of EU involvement 

Climate change and energy are issues of a European scale. Coordinated action is essential to 
reach the goals set in common in these areas. 

1.5.3.  Lessons learned from similar experiences in the past 

n.a. 

1.5.4.  Coherence and possible synergy with other relevant instruments 

The proposal establishes a framework for the use of CO2 taxation in areas where the EU ETS 
does  not  apply,  complementing  the  carbon  price  signal  established  by  the  ETS.  Overlaps 
between both instruments will be avoided to ensure consistency with the EU ETS and avoid 
losses in cost-effective way. 

EN 

38 

   EN 

The proposal contributes to the Europe 2020 strategy. In particular, it enables Member States 
to optimise the potential of the tax system to promote sustainable economic growth, encourage 
jobs and investment, and help meet our wider social and environmental goals. 

1.6. 

Duration and financial impact  

The proposal has no financial impact on the EU. 

(cid:133) Proposal/initiative of limited duration  

–  (cid:133) 

Proposal/initiative in effect from [DD/MM]YYYY to [DD/MM]YYYY  

–  (cid:133) 

Financial impact from YYYY to YYYY  

(cid:133) Proposal/initiative of unlimited duration 

–  Implementation with a start-up period from YYYY to YYYY, 

–  followed by full-scale operation. 

1.7.  Management mode(s) envisaged24  

The proposal has no financial impact on the EU. 

(cid:133) Centralised direct management by the Commission  

(cid:133) Centralised indirect management with the delegation of implementation tasks to: 

–  (cid:133) 

executive agencies  

–  (cid:133) 

bodies set up by the Communities25  

–  (cid:133) 

national public-sector bodies/bodies with public-service mission  

–  (cid:133) 

persons entrusted with the implementation of specific actions pursuant to Title V of 
the Treaty on European Union and identified in the relevant basic act within the meaning of 
Article 49 of the Financial Regulation  

(cid:133) Shared management with the Member States  

(cid:133) Decentralised management with third countries  

(cid:133) Joint management with international organisations (to be specified) 

If more than one management mode is indicated, please provide details in the "Comments" section. 

Comments  

24 

25 

EN 

Details  of  management  modes  and  references  to  the  Financial  Regulation  may  be  found  on  the  BudgWeb  site: 
http://www.cc.cec/budg/man/budgmanag/budgmanag_en.html 
As referred to in Article 185 of the Financial Regulation. 

39 

   EN 

                                                 
2. 

MANAGEMENT MEASURES  

The proposal has no financial impact on the EU budget. 

2.1.  Monitoring and reporting rules  

Specify frequency and conditions. 

2.2.  Management and control system  

2.2.1.  Risk(s) identified  

2.2.2.  Control method(s) envisaged  

2.3.  Measures to prevent fraud and irregularities  

Specify existing or envisaged prevention and protection measures. 

EN 

40 

   EN 

3. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

The proposal has no financial impact on the EU. 

EN 

41 

   EN