Industry Calls for EU Wide Taxation Exemption for All Energy Carriers

The European Union needs to remove disparities in energy taxation and invest more strenuous efforts to incentive the uptake of low-carbon and carbon-free fuels in the shipping sector, according to a report adopted by the European Parliament on October 25.

The report calls on the European Commission to support the decarbonization of the maritime and shipping sector with a clear focus on innovation, digitization and adaptation of ports and ships.

In order to do so it needs to create a level-playing field by adopting a technology neutral approach and remove taxation hindrances to price competitiveness of new fuels and innovations, the parliament stressed.

The report noted that disparities in energy taxation for shore-side supply for ships and energy used to generate alternative fuels should be addressed. It also calls on the commission, Member States and their regions, to establish a common ‘LNG blue corridors project for islands’, in particular for the outermost regions.

“The shipping sector and the European independent fuel suppliers welcome the European Parliament’s report which broadly reflects the positions they have taken in its response to the consultations held earlier this year in view of the Evaluation and Fitness Check of the Energy Taxation Directive,” European Community Shipowners’ Association (ECSA) said.

The associations stressed that the tax free bunkers and luboils provided for in the Energy Taxation Directive must be retained, in order to enable EU companies to compete on the same footing as shipowners and suppliers from outside the EU. Moreover, they call for the exemption for fuels to dredgers to become mandatory in order to avoid market distortions and loss of competitiveness.  

The industry representatives pointed out that the current directive is not providing equal treatment of energy supplies to the shipping industry thus hampering investments in and the uptake of cleaner technologies, such as shore side electricity, fuel cells, methanol, etc.  They therefore advocate a technology neutral approach.

” In view of the global nature of the industry and the importance of moving to greener shipping through the use of cleaner technologies in order to ensure that environmental objectives are met, a revised EU Energy Taxation Directive should provide for a mandatory EU wide taxation exemption for all energy carriers (i.e. fuels and electricity, including shore-side). Such level playing field would help close the cost gap between Heavy Fuel Oil and alternative fuels and electricity,” ECSA said.