National measures are more suitable for reducing emissions from sectors that fall outside of the EU's emissions trading scheme (ETS; see EurActiv LinksDossier) than EU-wide carbon taxes, BusinessEurope, an umbrella organisation for European businesses, told the Commission.
The group sent its comments regarding the ongoing revision of the Energy Taxation Directive on 5 November, arguing that a carbon tax should not raise the overall tax burden nor be used to raise revenue.
The EU executive is hoping to table its proposals to revise the 2003 Energy Taxation Directive next year, with a view to introducing minimum CO2 tax rates across Europe (EurActiv 04/11/09). The carbon taxes would target emissions from non-ETS sectors such as transport, agriculture and small industrial installations.
But businesses are keen to ensure that the new law does not overlap with existing national measures. Rather than taxing CO2, they would like to see voluntary agreements between industry and governments to reduce emissions.
"Where national schemes for reducing emissions in the non-ETS sectors are in place, countries should be allowed to opt out from the EU CO2 tax framework," the group wrote.
Moreover, the tax should not be levied on installations that fall under the scope of the ETS, even if these receive free allocations, BusinessEurope stresses. Taxing CO2 from installations that trade emissions would raise production costs without generating any additional emission cuts, it warned.
The Commission wants to iron out any overlaps with the ETS by extending the taxation directive to all energy products that fall under the ETS, but exempt them from CO2-related taxation (EurActiv 29/09/09).
In order not to put EU companies at a competitive disadvantage, BusinessEurope wants the CO2 taxation framework to mirror the free allocation of emission allowances for ETS installations. It is calling on the Commission to develop quantitative criteria to determine which non-ETS sectors are exposed to a risk of relocation under a carbon tax in order to exempt them based on the efficiency of its processes.
In addition, businesses are calling for a transition period so that the CO2 tax would rise from 20% in 2013, 70% in 2020 and 100% in 2027, in line with ETS auctioning rules.
Moreover, installations covered by the tax should also benefit from the choice of offsetting mechanisms similar to those in emissions trading, BusinessEurope argues. While the Commission already foresees the possibility to exempt companies which make CO2-reducing investments, this provision should be extended to reducing emissions in installations in another member state, it states.