Fuelling a European recovery: Time to end aviation fuel tax exemption

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

"Under current EU legislation on energy taxation, member states can and do exempt airlines from paying tax on the fuel they burn for international flights. This means that despite the escalating climate crisis, airlines emit damaging greenhouse gas emissions for free." [EPA-EFE/CJ GUNTHER]

For years, EU countries have allowed airlines to avoid paying tax on polluting jet fuels. With the climate crisis escalating, it’s time for the EU to put an end to this tax exemption, write Ciarán Cuffe, Anna Deparnay-Grunenberg, Claude Gruffat, and Tilly Metz.

The authors are members of the European Parliament affiliated with the Greens/EFA Group.

There isn’t a family, organisation or business that the COVID-19 pandemic has not affected. Across Europe, we have seen a devastatingly high death toll, the hardships and struggles that come from repeated lockdowns, as well as the financial impact. But with the vaccine roll-out, there is light at the end of the tunnel.

As Europe slowly starts to open up again and travel resumes across the continent, we need to ensure that the European recovery is sustainable and fair. Understandably, people are anxious to return to some form of normality. However, that normality cannot continue to include parts of our economy which are harmful to both people and the planet.

One such area is aviation, where, for too long, the industry has been allowed to pollute largely for free. Under current EU legislation on energy taxation, member states can and do exempt airlines from paying tax on the fuel they burn for international flights. This means that despite the escalating climate crisis, airlines emit damaging greenhouse gas emissions for free.

This is deeply concerning given that the latest International Energy Agency report predicts carbon dioxide emissions are set for their second biggest increase ever, reversing most of the decline seen last year, while the UN has warned that ‘’we are on the verge of the abyss’’.

The European Commission has stated it will review the unfair tax exemption for aviation fuels as part of its revision to the Energy Taxation Directive proposal, but has not committed to ending it. This is not good enough. Such inaction weakens the European Green Deal and our ability to tackle the climate crisis.

Fundamentally, the European Green Deal is about improving the lives of EU citizens and future generations by protecting the environment. In transport, this means reducing pollution and emissions. It must allow people to travel in a way that protects them and the environment.

Failing to reform a tax system that promotes endless growth in aviation emissions would be another failure by the EU to implement the European Green Deal. It risks following failures to reform the Common Agricultural Policy or trade deals like Mercosur or delivering necessary targets in the EU’s climate law.

The European Green Deal must be one of substance that is in line with science. This is why a cross party group of 73 MEPs from the Greens/EFA, The Left, Non Aligned, RENEW and S&D political groups, have written to Vice Presidents Vestager and Timmermans as well Commissioners Gentiloni and Vălean to urge the Commission to end the tax exemption for aviation fuel in its upcoming revision of the Energy Taxation Directive and do so swiftly.

While airlines are in difficulty, we must remember that all transport modes are struggling from the impact of COVID-19. The tax exemption for airlines is a fossil fuel subsidy that is a source of unfair competition between different transport modes.

Airlines in the EU already benefit from huge state subsidies – the tax exemption on fuel alone is worth €27 billion. Such financial free-riding undermines the polluter pays principle. It also is at odds with the Commission’s goal to internalise external costs, as set out in its Smart and Sustainable Mobility Strategy published in December 2020. In addition, the non-CO2 effects of aviation are entirely unregulated, despite warming the planet significantly more than CO2 emissions.

Ordinary citizens and businesses pay tax on the fuel they use – why should airlines not do the same? This is not about penalising airlines. It is about ensuring that airlines pay their fair share and that the recovery from COVID-19 is sustainable. It is about incentivising a shift towards sustainability and allowing for fair competition between aviation and more sustainable transport modes.

The COVID-19 pandemic has shown us that if we return to business as usual, destruction of the climate and the natural environment will increase and cause more damaging and frequent global crises. We have a unique opportunity to ensure airlines pay their fair share and end this historical injustice. The European Commission must take action now to end the tax exemption for aviation fuel in the Energy Taxation Directive if it is to have any hope of seriously reducing emissions in the transport sector.

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