MEP Petar Vitanov: EU green fuel taxes ‘must not create additional inequality’

MEP Petar Vitanov in the European Parliament in Strasbourg. [Michel CHRISTEN / European Union 2021]

This article is part of our special report Green laws and the EU’s road transport sector.

The European Commission has proposed wide-ranging legislation aimed at cutting emissions from road transport across the EU. But the various taxes embedded in the proposals run the risk of exacerbating inequality if not implemented properly, warns MEP Petar Vitanov.

Petar Vitanov is a Bulgarian MEP who sits with the Socialists and Democrats (S&D) group in the European Parliament. He is the S&D shadow rapporteur for the Social Climate Fund file in the Parliament’s environment committee and rapporteur for the transport committee’s opinion on CO2 emission performance standards for cars and vans.

In the European Parliament, your S&D colleague Ismail Ertug is pushing for higher charging and refuelling point targets in the Alternative Fuels Infrastructure Regulation (AFIR). In your opinion, is the AFIR proposal ambitious enough?

We all know that transport is the lifeblood of our economy. But around 20% of EU pollution is caused by transport, and we have increased greenhouse gas emissions from transport since 1990. So, we need to do something.

What we need is accessible, affordable, competitive, and sustainable transport.

If we want to change something, especially keeping in mind that 70% of this pollution comes from cars and vans, we need to set ambitious targets.

And we can see that if we want the ambitious targets in my file, CO2 emissions standards for cars and vans, to be achieved, we also need to make sure that alternative fuels infrastructure is in place.

And from that perspective, I totally support Ismail.

Speaking about myself, coming from Eastern Europe, I want to make sure that the infrastructure is in place and will provide this green transition for transport.

In terms of geographical balance, we need to make sure that Eastern Europe is not behind. If we are behind the market, then we will be isolated, and Eastern European business will lose its strength, especially in the transport sector.

Speaking of CO2 emissions standards, some automakers have expressed concerns that the Commission’s proposal to ban the sale of polluting vehicles by 2035 could have negative social consequences. Do you share this concern?

There are two main issues here. The first is the social aspect and then there is the economic aspect.

If we want to keep pace with the United States and China, in industries, high technology, zero emission electric vehicles, we need to push forward, we need more incentives. From this perspective I support the proposed legislation.

From the affordability point of view, all the big manufacturers are moving towards zero emission vehicles. The market, according to experts, is changing, and by 2026 the price of an electric car will be even to the price of a regular car.

And the faster we create this market for electric vehicles, the faster we will create a second-hand market for countries like mine, for Eastern European countries.

The faster it becomes cheaper to drive electric vehicles, the better it will be for poorer countries, because once the second-hand market is formed EVs will really be more affordable. So, when we speak about affordability, I’m in favour of a faster transformation.

Although, let me be honest: there are a lot of challenges. I also think that faster than 2035 is not realistic.

The Commission has proposed extending the Emission Trading System, the EU’s carbon market, to road transport. Are you in favour of doing so?

I’m shadow rapporteur for the Social Climate Fund file in the ENVI committee and this is linked with the ETS extension, which is probably the most problematic file of all.

The biggest problem is the penalising of the poor. We have to make sure that there is enough compensation for vulnerable people.

If we do extend the ETS to transport, we have to make sure that the compensation is enough, because this extension will lead to higher fuel prices, which will lead to higher transportation prices for all goods. This is a problem.

We have to make sure that we compensate those who suffer most from the extension of the ETS. And who suffers the most? The poor. And now, because of the way this legislation is designed, we cannot be sure that this compensation goes directly to those who really need it.

It is said that the Social Climate Fund will, for example, give rebates for buying new electric cars. Yet who can afford electric cars? Those who are poor, they cannot. So, we have to make sure that we target those who really need it.

If this happens [the extension of the ETS], we should think about how to make this process less painful. Maybe the solution is to look at the way it is in Germany, with a fixed price, or maybe we should give free quotas just like in the main ETS.

Yes, we have to reduce greenhouse gas emissions. But this reduction cannot come with a decrease in mobility. We need to find another approach.

The extension of the ETS enjoys support not only from the Commission but from MEPs such as Peter Liese of the EPP Group, who say the revenue generated will offset negative impacts. But it sounds like you’re concerned about how the Social Climate Fund will be rolled out in practice?

The colleagues that you mentioned think that this fund should be fed from the extension of the ETS. I say that this fund should be fed not only by the extension, but by the main ETS.

I am not 100% sure that we need this extension of the ETS to have enough money to compensate those who will suffer from the green transition, especially in transport.

I’m not against it, we just have to make sure that we find the best possible approach. Like I said, on one hand, we have these new targets that are set in the CO2 emission performance standards for cars and vans regulation. And on the other hand, we have this extension of the ETS. This will probably lead to a decrease in mobility, which is my biggest concern.

Those who really suffer most, they will not be able to change their lifestyle. They will need to pay more, those who are already poor.

There are different options, but we have to make sure that we’re not creating additional inequality.

Industry has said it’s unfair to apply green taxes until clean technology is available. So, if it’s not possible to buy a clean truck or coach for long-haul journeys it’s unfair to penalise truck and coach companies. What are your thoughts on this?

I absolutely agree 100%. We should not penalise business if there’s no other solution. We can penalise them only when we offer them an option.

The transport industry has also said that the extra expense from Green Deal laws could diminish European competitiveness.

We have to make sure that this is not going to happen.

When it comes to the energy taxation directive, I think that we should gradually introduce a new taxation structure. And it should be applied to a wider range of fuels over the transition period.

But what is most important is to avoid an overlap in taxes. Because if we don’t do this, this will definitely affect economic competitiveness.

It sounds like you are worried that people or companies may have to pay for the same emissions more than once?

Yes, this is my main concern. We have taxes in the energy taxation directive, we have the same taxes possible with the extension of the ETS, and on top of that, we have the same in the Eurovignette.

All of these taxes are coming from different legislation, tackling one single issue. This is multiple taxation on the same thing.

What could be done, for instance, is the exclusion of taxation for carbon emissions in the Eurovignette. This is one possible option in order not to have multiple taxation.

[Edited by Frédéric Simon]

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