Tax incentives for eco-friendly energy technologies and disincentives for polluting energy sources such as carbon and petroleum products, feature in the European Commission’s imminent package of eco-related taxes, while, for trade relations with non-EU countries, a Carbon Border Adjustment Mechanism will include penalties for a series of imports, including electricity.
The package of tax incentives, to be announced on July 14, will prompt major changes in Europe’s energy market, hastening developments towards a greener economy. Without a doubt, reaction by unhappy players can be expected.
Lignite will become an even more costly energy source as a result of the measures. Gasoline, other auto fuels and heating fuels may be spared of extra levies as existing Greek fuel tax rates are already among Europe’s highest, well over the EU average.
Implementation of the tax measures may take until 2023 as European Parliament and the EU-27’s national parliaments will all need to ratify the package before it can be introduced.
The arrival of these tax measures is expected to immediately lift carbon emission right prices to even higher levels. Already soaring, they exceeded 53 euros per ton yesterday, and, according to analysts, could end up reaching as high as 100 euros per ton, as was noted by power utility PPC’s chief executive Giorgos Stassis, at yesterday’s Delphi Economic Forum.
Beyond the EU borders, the European Commission will introduce a Carbon Border Adjustment Mechanism, to apply for the EU’s relations with non-EU members. This mechanism could spark political tension, even trade wars.
It will aim to protect European industry from unwanted competition in sectors such as the energy, steel, aluminium, cement and fertilizer industries by increasing the cost of imports from non-EU areas and countries without CO2 right markets, such as the west Balkans, Turkey, India and China.
The CBAM is also expected to be introduced in 2023.