“Macroeconomics of the Energy Union” study for the European Commission

Thematic Area #4 – Fiscal implications of the energy transition

The interaction between tax policy and climate policy is coming under the spotlight, as taxes that penalise pollution offer an incentive to decarbonsie and thus support climate action, while successful decarbonisation will curb revenues coming from fossil fuel taxation.

Existing tax rates and exemptions were largely established in times when climate change mitigation was not the highest priority: the EU Green Deal and climate neutrality target offer tax policy tax policy the opportunity to address this misalignment between tax rates and climate objectives and help accelerate the energy transition.

For this report:
– We collected excise and value added tax rates for all EU countries for the 2010-2020 period and assembled these in a database, used to populate templates feeding into E3ME and GEM-E3.
– We cross-checked tax rates for consistency (e.g., tax rates collected for DG Energy, reported by the IEA and by the OECD, etc.). In specific cases national tax documentation has been consulted to resolve discrepancies between the sources.

Outputs of our work include:
✅ Updated tax rates for each fuel and fuel user used in the two models to have a more accurate and realistic view of taxes and their impacts.
✅ Improved understanding of the implications of the energy transition for tax revenues, through studying of the past (2010-2020) and projection of the future (2020-2050)
✅ Assessment of the fiscal and emissions impact of a set of tax rates.

Read the full report 👉🏽https://lnkd.in/dJqfPXUD