EU energy tax deal deferred to 2000

Finland expects to pass dossier over to next EU presidency as "small positive signs" emerge

The plan to harmonise EU energy taxes - widely seen as a key policy in the fight against climate change - will not be finalised this year, the Finnish EU presidency has accepted. The dossier will pass to the Portuguese presidency, which takes over from Finland in January, "without any major progress," a Finnish source told ENDS Daily today.

1999 had been seen as a critical year for reaching consensus on the proposal, which would extend minimum excise duties to a wide range of energy products (ENDS Daily 17 January). Both the Finnish and the preceding German EU presidencies strongly supported the plan, but Spain and Ireland have blocked progress. Neither Portugal nor France, which succeeds it as EU presidency in the second half of 2000, is as enthusiastic.

One "small positive sign," however, according to diplomatic sources, is that Portugal intends to keep tax harmonisation on the agenda for EU finance ministers' meetings. Moreover, in what the sources describe as "a subtle change of tack," Spain - the arch critic, on grounds that it would fuel inflation - said at a finance ministers' meeting last week that "it did not categorically oppose" energy tax harmonisation. In the event of the Socialists regaining power in elections due next spring, diplomats say the Spanish position could shift substantially (ENDS Daily 25 October).

Meanwhile, in a bid to "give a signal that the issue is still alive," Finland last week presented a paper to European tax experts suggesting that countries be given more flexibility over the state aid they can offer to energy-intensive industries affected by energy taxes.

At present such allowances must be approved by the European Commission every two years, and are supposed to gradually decrease. The Nordic countries, Germany and the Netherlands want such derogations to be made permanent. This position has now won the backing of other member states, and will be presented to the next finance ministers' meeting on 29 November.

Follow Up:
Finnish presidency, tel: +358 913 4151.

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