Did the elections mark a turning point for taxing carbon?

Last weekend’s European Parliament elections made it clear that climate change will be high on the agenda of the incoming EU policymakers. Different forms of carbon taxes will be among the key climate topics.  

Last weekend, Europeans cast their vote in record numbers, with an overall turnout at the EU Parliament elections rising to more than 50% – the highest in 20 years.

Far-right, populist and anti-EU parties – a lot of them also anti-climate action – were less successful than expected and pro-EU parties will continue to have a majority in the European Parliament.

In what has been dubbed as a “green wave”, the Greens succeeded beyond expectations, making substantial gains in countries like Germany, France, Netherlands, Ireland and Finland where the elections became a vote on climate.

But the climate crisis is no longer just a topic for the Greens; the youth movement and climate marches across Europe have made sure that also more mainstream political parties can no longer ignore it.

Growing momentum for green taxes

Pricing pollution is one of the tools needed to cut greenhouse gas emissions in order to keep climate change in check. A meaningful pollution price would drive a shift to renewable energy and incentivise the uptake of climate-friendly technologies. It would help change consumer behaviour and boost more sustainable transport modes.  

It’s also becoming something of a political mantra among European leaders.

Take French President Emmanuel Macron, who would like the EU to introduce a carbon tax at Europe’s border – a move that recently received cautious backing from Business Europe, an industry lobby. The Spanish government for its part has proposed that the EU start taxing dirty energy imports. In Germany, lately in the spotlight for its failure to take decisive climate action, growing pressure on Angela Merkel’s government is forcing it to reconsider its lukewarm attitude towards an economy-wide carbon tax.

The aviation sector, one of our biggest climate problems with soaring greenhouse gas emissions, currently enjoys tax advantages over other means of transport. To address this, Austria, France, Germany, Italy, the UK and Sweden have national aviation taxes in place and other countries, including the Netherlands and Belgium, are advocating for a similar tax to be implemented across Europe. Echoing these calls, a European Citizens’ Initiative is asking the Commission to “propose to member states the introduction of a tax on aviation fuel (kerosene)”.

The outgoing EU Commission agrees on the need to tax pollution in order to help the EU achieve its climate targets. The current First Vice-President of the European Commission, Frans Timmermans, who has his eyes set on the top job of the next Commission, has been very vocal about introducing a carbon tax at the European level (and backs a kerosene tax for aviation). The Energy and Climate Action Commissioner Arias Cañete in a recent speech underlined the need to have a taxation framework in place that gives the right incentives to consumers and facilitates the deployment of clean technologies.

Speed bumps ahead

The road to EU wide carbon taxation is likely to be bumpy, as under the current rules – that the Commission is proposing to change – the EU member states would have to agree unanimously on such taxes.

However, there is clearly growing political momentum for carbon taxes, reinforced by the recent elections and the EU citizens’ loud and clear call for decisive climate action. Even in the absence of an EU-wide agreement, the number of countries which are already backing fairer taxation of the aviation sector, for example, could constitute a critical mass which would allow them to introduce taxes through mutual agreements.

At Carbon Market Watch, we follow this debate with a keen eye and do our part to make sure that Europe has fair pollution pricing systems in place that truly drive the transition towards zero-carbon societies.