EU to Propose Carbon Tax on Energy Products

By ALESSANDRO TORELLO
BRUSSELS -- The European Commission will propose raising a minimum tax on energy products such as gasoline based on their carbon-dioxide emissions, as part of a broader plan to reform energy taxation in the 27-nation bloc, a draft document obtained by Dow Jones Newswires showed Monday.
The commission, the European Union's executive arm, wants a minimum tax on energy products to be partly based on how much CO2 these products emit, rather than only on their energy content, the draft said.
Details could change during consultation but the draft calls for a minimum tax ranging between one European cent (1.46 U.S. cents) and three cents a kilogram of CO2 and should be applied starting in 2013.
This system is designed to complement the EU's flagship program to reduce greenhouse gas emissions, the Emissions Trading System, which caps the amount of CO2 produced by EU industry and creates a market for them.
"Taxation related to CO2 emissions can be a cost-effective means for member states to achieve the reductions of greenhouse gases necessary" to meet EU's targets to cut these emissions by 20% by 2020 compared with 1990, the draft read.
The idea of a tax on carbon emissions has already been raised in a number of countries including France, China and Japan as one way to limit CO2 emissions.
Any formal proposal for a new tax system isn't likely to come before the end of the year and will need to be backed by all 27 EU countries -- no easy task as the U.K. has already expressed doubts about a pan-European carbon tax. The taxed products could include kerosene, natural gas and liquefied petroleum gas.
Write to Alessandro Torello at alessandro.torello@dowjones.com