EU fails to reach agreement on energy tax

Sweden had wanted to reach an outline agreement in discussions which dragged on throughout 5 June, but the UK’s Gordon Brown and his Spanish counterpart, Rodrigo Rato, said that they would not accept the tax until European energy markets have been fully liberalised with a single energy market. The proposals for the tax, which passed through the European Parliament more than two years ago (see related story) require the support of all 15 EU finance ministers before approval.

States also failed to agree on taxing renewable energy, with some nations arguing that they should be exempt from the tax altogether and others favouring inclusion but support through other means. When Parliament debated the issue it had agreed that products made from sources using renewables and other environmentally friendly goods would be exempt. In the Council meeting Sweden had also put forward other green measures in its proposals for the tax, saying that that fuels used in combined heat and power plants should be subject to lower taxation, that levies should be based on consumption instead of production and that energy-intensive companies should be subject to different rules.

It is now unclear what action Sweden will now take and the rejection leaves Belgium little hope for an easy settlement for one of its main priorities for policy introduction when it takes the EU presidency from Sweden at the end of June.