EU draft exempts private jets, cargo from jet fuel tax

: Emissions, Oil products
21/07/06

The European Commission has proposed exempting private jets and cargo flights from the planned EU jet fuel tax. A draft indicates that the tax would be phased-in for passenger flights, including ones that carry cargo.

The draft, which the commission will on 14 July present with its proposed revisions to the bloc's 2003 energy-taxation directive, indicates there could be an exemption from taxation for energy products and electricity used for intra-EU air navigation of cargo-only flights. It proposes allowing EU states to only tax such flights either domestically or by virtue of bilateral or multilateral agreements with other member states.

The commission is worried that taxing fuel for cargo-only flights would adversely affect EU carriers. Third-country carriers, also with a significant share of the intra-EU cargo market, have to be exempted from taxation due to aviation services agreements, the commission argues.

Private jets will enjoy an exemption through classification of "business aviation" as the use of aircraft by firms for carriage of passengers or goods as an "aid to the conduct of their business", if generally considered not for public hire. A further exemption is given for "pleasure" flights whereby an aircraft is used for "personal or recreational" purposes not associated with a business or professional use.

Non-governmental organisation Transport & Environment (T&E) called the proposal "generally good".

"The downside, though, is the commission is considering exempting cargo carriers that are often US-run," said its aviation director Andrew Murphy, who noted "multiple" solutions for taxing jet fuel used by cargo carriers that "tend to use older, dirtier aircraft".

In May, Murphy co-authored a report indicating that private-jet CO2 emissions in Europe rose by 31pc between 2005 and 2019, with flights to popular destinations up markedly during summer holiday seasons. He has argued for a fuel tax for this "leisure-driven" private jet sector.

Airlines for Europe (A4E) fears that setting minimum tax rates for intra-EU flights could lead to distortion of competition. The industry association, which counts 16 airline groups as members including Ryanair, Air France/KLM, Lufthansa, IAG, easyJet and Cargolux, indicated that the commission's proposal could lead to aircraft deliberately carrying excess fuel bought outside the EU specifically to avoid the bloc's jet fuel tax.

Airlines should not pay extra under the revised energy taxation directive when they are already paying for CO2 under the EU's emissions trading sytem (ETS) and participating in the International Civil Aviation Organisation's Carbon Offsetting and Reduction Scheme for International Aviation (Corsia).

More generally, the commission sees collection of aviation fuel tax as not problematic, with fuel suppliers collecting it and transferring to relevant tax authorities. The commission estimates the administrative cost of this at 0.65pc of revenue.

The draft may change before 14 July, and does not contain the all-important annexes with tax rates. To enter into force it must be approved by all 27 EU member states, and it may change markedly over the coming months. A commission proposal made in April 2011 to update EU energy taxation rules failed after finance ministers could not agree by unanimity in 2014.

The commission wants to align energy taxation with EU climate goals, meaning that taxes should be based on the net calorific value of the energy products and electricity and that minimum levels of taxation across the EU would be set out according to environmental performance and expressed in €/GJ. These minimum levels should be aligned annually on the basis of the EU's harmonised index of consumer prices, excluding energy and unprocessed food.

Next week, the commission will propose changes to the EU's emissions trading system (ETS). A draft of these did not detail how aviation will be treated, but no free allocations are envisaged for maritime, road transport and buildings sectors. Officials will also present the commission's mandate for sustainable aviation fuels (SAF), whereby all firms could be expected to fill up with blended jet fuels at EU airports.

By Dafydd ab Iago

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24/11/21

Cop: Developing countries reject new finance draft

Baku, 21 November (Argus) — Developing countries have expressed discontent with the climate finance draft text released today and continue to stick to their initial positions in negotiations at the UN Cop 29 climate summit, in Baku, Azerbaijan. The Cop 29 presidency earlier today released a new draft text on the key issue of climate finance for developing countries , but entrenched positions remain with no progress on an amount. Countries must agree on a new collective quantified goal (NCQG) — a new climate finance target — building on the $100bn/yr that developed countries agreed to deliver to developing countries over 2020-25. Parties such as the group of 77 (G77) and China, Pakistan and Kenya — on behalf of the African Group of Negotiators — today responded with disappointment at the lack of an amount for finance. They are calling for a figure close to 1.3 trillion/yr in provided and mobilised finance, an amount that has long been pushed forward by developing countries. Developed countries have not indicated a number . "We cannot talk about a lower or higher number because there is no number," said Colombia's environment minister Susana Muhamad. The country seeks to end the country's dependence on fossil fuels , while promoting a transition to clean and renewable energy, but has long said that it is lacking the financial means to do so. The finance goal "is not an investment goal, but there remains text on investment flows," complained the G77 and China group. China's representative emphasised that the text should not "cherry-pick single paragraphs" from the Cop 28 deal, as developed countries seek to add language on fossil fuels agreed in Dubai last year. The finance text should duplicate accurately and fully the wording of the Paris Agreement, they said. China also reiterated that the finance goal is for developed countries to honour their obligations. The country pointed out that although it has provided 177bn yuan ($24.5mn) since 2016 in support of developing countries, "the voluntary support" of the global south is not part of the goal. It is different in nature from the obligation of developed countries to provide financial resources, the Chinese negotiator said. UN secretary general Antonio Guterres today urged parties to "soften hard lines" and focus on the bigger picture. "Finance is not a hand-out… it's a downpayment on a safer, more prosperous future for every nation on earth." "The time to repeat initial positions has come to an end, and parties should find areas of possible compromise," he said. The summit is scheduled to end on 22 November, but many participants said it is likely to overrun. By Prethika Nair and Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: EU, four countries commit to 1.5°C climate plans

24/11/21

Cop: EU, four countries commit to 1.5°C climate plans

Baku, 21 November (Argus) — The EU, Canada, Mexico, Norway and Switzerland have committed to submit new national climate plans setting out "steep emission cuts", that are consistent with the global 1.5°C temperature increase limit sought by the Paris Agreement. The EU and four countries made the pledge at the UN Cop 29 climate summit in Baku, Azerbaijan today, and called on other nations to follow suit — particularly major economies. Countries are due to submit new climate plans — known as nationally determined contributions (NDCs) — covering 2035 goals to the UN climate body the UNFCCC by early next year. The EU, Canada, Mexico, Norway and Switzerland have not yet submitted their plans, but they will be aligned with a 1.5°C pathway, EU climate commissioner Wopke Hoekstra said today. The Paris climate agreement seeks to limit the global rise in temperature to "well below" 2°C and preferably to 1.5°C. Canada's NDC is being considered by the country's cabinet and will be submitted by the 10 February deadline, Canadian ambassador for climate change Catherine Stewart said today. Switzerland's new NDC will also be submitted by the deadline, the country's representative confirmed. Pamana's special representative for climate change Juan Carlos Monterrey Gomez also joined the press conference today. Panama, which is designated as carbon negative, submitted an updated NDC in June. It is planning to submit a nature pledge, Monterrey Gomez said. "It is time to streamline processes to get to real action", he added. The UK also backed the pledge. The UK announced an ambitious emissions reduction target last week. The UAE — which hosted Cop 28 last year — released a new NDC just ahead of Cop 29, while Brazil, host of next year's Cop 30, released its new NDC on 13 November during the summit. Thailand yesterday at Cop 29 communicated a new emissions reduction target . Indonesia last week said that it intends to submit its updated NDC ahead of the February deadline, with a plan placing a ceiling on emissions and covering all greenhouse gases as well as including the oil and gas sector. Colombia also indicated that its new climate plan will seek to address fossil fuels, but it will submit its NDC by June next year . By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: EU says finance draft text not acceptable

24/11/21

Cop: EU says finance draft text not acceptable

Baku, 21 November (Argus) — The latest draft of the text on climate financing presented at the UN Cop 29 climate summit is not ambitious enough on mitigation — reducing emissions — and "clearly unacceptable," EU energy commissioner Wopke Hoekstra said today. Parties must agree at Cop 29, in Baku, Azerbaijan, on a new collective quantified goal (NCQG) — a new climate finance target — building on the $100bn/yr that developed countries agreed to deliver to developing countries over 2020-25. The text is the main outcome for the summit. "What we had on our agenda was not just to restate the [Cop 28] consensus but actually to enhance that and to operationalise that," but the text goes in the opposite direction, Hoekstra said. Parties to last year's Cop 28 summit in Dubai made an historic pledge to "transition away" from all fossil fuels. The EU has warned against any backsliding on this pledge . "We cannot accept the view that the previous Cop did not happen," Hoekstra said. A draft text on the mitigation work programme — a process that focuses on emissions reduction — was released by the Cop 29 presidency in the early hours of this morning. It does not mention phasing out or reducing fossil fuels in energy systems, or reference the agreement reached on the latter point at Cop 28 last year. Hoekstra indicated today's text does not provide enough clarity to allow the EU to put a concrete number on the amount of climate finance that should be available. The bloc has insisted the final number for climate financing can come only when other elements, including the structure and contributor base, are settled. But recipient country groups such as the G77 and Like-Minded Developing Countries (LMDC) groups have expressed impatience at the lack of a concrete number. Minor bright spots in the numerous draft texts released overnight include those on Article 6, which governs international carbon credits, Hoekstra said. But the commissioner is "sure there is not a single ambitious country who thinks this is nearly good enough." By Rhys Talbot Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: Talks on Article 6 near final agreement

24/11/21

Cop: Talks on Article 6 near final agreement

Washington, 21 November (Argus) — Negotiators at the UN Cop 29 climate summit in Baku, Azerbaijan, appear close to a final agreement on the details of an international carbon market under the Paris Agreement. The ministers leading the final discussions on 21 November released updated texts for Article 6.2 and Article 6.4 of the accord that attempt to bridge the gap on remaining issues. It is not yet clear if these are the final texts, but any work left may only involve some "small tweaks", International Emissions Trading Association (Ieta) international policy director Andrea Bonzanni said. Those two sections of the Paris Agreement govern how countries can use carbon credits to meet their greenhouse gas (GHG) emissions-reduction pledges, known as nationally determined contributions (NDCs). Article 6 aims to help set rules on global carbon trade. EU energy commissioner Wopke Hoekstra called Article 6 one area of the talks "where at least the text is a bit encouraging." "We've always been pleading for more progress on Article 6," he said. "We've stressed the tremendous importance of transparency, predictability, credibility of these items." On the key issue of the Article 6 credit registry, the text reflects the idea of a "dual layer" approach that Singapore environment minister Grace Fu suggested on 20 November . The text calls for the creation of a registry to issue and trade credits that would be run by the UN and would be separate from the Article 6 registry, which would only serve an accounting function. "It looks like they managed to make both sides happy," Bonzanni said. The text also says that the inclusion of any emissions credits — known as internationally transferable mitigation outcome (Itmo) units — in the UN registry does not represent any sort of validation of their environmental integrity, in response to concerns raised by the US and others. "There was a concern that if the Itmos are in a UN registry, they may be seen as automatically having legitimacy or UN endorsement," Bonzanni said. The US should be happy with that language, he added. But the EU got only some of what it has sought over the past year. Most notably, the latest text does not include a definition of a "cooperative approach," essentially what it means for countries to buy and sell emissions units under Article 6. An earlier draft of the text included a definition, but there were concerns that it "could have restrained the markets significantly" and created confusion around certain requirements for when countries authorise Itmos, Bonzanni said. "I believe the presidency did a good job by making tough calls." Ieta is not happy with everything in the text, but at the same time "there is nothing harmful" to trading in it, Bonzanni said. By Michael Ball Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: New climate finance draft does not bridge divide

24/11/21

Cop: New climate finance draft does not bridge divide

Baku, 21 November (Argus) — The UN Cop 29 presidency has released a new draft text on the key issue of climate finance, but entrenched positions remain with no agreement on an amount, and no explicit reference to reducing fossil fuels in energy systems. The outcome of the finance discussions are inextricably linked to progress on mitigation, or cutting emissions. Developing countries have long said they cannot decarbonise or implement an energy transition without adequate finance. Developed countries are calling for substantially stronger global action on emissions reduction. Countries are working at Cop 29 to decide the next stage of a climate finance goal. Developed countries agreed to deliver $100bn/yr in climate finance to developing nations over 2020-25. The draft, released in the early hours today, streamlines previous iterations. But countries' views on details such as the amount beyond 2025 are set out in separate 'options', illustrating a lack of common ground. The text does not overtly reference phasing out or reducing fossil fuels, although it does call on the fossil fuel industry to align itself with the Paris Agreement and for phasing out inefficient fossil fuel subsidies. It is unclear if there was wide agreement on these points. Countries agreed at Cop 28 last year to "transition away" from fossil fuels. The first option, which roughly covers developing country views, sets out a climate finance goal of upwards of $1 trillion over 2025-35, broken down into provision and mobilisation. The provision element — which developed countries would be called on to provide — is in the billions of dollars, from a $100bn/yr floor, and should be grant or grant-equivalent, according to the draft. Mobilised finance, which could be private finance or even from carbon markets, would make up the rest — although no specific figures are in this part of the draft text. The second option, broadly covering developed countries' position, focuses on the Paris climate agreement that seeks to limit the global rise in temperature to 1.5°C above pre-industrial levels. This option sets a floor of $100bn/yr by 2035 for "collectively mobilising" finance "from a wide range of sources". It outlines a goal of $1 trillion or more for "global finance in climate action… from all sources of finance". The contributor base has long been a point of contention. UN climate body the UNFCCC delineated developed and developing countries in 1992, and the former group has consistently argued that economic circumstances have since changed, requesting a wider contributor base for climate finance. But positions on this appear not to have changed. The first option "invites developing country parties willing to contribute" to do so voluntarily, but says this will not be counted in the official finance goal. The second option notes that developed countries take the lead, but contributions from "countries with the economic capacity to contribute" will be counted. "This is not a text that aims to bridge", non-profit WRI director of international climate action David Waskow said today. He sees "a lot of work to be done". Cop 29 is scheduled to finish on 22 November, but many participants said it is likely to overrun. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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