POLITICO: EU prepares for new tax on fossil fuels What are the costs and who will be affected the most?

It says Europe will soon introduce a tax on fossil fuels used to power and heat cars. Politics. Until then, the EU is struggling to ensure that these new costs do not further increase social inequality.

The new scheme – a counterpart to the EU’s Emissions Trading System, ETS2 – is part of a European initiative to ‘green’ the economy and targets two of the most difficult sectors to decarbonise by reducing greenhouse gas emissions: thermal power plants and road transport. .

The new tax, which the European Parliament predicts will raise the price of fuel by up to 10 euro cents a liter by 2030, will act as a strong incentive for people to insulate their homes and switch to electric cars or use public transport. .

The big fear is that the new measure will hit Europe’s poor hardest, as they spend more of their incomes on energy and less likely to find clean alternatives, sinking further into poverty.

The European Commissioner in charge of the Green Deal, Franz Timmermans, tried hard to dismiss all these concerns: “I guarantee you – poor people will not suffer.”

A fund dedicated to vulnerable families – the 86.7 billion Social Climate Fund – will take effect in 2026, a year before the new tax plan is adopted.

“It will be very difficult for vulnerable families to avoid paying this tax.”

Anti-poverty campaigners and researchers warn that the fund may not be enough to protect the poor, as it all depends on how EU countries plan to distribute and contribute money to the social fund.

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“The risk we face is that each member state will make its own choices about how to distribute these funds and some of the most vulnerable may be left behind,” said Sabrina Inazone, policy officer at the European Poverty Network.

Under the ETS2 scheme, switching to non-polluting forms of transport and heating offer key options for saving on energy bills. But buying a “cleaner” car, insulating a house and replacing a gas boiler with a heat pump require a significant upfront investment that “people who are already struggling with heat and food” can’t afford, Iannazzone explained.

In the long term, “it will be very difficult for vulnerable households to avoid paying this tax,” said Greens MEP Sarah Mathieu, who is trying to make the new carbon market fairer. “From this perspective, I’m afraid the market mechanism won’t work.”

Critics say the European Parliament has allocated too little funding. According to Mathieu, in Belgium’s Flanders region alone, upgrades require 4 to 6 billion euros a year.

Also, they say the timing of the measures is inappropriate as funding will only be available in 2026 and only a year before the introduction of new taxes.

Author: Raul Nesoyu

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