The European Union’s long-awaited plan to tax aviation and maritime fuel is facing yet another delay, with Hungary proposing to postpone the implementation of a minimum levy until 2049. This proposal, designed to break a deadlock in the EU’s energy taxation reform, has drawn sharp criticism from environmental groups, who see it as a blatant disregard for the bloc’s climate targets.
The European Commission initially proposed scrapping the blanket exemption for aviation and maritime fuels in 2020 as part of a comprehensive package of measures to achieve a 55% reduction in CO2 emissions by 2030. However, the bill has been bogged down in bureaucratic delays, exacerbated by the fact that tax legislation requires unanimous agreement from all 27 EU member states.
Hungary’s compromise proposal, which has been met with fierce opposition, suggests that the minimum tax rates for aviation and maritime fuels should be postponed until 2049. This move has been condemned by environmental campaigners, who argue that such a delay would effectively render the tax meaningless and severely undermine the EU’s climate goals.
“It’s hard to find the words to describe the absurdity of a proposal to delay the introduction of a jet and maritime fuel tax to 2049, if not for ever,” said Jo Dardenne, lead campaigner on aviation issues at the NGO umbrella group Transport & Environment in Brussels. “With its proposal, the Hungarian government has completely obliterated the very purpose of this last piece of the Green Deal, which was to put a price on dirty fuels.”
Meanwhile, the European aviation sector, represented by the lobby group Airlines For Europe (A4E), maintains that airlines already pay significant taxes and are committed to sustainability initiatives. They claim that by 2030, their members, which include major airlines like Lufthansa Group and Ryanair, will be paying over €10 billion for allowances under the EU emissions trading system. They argue that imposing an aviation fuel tax would be counterproductive, jeopardizing the competitiveness of the European airline sector and potentially driving passengers to airports outside of the EU. A4E spokesman Kevin Hines told Euronews that their members plan to invest €14.8 billion in sustainable aviation fuel development alongside €165 billion in new aircraft by 2030.
The issue of taxing aviation fuel has been a subject of debate within the EU for years. Several EU governments, including the Netherlands, Belgium, France, Sweden, and Luxembourg, have advocated for such a tax. The European Commission, in 2021, concluded that a fuel tax would have a negligible impact on Europe’s economy before tabling its reform bill. More recently, EU climate commissioner Wopke Hoekstra expressed his frustration with the lack of progress, stating that it is “absurd” that aviation fuel remains untaxed while other fuel sources are heavily taxed.
The Netherlands, during the COP28 climate summit in Dubai last year, called for a phasing out of fossil fuel subsidies and for special attention to be paid to aviation and maritime transport. This initiative received support from several countries, including Antigua and Barbuda, Austria, Belgium, Canada, Costa Rica, Denmark, Finland, France, Ireland, Luxembourg, and Spain. However, the EU’s internal deliberations on the issue seem destined to drag on.
Government delegates are scheduled to discuss the Hungarian compromise proposal in Brussels on September 16. A similar impasse was reached in the European Parliament, with the assembly’s lead negotiator on the file, Johan van Overtveldt, a Belgian member of the right wing ECR group, proving a divisive figure. Overtveldt, in April, controversially shelved a ballot on the proposal in the economic and financial affairs committee, effectively postponing the decision and leaving it for the new parliament to resolve. This delay further underscores the deep divisions and political obstacles hindering progress on the critical issue of taxing aviation and maritime fuels.
