EU Court of Auditors confirms: Subsidies for fossil fuels impede energy transition


According to EU experts, the promotion of fossil fuels is hindering the energy transition in the European Union. In some cases, climate-damaging energies such as coal are taxed less in the EU than climate-neutral alternatives, according to an analysis by the EU Court of Auditors. More than half of EU countries subsidize fossil fuels more than renewables, according to the auditors’ analysis. In total, member states would spend over 55 billion euros a year on fossil fuel subsidies – despite commitments to phase them out. In order to achieve the climate goals, adjustments must therefore be made.

“Energy taxes, CO₂ prices and energy subsidies are important tools for achieving climate targets,” said lead auditor Viorel Stefan. The lower the taxes and the higher the government subsidies for an energy source, the cheaper it ultimately becomes for consumers. Low tax rates and state funds therefore create an incentive to use certain energies more intensively.

The auditors found that under current EU law, climate-damaging energy sources can be taxed more favorably than climate-neutral energy sources. For example, there are sometimes lower taxes on coal than on gas, although the latter emits less climate-damaging carbon dioxide. At the same time, 15 EU countries subsidized fossil fuels more than renewable energy. Renewable energies have generally received more support since 2008, but support for fossil fuels has remained stable. This means that the relative price of sustainable energies is rising and the energy transition is being delayed.

However, the auditors also pointed to challenges in phasing out tax breaks and energy subsidies for fossil fuels by 2025 as planned. Consumers in particular could be affected by a tax reform and rebel against it, for example because of higher prices.


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