New European environmental taxes in the offing

August 13, 2020

In July, EU heads of government reached agreement on the largest-ever EU recovery package to mitigate the consequences of the corona recession. The package contains a EUR 750 billion recovery fund and a new multiyear budget (2021-2027). The agreement includes new environment-related measures at the EU level:

  • As of January 1, 2021 the EU will start collecting taxes on non-recyclable plastic. This is to encourage the reuse of plastic. The first calculations indicate that the plastic tax should provide the EU with EUR 6 billion - EUR 8 billion of additional revenue each year. Member States have to collect this, but the revenue should be remitted to the EU. The tax is calculated on the basis of the weight of non-recyclable plastic packaging waste, at an expected rate of EUR 0.80 per kilogram. The Netherlands is expected to contribute about EUR 250 million.  
  • Plans are being drawn up to tax CO2 at the EU level as of 2023. This should be a border adjustment, but it is currently uncertain whether it will be a tax. Putting a price on CO2 is the most effective way to combat CO2 emissions. Ideally, emissions would be taxed worldwide, but this is different in practice. Companies in countries with a CO2 price experience a competitive disadvantage, which can lead to production being relocated (carbon leakage effect). The new EU measures enable countries with a strict climate policy to protect themselves. For example, the measures tax products that are imported from countries without a climate policy. A bill is expected at the end of 2021.
  • Since 2005 the EU has had an emission trading scheme for CO2, the ETS. Heavy industry and companies in the energy and EU aviation sectors have to buy rights for each ton of CO2 they emit. The ETS may possibly be extended to maritime shipping and the free rights for the aviation industry may be phased out.

We will inform you as soon as more is known about this.

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