The European Commission’s proposal for changes to the way energy is taxed is expected to have limited impact on the cement industry, according to Cembureau, the European association of cement producers.
The proposal distinguishes between two types of tax: one based on the energy content of energy products (general energy consumption taxation) and a second type specifically linked to CO2 emissions related to the consumption of energy products.
No amendments are expected to the general energy consumption tax, unchanged from the original Directive (2003/87/EC). As the tax is intended to place a levy on energy used for heating and motor purposes, the cement industry has been excluded from the scope as its energy use is required to transform its raw materials into clinker.
However, the CO2 tax introduces a new element in the taxation legislation as it will apply in principle to all energy products apart from those used in installations falling under the Emissions Trading Directive. As a result, energy used in the production of cement in >500tpd rotary kilns or other kilns with >50tpd capacity will be exempted. If capacity is lower, or in the case of grinding units, the plants will be subject to the CO2 tax, which is fixed at a level of EUR20/t CO2. For all biofuels that comply with the sustainability criteria laid down in Article 17 of Directive 2009/28/EC, it would be zero.
The bill includes transitional provisions to avoid carbon leakage while maintaining the environmental benefit of the CO2 tax.
To become a reality, the proposal will have to be approved by unanimous vote in the Council. This may prove difficult, according to Cembureau, given that Germany, Ireland, Luxembourg and the UK have given the proposal a not particularly warm welcome.