EU finance ministers on the verge of locking in a decade of fossil fuel subsidies

13 October 2025

In the heart of the EU, the 27 are about to endorse a 470-billion-euro (1) tax break benefiting aviation, shipping and fisheries.  

Today in Brussels, BLOOM, with Transport & Environment, Seas at Risk and Blue Marine Foundation, convened scientific and economic experts for a press briefing on the revision of the Energy Taxation Directive (ETD). Speakers warned that EU finance ministers are poised to maintain full tax exemptions for fossil fuels used in aviation, maritime transport and fisheries until 2035, turning what should have been a cornerstone of the Green Deal into a decade more of fossil fuel subsidies.

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>>>Watch the recording of the press conference <<<

A crucial but overlooked directive

The Energy Taxation Directive sets the EU’s rules for taxing energy products. The current text, unchanged since 2003, is outdated and incompatible with climate objectives. Experts have long warned about the massive loss of income this loophole represents for Member States. 

Each year, aviation escapes 21.3 billion euro in taxes, shipping 24 billion euro, and fisheries up to 1.5 billion euro. That is 46.8 billion euro in lost revenue annually across the EU, including 3.2 billion euro for France alone. This is money that could instead finance the ecological and social transition. Yet, as national budgets tighten, the Council is preparing to take a final decision under the radar of citizens, unaware of the scale of the sums at stake. 

While we Europeans are struggling with high energy prices, the most polluting sectors still pay no tax on fossil fuels. These exemptions not only promote ships and fisheries to burn the dirtiest type of fuel but it also drains public budgets that could instead lower energy costs, support clean jobs, and fund the transition we urgently need. Ending these exemptions is not about ideology, it’s about fairness and the future. We need to tax the past to fund the future and we need decision makers with the political courage to make it happen. Better no deal than a weak deal that locks us into higher costs and deeper crises” said Anaïs Rios (Seas At Risk). 

‘This is only happening because of the hold the fossil fuel industry has over Member States and their political class” added Claire Nouvian (BLOOM).  

Europe’s untaxed pollution

Granting tax exemptions for fossil fuels amounts to an indirect fossil fuel subsidy. The EU’s 8th Environment Action Programme calls for phasing out such subsidies as a priority, and the European Parliament adopted a resolution urging their elimination at national, EU and international levels. The EU has also pledged to end fossil fuel subsidies and recognises that most of them are tax related. Phasing them out is part of Commissioner Wopke Hoekstra’s mandate. Yet the ongoing ETD negotiations are moving in the opposite direction. 

Professor Dr. Rahmstorf underlined the failure to slow down global warming since 1992: greenhouse gas emissions have even increased and global temperature rise has accelerated.  

A compromise that weakens the Green Deal

The European Commission’s 2021 proposal sought to remove mandatory tax exemptions for aviation, shipping and fisheries and to align taxation with energy content and carbon intensity. But since 2024, successive Council presidencies, Hungary, Poland and Denmark, have considerably weakened that proposal. They proposed to maintain obligatory tax exemptions for these sectors and seek to postpone any revision until 2035. 

Member States also proposed to delay the indexation of energy tax levels, which would now start only in 2038 and reoccur every three years. This watered down version of the text is due to be voted on at EU level by Finance Ministers of all EU member States (ECOFIN) on 13 November. 

By agreeing to this outrageous text, Member States would give up on € 231 billion of revenue from the aviation sector alone from now until 2035 that could be directed toward the just transition said Marte van der Graaf (T&E).  

Wrong incentives, wrong priorities

Decarbonized and lower emissions solutions are available but are being undermined by the continuation of fossil fuel subsidies. Rail receives far less public support even though it is five times less CO₂ intensive than aviation and six times less than road freight. Meanwhile, night train routes are being cancelled due to cuts in public funding despite rising demand. The same absurdity is visible across sectors: subsidies continue to reward those burning fossil fuels while punishing those investing in alternatives. 

Ethem Pekin (Community of European Railway and Infrastructure Companies (CER)) highlighted that despite rail being subject to the Emissions Trading System (ETS), it barely receives ETS revenues and does not benefit from any tax exemption unlike the aviation and maritime transport sectors. 

Competitiveness or climate?

Member states defend these exemptions in the name of competitiveness. But the European Environment Agency’s latest report is clear: no economy can remain competitive without a stable climate. Europe is the fastest warming continent, and climate impacts already cost billions of euros each year. Studies warn that climate shocks could reduce global GDP by 50% by 2070 if emissions continue unchecked. 

Dr. Michael Jakob underlined that on average the social costs of carbon amount to almost €300 per ton of CO2. The polluter-pays-principle demands incentives to reduce emissions and emitters to be accountable. Fossil fuel subsidies instead reward emitting activities and hence act like negative carbon price.  

Fisheries: the forgotten exemption

The fishing sector remains outside every European carbon framework. It is covered by neither the ETS nor the current ETD, meaning it escapes any form of taxation. Most emissions assessments also fail to account for the vast carbon released from seabeds disturbed by bottom trawling, emitting as much carbon each year as global aviation, yet the sector still benefits from the largest tax exemptions.  

‘The most energy intensive as well as the most destructive fishing practices are favored by the taxation system. Politicians bear the responsibility of delivering a vision to revert the system and drive a just and fair transition. They are failing to do so’ added Flaminia Tacconi (BLOOM).  

A democratic absurdity

Taxation at EU level requires unanimity, allowing one Member State to block progress for all. In this case, Malta, the smallest EU country, has led opposition to taxing aviation and shipping fuels, while other Member States have chosen to close the file rather than confront the blockade. The European Parliament’s opinion, expected in early November after years of delay, will arrive too late to influence the Council’s decision. 

A critical moment for Europe

The last technical meeting of the Council’s working group takes place on 14 October, followed by the ECOFIN vote on 13 November. BLOOM and its partners call on finance ministers to reject the current compromise and to restore the proposal’s ambition by ending fossil fuel tax exemptions and aligning EU taxation with its climate goals.

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 To govern is to choose. It is time to choose fiscal and climate justice by finally ending the climate-destructive tax loopholes benefiting aviation, maritime transport and fisheries. The upcoming decision will show whether Europe chooses to defend fossil interests or the public interest. 

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(1) 10 year projection based on current figures.