20 May 2025
Financial Experts, EU politicians and NGOs spoke with one voice last week in the European Parliament: end fossil fuel subsidies in the EU
20 May 2025
Last week in Brussels, BLOOM brought together experts, NGOs, MEPs and European Commission officials at the European Parliament to reiterate our demands on EU institutions for an ambitious revision of the Energy Taxation Directive, which is essential to preventing social, economic and climate collapse.
This file needs citizens’ full attention: it is about eliminating fossil fuel subsidies at EU level.
In February, BLOOM launched a large mobilization to support Commissioner Hoekstra in his intention to implement the Green Deal and work towards the critical revision of the Energy Taxation Directive (ETD). If this level of commitment is maintained, the revised ETD would become the only tool available at EU level that could tax energy sources proportionally to their level of pollution and could eliminate tax exemptions in aviation, fisheries, and maritime transport. Commissioner Hoekstra confirmed at the FISC Committee of the European Parliament that obtaining an ambitious deal on the ETD would be a priority for his mandate.
A file hold hostage of Member States’ discussions in Council
The Commission submitted a revision proposal in 2021 to put an end to these unfair and unjustified tax advantages granted to the most polluting sectors. Despite recommendations from the EU Climate Advisory Board, a handful of Member States in the Council repeatedly blocked discussions on this file as they are strongly opposed to the elimination of these fossil fuel subsidies, thus undermining the EU in achieving its climate objectives.
While taxation issues are decided in the Council by unanimity, some Member States (in particular Malta, Greece, Italy and Cyprus) have used their power to block progress on such a crucial matter, despite the urgent need for our societies to decarbonize our economies and phase out of fossil fuel subsidies as soon as possible, as agreed at EU and international level.
The transition of our societies requires financially sound and socially fair decisions
The context in which this legislation needs to be finalized is particularly sensitive, as discussions are starting at EU level for the adoption of the Multiannual Financial Framework that will decide how much money will come from the EU to finance the transition of our societies.
The crucial question is whether the EU and its Member States can really afford to give up tax revenues from the most polluting sectors such as aviation, maritime transport and fisheries while facing the immense costs of transition. Shall citizens be the ones to bear this financial burden while these sectors are encouraged to burn even more fuel?
Political daring means ending fossil fuel tax exemptions for polluting sectors
© Estelle Decorte
Financial Experts, EU politicians and NGOs spoke with one voice last week: end fossil fuel subsidies.
Ahead of the Danish Presidency, BLOOM organized a high-level panel discussion last Wednesday at the European Parliament in Brussels. The message was clear: maintain high level of ambition for the revision of the Energy Taxation Directive and get rid of fossil fuel tax exemptions for the aviation, maritime and fishing sectors.
All our speakers highlighted the absolute necessity of working towards a taxation regime at the EU level that is fair and coherent with the need to decarbonize our societies.
This is a need not only from a climate change perspective but also from a financial risk perspective.
Mike Clark, Senior Fellow at the Institute and Faculty of Actuaries, warned that “Subsidising economic activity that destroys citizens’ future is unwise. Voters may notice. […] Financial markets may notice before voters” and “Nature and physics are running the show. We tend to think that we are, but we are not”. He also stressed the importance of having a good transition plan. Is the EU working towards such a plan for the aviation, maritime and fisheries sectors?
While Patrice Pillet, taxation expert from the cabinet of Commissioner Hoekstra, confirmed that the Commission is committed to obtaining an ambitious deal on the ETD, Member States in the Council are still discussing whether to maintain a mandatory and total tax exemption for fuel used in some of the most polluting sectors.
The European politicians on the panel coming from three different political families agreed that the way forward needs to pass through removing fossil fuel subsidies to achieve the changes that need to happen and generate more financial resources to face the energy transition ahead.
Matthias Ecke (S&D, Germany), MEP and Vice-Chair of the FISC Committee, stressed that “Europe must ensure its taxation policies align with its climate ambitions” and “It is not only coming from environmental groups, we have also businesses telling us that we cannot keep on subsidizing fossil fuels”.
Lena Schilling (Greens/EFA, Austria), MEP, called for eliminating tax exemptions, insisting that “we are celebrating this year the ten-year anniversary of the Paris Agreement. I want to remind all of us that it is an obligation. Something we committed to do because we realized what the climate emergency and crisis means. […] And it is insane from an economic and climate perspective that we still subsidize fossil fuels in times like these”.
Yvan Verougstraete (Renew Europe, Belgium), MEP, advocated for a holistic approach of the issue, stating that “Inaction is not an option when it comes to fossil fuels subsidies. In order to preserve our competitiveness and our planet, Europe must act with determination and consistency. To win the environmental battle, we must make ecology economically attractive”.
The experts on the panel brought their insights on each specific sector that is benefitting from substantial tax advantages on fuel burned.
Krisztina Hencz, Aviation Manager at Transport & Environment (T&E), criticized the weak kerosene tax, noting that “most emissions — especially from long-haul flights — will go untaxed”. According to T&E’s analysis, this aviation under-taxation could lead to €34.2 billion in lost public revenues in Europe in 2022 alone, a figure projected to rise to €47.1 billion by 2025 if no reforms are adopted.
Anaïs Rios, Policy Officer at Seas at Risk, urged the EU to lead the way, stressing that “we know tax policies shape economic behavior. Yet, marine fuels remain effectively untaxed across EU. The EU is sending exactly wrong signals at a moment we need to speed up the transition”. In the EU, the fishing fleet consumes 2.3 billion liters of fuel annually and receives between €759 million and €1.5 billion in tax rebates. These subsidies disproportionately benefit the most destructive and fuel-intensive fishing practices such as bottom trawling.
Claire Nouvian, founder and Director of BLOOM, stressed that “it is just not right to use public wealth to destroy public wealth”.
The way forward: will EU politicians and Member States dare?
The Energy Taxation Directive has been blocked for years by a small number of Member States that continue to defend the indefensible. Maintaining tax exemptions for the most polluting sectors is not a neutral choice. It is a political decision that actively undermines the European Green Deal and threatens our future.
The Danish Presidency must now assume responsibility as it will facilitate negotiations of Member States in Council. It will be up to this Presidency to show whether the Council is capable of aligning EU tax policies with climate science. The Presidency must put the issue back on the agenda, isolate the blockers, and lead efforts to reach an agreement on a truly ambitious directive.
The Rapporteur for the European Parliament Johan Van Overtveldt, from the European Conservatives and Reformists (ECR), has finally issued his draft report. While it acknowledges the need to modernize outdated annexes and update minimum rates, it prioritizes competitiveness and affordability over environmental ambitions. By rejecting CO2 content as the basis of the ETD and suggesting yet another transition period to tax maritime and aviation sectors, it sends a contradictory signal at a moment when clear fiscal guidance and fiscal radical changes are urgently needed. Such an approach evidently underestimates the risks of climate inaction on our economies.
This approach reflects the broader resistance that has kept the ETD blocked despite its potential to deliver on the EU’s climate objectives.
There is no climate transition without fiscal reform. If the EU is serious about phasing out of fossil fuel subsidies, the Energy Taxation Directive must become one of its main tools. A strong ETD would respect the “polluter pays” principlei, put an end to harmful tax exemptions, and redirect public money towards the ecological transition.
The window to act is still open. But without political courage, the revised ETD risks becoming a missed opportunity and a symbol of failure that will lead our societal system to a climate and financial collapse.
If you want your voice to be heard alongside those who spoke at our event at the EU Parliament last week, together with thousands of EU citizens, sign our petition to call on the EU to stop subsidizing fossil fuels: