The new European Commission will start work at the beginning of 2010 on a revision of EU energy taxation, designed to introduce CO2 as a fiscal element. The outgoing Commission was to discuss the review proposal earlier, however EU member states did not want any potentially controversial tax proposals on the table ahead of ratifying the Lisbon Treaty.

As now all 27 EU member states have ratified the Lisbon Treaty, it is likely to enter into force before the end of the year, paving the way for opening up discussions in politically sensitive areas, such as taxation, and simplifying EU decision-making processes in both taxation and energy policy.

The revised 2003 directive will seek to bring current energy taxation in line with the EU's climate objectives by obliging member states to levy a CO2 tax on heating and motor fuels that do not feature in carbon trading. In addition, it also seeks to tackle any overlaps with the EU's emissions trading scheme (EU ETS) to avoid double-charging industries. The Commission would aims to propose a tax regime in which the carbon-related component would not increase the total level of energy taxation, to avoid creating headlines in member states accusing the EU of being about to impose yet another new tax on citizens. The European Environmental Bureau (EEB) however criticised the low rates, saying that they would not have the desired effect of persuading consumers to switch to more energy-efficient fuels. The Commission estimates that a carbon price of €39 per tonne of CO2 will be necessary to reach the EU's binding 2020 emission reduction target.

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Here you can find further information on the EU framework for energy taxation, including electricity.