Tuesday, April 12, 2011

Freight Prices Threatened As European Haulage Groups Fear New Fuel Regulations

Commission Proposes Tax Charges on Energy and Emissions
Shipping News Feature

EUROPE – Those who believe that there are powers within the European Commission who crave a ‘super state’ will claim to have more evidence this week after a speech given by Algirdas Šemeta, EU Commissioner for Taxation and Customs Union to the European Tax Policy Forum and Centre for European Policy Studies during which he revealed details of a proposal to put before the Commission which will strike fear into the freight community, particularly those involved in the road haulage sector.

During his address Mr Šemeta spoke on four key tax areas including financial regulation, corporation tax and the obstacles which revenue paying citizens faced, but the area which will concern most of our readers are his proposals on the introduction of a European carbon tax which may have a serious inflationary effect on diesel prices. In his own words, “Our objective is less about introducing a new tax than about restructuring energy taxation,” which to the average cynical trucker means an additional cost at a time when he is least able to afford it.

Mr Šemeta believes that a common EU framework for energy and CO2 taxation will not only have the effect of making the EU countries greener but to, “ensure that they foster growth and employment” without expanding quite how he sees that happening. He claims that by introducing a CO2 element in the taxation of energy products, it will provide a framework for Member States to apply unified CO2 taxation in all areas where the EU Emission Trading System does not apply and it will encourage the development and use of high energy, low emission biofuels and possible other energy sources with no advantage to any one country.

The plan is to split energy taxation into two income streams, one based of the energy content of a fuel and the other on its CO2 potential which Šemeta says means taxes will then be based on objective criteria and provide consistent treatment of all types of fuel. The effect that these proposals will have is very much up for debate with the press throughout Europe speculating on what might be the outcome for private motorists and commercial organisations alike.

At first sight it would appear that petrol may come out better than diesel if the proposals become law, many European countries have adopted the new generation rail diesel engines with relish, over 60% of new cars sold in Austria are diesel powered, but road hauliers of course have a far narrower choice of power units. Manufacturers say that later diesel engines are much less polluting but this of course can depend on engine and exhaust technology rather than an analysis of original fuel type.

The answer to how the taxes will impact on individuals cannot possibly be known of course until the ratio of energy to pollutant is established together with the percentage taxes for each, but it seems that the paucity of energy the continent is likely to face in the next decade or so has politicians scrambling to stay ahead of the game and whatever the outcome few people will believe that there will be any pecuniary advantage in a new set of taxes.

The one positive effect of such an increase may well be that the adoption of heavy goods vehicles powered by new technology fuels will be taken seriously more quickly than hitherto. Anyone typing electric or hybrid into the News Search at the head of this page will find a host of stories published in the past two years regarding the developments in modern power train technology and the leaps forward made by numerous manufacturers.

A new set of taxes will be welcomed by very few, but it may force the development of freight and general haulage vehicles more suited to the restricted energy supplies which Europe has to face in future years.

Photo: A Smith Newton all electric truck in action.