The energy transition will hit the poor hardest unless it’s balanced by a shift in taxation, says Christian Egenhofer. The EU needs to acknowledge this and get started by lowering taxes on electricity to achieve the EU’s carbon reduction goals at least cost, he argues.
Christian Egenhofer is Senior Research Fellow and Head of the Energy and Climate programme at the Centre for European Policy Studies, a think-tank based in Brussels. He spoke to EURACTIV’s energy and environment editor, Frédéric Simon.
- The energy transition will imply cost increases, which may be covered with new taxes
- But any tax increase on polluting energy has to be offset by decreases elsewhere to cushion the social impact
- The European Commission has so far shied away from this debate about the distributional effects of the energy transition
- The Juncker Commission made a first step by acknowledging that energy poverty must be dealt with at EU level
- But member states now face tough choices and will need EU support, including financial, as well as “special policies”
- The proposed €5bn Just Energy Transition Fund is “peanuts” but it sends a very strong political signal
- When funds are limited, they should be directed at “no-regret” solutions like electricity grids
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