The reform of the European Energy Tax Directive: does data disaggregation matter? The Italian case

Abstract

In 2011, the European Commission (EC) proposed a new version of the Energy Taxation Directive (ETD), a tax affecting the price of energy products. The main aim was to increase the effectiveness of the instrument through stronger fiscal pressure and to coordinate the environmental taxation with the Emissions Trade System (ETS) introduced in 2005. However, in May 2012 the European Parliament did not approve the reform. Italy, already characterized by high energy taxation rates, has recently expressed a commitment to increase the use of environmental taxation by explicitly referring to the amendments proposed by the EC in 2011. This study analyzes the effect of the 2011 ETD reform on prices in Italy, if it were implemented. The main finding is that the new tax regime would have a low impact on prices. This result implies that the reform would not significantly orient consumption and production towards more environmentally friendly patterns.