By Gavin Jones

ROME (Reuters). Increasing numbers of European countries have cut fuel taxes in an effort to reduce surging petrol prices. While this is good news for motorists it does not bring relief to the environment. However, many environmentalists feel that it goes against global warming commitments.

The war in Ukraine has exacerbated rising international oil prices, driving petrol to more than 2 euros per litre across much of Europe, creating a significant burden for car and truck owners.

France’s 2018 protest movement “yellow vest”, triggered by fuel costs, was prompted in part by the rising cost of gasoline. The issue of fuel costs is always an emotive political topic and the governments keen to curb motorists’ anger are taking steps now.

It announced Friday that it will reduce the cost of gasoline and diesel by 25c per litre, until April. The measure is funded with a tax of one percent on the profits of energy companies in Italy who have seen their profits rise over the past six months.

France promises a rebate of 15% per litre, starting on April 1. This will be at almost 3 billion euro for the state coffers. Sweden announced similar measures. This year, both countries will be facing elections.

Climate activists, as well as economists, have criticised the strategy. They claim that politicians are abandoning pledges to reduce fossil fuel subsidies, and instead are reacting to fuel price emergencies at the expense of the climate crisis.

Michele Governatori from the Italian Climate and Energy Think-Thank ECCO stated that governments have clearly gone in the wrong way. Instead of reducing subsidies that harm the environment, they are actually increasing them.

His recommendation was that countries offer incentives to encourage people to use car-sharing, public transport and other forms of eco mobility. Alternately, cash assistance could provide financial support to the poor, which could then be spent on petrol if needed, without encouraging people to use cars and thereby reducing greenhouse gas emissions.

Eurointelligence, a think tank focusing on EU policy, called these moves “misguided and regressive.” It subsidises middle-class car owners instead of providing support for households that are least able to absorb the rising energy prices.

GERMAN TENSIONS

It has been almost impossible to oppose the reductions in petrol prices in France or Italy. There, environmentalists are not very well represented in parliament. But, Germany’s first sign of tension is the matter.

Christian Lindner (Finance Minister, Pro-business Free Democrats) proposed a Petrol and Diesel Rebate of 6.6 Billion Euros in three Months. The plan was rebuffed by the Greens who are reluctant to fund state subsidies for fossil Fuels.

These frictions threaten the unity of Olaf Scholz’s coalition government in advance of this month’s election in Saarland. This is the first state-wide election since the national ballot last year.

Scholz’s Social Democrats lawmakers and Greens claim that universal rebates are unfair, given the fact that high-earners tend to own cars while low-income households suffer from rising energy costs.

Clemens Fuest (president of the highly-respected Ifo Institute) has also raised concerns about the effectiveness of this measure. Jens Suedekum advises Germany’s economy ministry and said that it amounts to “throwing money out the window”.

Environment is at risk. The U.N. Climate Science Panel warned in its most recent report that climate change is affecting the world faster than scientists anticipated.

John Kerry, U.S. Climate Envoy, said that denial and delay were not strategies. He also stated in a statement attached to the report. The statements had been largely overshadowed just four days before by Russia’s invasion of Ukraine.

Temperatures 30-40° Celsius were higher than usual last weekend due to simultaneous heatwaves at the north-south poles.

RELIANCE ON RUSSIAN OIL

Paris’s International Energy Agency (IEA), a collection of 31 industrialized nations, issued a call to consumers Friday to reduce their oil use by sharing transport, driving slower, and travel less. The plan is part 10 of a 10-point strategy to decrease crude oil consumption in advanced countries by 2.7 million barrels per day over four months. It was announced as a response to concerns that the conflict in Ukraine will increase supply worries.

Russia accounted for 27% of EU imports in 2019.

When Reuters asked the IEA if fuel subsidies for motorists adopted by EU nations contradict its plan’s spirit, it refused to answer.

It stated in a statement that pricing policies should be carefully designed to prioritize the most vulnerable and people whose lives are dominated by cars.

The European Commission called upon member states to lower greenhouse gas emission by 55% in 2030. This is a significant reduction from 1990 levels. However, the European Commission did not condemn governments.

A spokesperson stated that they understood the difficulty caused by recent increases in energy prices. They also stressed the importance of taking temporary, targeted steps to mitigate the effects on households and businesses.

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