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Analysis: Climate goals take a back seat as EU states slash petrol prices

  • War in Ukraine drives up fuel prices
  • EU states lower petrol prices at the pump
  • Environmentalists say the measures are going in the wrong direction
  • The issue sparks political tension in Germany

ROME, March 22 (Reuters) – A growing number of European countries are cutting fuel taxes to lower petrol prices at the pump. The move brings respite to motorists, but environmentalists say it runs counter to commitments to curb global warming.

Rising international oil prices, exacerbated by the war in Ukraine, have for the first time pushed petrol prices above 2 euros ($2.21) a liter in much of Europe , placing a huge burden on car owners and the industry.

Fuel prices sparked the “yellow vests” protest movement in France in 2018. They are still a sensitive political issue and governments, keen to stave off the wrath of motorists, are now taking action.

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Italy announced on Friday it would cut petrol and diesel prices by 25 cents a liter until the end of April, funding the measure with a one-off tax on energy companies whose profits have risen over the past six months. last months. Read more .

France promised a rebate of 15 cents per liter for four months from April 1 at a cost of nearly 3 billion euros for state coffers, and Sweden announced similar measures. Both countries are facing elections this year. Read more

However, climate activists and some economists are criticizing this approach, saying politicians are backtracking on promises to cut fossil fuel subsidies and reacting to the fuel price emergency at the cost of the climate crisis.

“What governments are doing is clearly going in the wrong direction, they should be cutting subsidies that harm the environment and instead they are increasing them,” said Michele Governatori of Italy’s climate and climate think tank. ECCO energy.

He said countries should offer financial incentives for people to use public transport, carpooling or other means of green mobility. Alternatively, simple cash distributions would provide support to the needy that they could spend on petrol if needed, but without directly encouraging car use and therefore greenhouse gas emissions.

European policy think tank Eurointelligence called the measures “misguided” and “regressive” because they subsidize middle-class motorists instead of helping households least able to bear the brunt of rising car prices. energy.

GERMAN TENSION

Petrol price cuts have seen virtually no political backlash in Italy or France, where environmentalists have little say in parliament, but in Germany the issue has revealed the first signs of tension in the three-party government. month.

Finance Minister Christian Lindner, of the business-friendly Free Democrats, has proposed a petrol and diesel rebate worth €6.6bn over three months, but the plan is being resisted by the Greens , reluctant to support state fossil fuel subsidies.

Friction is undermining the unity of Olaf Scholz’s coalition government ahead of an election this month in Saarland, the first since last year’s nationwide vote.

The Greens and some Scholz Social Democrat lawmakers say a universal rebate is unfair given car ownership is widespread among high earners, while soaring energy prices are squeezing low-income households income, many of whom do not have a car.

Economists such as Clemens Fuest, president of the famous Ifo institute, have also questioned the cost-effectiveness of the measure. Jens Suedekum, who advises Germany’s economy ministry, said it was “throwing money out the window”.

The stakes for the environment are significant. In its latest report last month, the United Nations Climate Science Panel warned that climate change was impacting the world much faster than scientists had predicted. Read more

“Denial and delay are not strategies, they are a recipe for disaster,” US climate envoy John Kerry said in a statement accompanying the report, which was largely overshadowed by the Russian invasion of Ukraine four days earlier.

Last weekend’s simultaneous heatwaves at the north and south poles saw temperatures 30 to 40 degrees Celsius above normal for the time of year.

DEPENDENCE ON RUSSIAN OIL

The Paris-based International Energy Agency (IEA), a group of 31 industrialized countries, on Friday urged consumers to travel less, share transport and drive more slowly as part of a 10-year plan points aimed at reducing oil consumption in advanced economies by 2.7 million. barrels per day within four months as war in Ukraine intensifies supply concerns.

In 2019, 27% of EU crude oil imports came from Russia.

Asked by Reuters whether fuel subsidies for motorists adopted by EU countries contradict the spirit of its plan, the IEA avoided direct criticism.

“Wherever possible, pricing measures should be carefully designed, giving priority to the poorest segments of the population and those for whom cars are an indispensable part of their economic activity,” he said. he said in a statement.

The European Commission, which has called on member states to cut greenhouse gas emissions by 55% by 2030 from 1990 levels, has also avoided criticizing governments.

“We understand the difficult situation created by recent energy price hikes and the need to cushion the impact for households and businesses with temporary and targeted measures,” a spokesperson said.

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Additional reporting by Joseph Nasr in Berlin, Noah Browning in London, Simon Johnson in Stockholm, Leigh Thomas in Paris and Kate Abnett in Brussels; Editing by Alison Williams

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