Luxembourg says cannot tackle 'fuel pump tourism' yet

Reuters News
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Posted: Sep 21, 2015 4:11 PM

By Barbara Lewis

LUXEMBOURG (Reuters) - Luxembourg will not consider changing its fuel pricing system that opponents say amounts to a big fossil fuel subsidy until after global climate talks in Paris later this year, the nation's environment minister said on Monday.

Environment campaigners say cheap fuel encourages waste and increases emissions, while boosting Luxembourg's revenue, as haulage firms deliberately plan their routes via the country.

The issue has shot to the fore because Luxembourg, as the EU presidency, is helping to lead EU negotiations on a global climate pact at summit talks in Paris from Nov. 30.

Environment Minister Carole Dieschbourg said she had launched an enquiry into the full impact, including the economic benefits to Luxembourg, when she took office in December 2013.

But she could not say what changes might be made without the report, which has been delayed because a fall in international oil prices meant the numbers had to be recalculated.

"For Luxembourg it's a major reform," she told Reuters. "We had hoped to finish the report before summer, but it has to be reworked. It is not a decision to make before Paris."

She disputed comments from non-governmental organizations that drivers make detours, saying Luxembourg was "at the crossroads" and therefore on the way for many European journeys.

She also said Luxembourg was introducing other measures to discourage car journeys, increase bicycle use, and improve public transport and that emissions in Luxembourg fell last year more than they had across the EU as a whole, although the figures have not been finalised.

While Luxembourg has been slow to assess the impact of what is known as fuel pump tourism, environment campaigners are quicker to analyze the web of levies.

Based on figures from Eurostat, the official EU database, Transport & Environment calculated that Luxembourg with a population of around half a million people made nearly one billion euros in 2014 in fuel tax revenues. Germany, with a population of more than 80 million, collected 31 billion euros.

In Luxembourg, in 2014 the weighted-average fuel tax was 34 cents, while in Germany it was 53 cents.

For a haulier's fuel tank of 1,000 liters, comparing Germany and Luxembourg, the difference is 120 euros per refill, discounting value added tax that can be claimed back.

In terms of emissions, fuel sales have pushed Luxembourg above its reduction goals, but it has met them by buying international carbon offsets.

The European Environment Agency, which collates data for EU policymakers, said Luxembourg had had to use "flexible mechanisms" because of cheap fuel.

Making up any shortfall could get harder as the European Union aims to raise its green energy targets for 2030 compared with 2020.

The European Commission, which says Luxembourg has the EU's highest motorization rate, has repeatedly called on Luxembourg to reduce emissions, including by increasing energy taxation.

(Additional reporting by Francois Aulner, editing by David Evans)