Comparing electricity policies between the primary and tertiary needs: the need for distributive justice within the energy transition

Abstract

The energy transition is amplifying the growing role of low-carbon electricity in our economies, and all sectors are concerned. This includes hard-to-abate sectors, such as air mobility, which cannot be directly electrified. The European Union recently introduced the obligation to incorporate e-fuels for aviation as soon as 2030. Among other characteristics, e-fuel is an energy carrier which requires significant low-carbon electricity volumes to be produced. In this paper, it is found that electro-intensive facilities, which produce e-fuel, benefit from little or no taxation while, when considered as a jet fuel, the final product is also untaxed. This means that electricity, when serving primary needs such as heating or lighting, is finally three times more expensive, mostly because of taxes, than electricity dedicated to producing e-fuel for aviation, a tertiary need. This unfair situation is being aggravated by the fact that while the entire population needs electricity for primary needs, only a fraction, the more affluent classes, really benefit from air mobility. Distributive justice is, therefore, found to be necessary, as a means of reforming the existing tax system, with a view to a just transition. These findings carry important implications for policy-makers, as keeping current policies, while electrifying, would lead to major injustices and wrong prioritizations. Although based on EU regulations, here applied to France, as part of its energy taxation directive, the methodology and conclusions of this study can be transposed to other countries, and other energy carriers based on electricity, such as hydrogen. Key policy insights With the existing tax schemes, electricity serving basic needs is 3-fold more expensive than when serving the production of e-fuel for aviation, a tertiary need. Keeping current policies, while electrifying, will lead to major energy injustices and wrong prioritizations. The implementation of transformational policies and strategies, aimed at achieving low emissions, should not interfere with energy justice. The taxation rate should become proportional to the final purpose of the energy, and this principle should be a pillar of energy justice.