Distributional impact of the revision of the Energy Taxation Directive in the EU: a gender perspective

Achieving the objectives outlined in the European Green Deal relies on the careful formulation of ambitious policies that make full use of existing tools, such as energy and environmental taxes. Within the "Fit for 55″ legislative package, the European Commission proposed a deep reform of the Energy Taxation Directive to update the current taxation and align it with current environmental goals. Nevertheless, the recent energy crisis, triggered by the war in Ukraine, along with concerns about the reform's potentially regressive consequences, has led to a standstill in negotiations. This study contributes to the debate by presenting new insights from a microsimulation model designed to evaluate the overnight distributional effects of the proposed ETD reform on households, with a particular focus on gender (analysed through the comparison of man-versus woman-headed households as a proxy), a perspective still largely overlooked in distributional assessments. This paper aims to examine whether the instruments proposed at the EU level can be designed to enhance rather than undermine social justice, considering an intersectional perspective. The results indicate that man-headed households in countries like Bulgaria, Italy, Poland, and Portugal would face greater welfare losses due to their higher reliance on fuel for private transport. In contrast, woman-headed households in countries like Belgium, Croatia, the Czech Republic, and Romania would be more affected by increased taxes on domestic energy, particularly for heating. Reductions in electricity tax rates, however, tend to benefit woman-headed households the most, as seen in Spain. • The ETD reform is key to aligning EU taxation with climate goals. • Gender-specific impacts of the ETD reform remain largely underexplored. • Man-headed households are more affected by fuel tax increases. • Woman-headed households are more affected by heating tax increases. • Lower electricity taxes tend to benefit woman-headed households the most.