EU Green Push Could Drive Up Fuel Prices by 50 Stotinki per Liter, Industry Warns

The European Commission is preparing a new phase of green legislation that could significantly impact fuel prices across the EU, BNR reports. Following the sharp rise in electricity prices caused by carbon emissions quotas under the "Green Deal," the Commission now aims to extend the emissions trading system to include the transport and building sectors starting in 2027. This means that the cost of carbon will be incorporated into the final retail price of fuel, making drivers effectively pay for emissions at the pump.

Estimates suggest that the initial increase in fuel costs could be around 8.4% in 2027, with prices continuing to rise in the following years. Rough calculations indicate that this could translate to a price hike of between 30 and 50 stotinki per liter, although final prices will depend on a range of market dynamics. These proposals are still under discussion and have yet to be officially adopted at the EU level. However, they are already being reviewed in Bulgaria through the draft Social Climate Plan and are expected to be brought to public consultation soon.

The broader package also includes support measures such as fuel vouchers for low-income households, subsidies for home energy renovation, replacement of inefficient heating systems, and free or discounted public transport for selected groups. Still, the most immediate concern is the direct impact on the fuel sector, a key component of Bulgaria’s economy.

Industry voices warn that this policy would trigger an abrupt and state-imposed price surge. According to calculations, one ton of diesel fuel emits around three tons of carbon dioxide. At a minimum carbon price of 50 euros per ton, this equates to 150 euros per ton of diesel, or roughly 30 cents per liter. After adding VAT, the total increase reaches just over 40 cents, possibly more depending on the product.

Beyond higher fuel prices for consumers, the broader economic consequences could be severe. Since the transport of goods heavily relies on fossil fuels, a rise in fuel costs would likely push up prices across all consumer products, driving inflation. This inflationary pressure would particularly affect countries like Bulgaria, which rely more heavily on fossil fuels and where much of the vehicle fleet is outdated.

The proposed measure, critics argue, was originally drafted in a completely different economic environment - prior to the war in Ukraine and the subsequent energy crisis. They stress that the economic assumptions underpinning it are now outdated. For example, initial renovation targets in some countries have been sharply reduced due to changing conditions.

While some northern EU states already operate similar carbon pricing schemes and would experience minimal change, many southern and eastern countries would feel the impact more severely. This discrepancy highlights the deepening divide between different regions of the EU on climate policy.

There are indications that resistance may be building among several EU member states, particularly in the east, with calls for the postponement or revision of the policy. Whether these concerns will be addressed remains to be seen, but the next few months will be critical for shaping the final version of the legislation.

Source: BNR