The European Union is grappling with a cost-of-living crisis that is straining households and businesses. As part of its response, the European Economic and Social Committee (EESC) has put forward a bold proposal to phase out the most harmful fossil fuel subsidies.
Adopted in April 2025, this initiative aims to align climate goals with economic relief. But the impact could disrupt how Europeans travel – affecting everything from commuting to and holiday flights to public transport.
Fossil fuel subsidies, government measures like tax breaks, exemptions, or direct financial support, lower the cost of producing and consuming coal, oil, and gas. In 2023, EU fossil fuel subsidies reached €111 billion, representing more than a third of all existing energy subsidies. These subsidies directly influence travel costs. Despite EU attempts to mandate annual reporting on subsidy phase-outs, the EESC reported that these efforts have had limited impact.
Time to tackle Europe's #CostOfLiving crisis.
— European Economic and Social Committee (@EU_EESC) May 6, 2025
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Road transportation
“Diesel and gasoline are taxed more competitively than electricity used for charging EVs [electric vehicles], which means that charging an EV is more expensive than using diesel and gasoline,” said Corina Murafa Benga, EESC rapporteur and co-founder of the Romanian Energy Poverty Observatory. She noted that electricity is taxed three to four times higher than gas, undermining incentives to switch to cleaner alternatives.
Subsidies on petrol and diesel keep fuel prices low, making driving more affordable in countries like Germany, Poland, and France, which together accounted for over 60% of EU fossil fuel subsidies in 2023. Without these subsidies, fuel costs could skyrocket, impacting commuters, road trippers, and logistics companies.
Moreover, in 2023, The Brussels Times reported that Belgium alone had spent a total of €2.79 billion “subsidising the sale of diesel fuel” since 2019. Later, a 2024 report by the NGO Transport & Environment revealed that subsidies for company cars powered by petrol or diesel cost EU taxpayers €42 billion per year in just five countries.
Air transportation and rail transportation
Aviation benefits significantly, particularly from tax exemptions on kerosene (jet fuel). This keeps airfares low, especially for budget airlines. Withdrawing these subsidies could increase ticket prices, potentially pushing travellers towards train.
“A low-cost airline is four times cheaper between Brussels and Paris than a train between the two capitals,” Murafa Benga highlighted the discrepancy. Removing the kerosene exemption would raise airline operating costs that will likely be passed on to passengers. Currently, airlines are exempt from excise duties on their fuel. Additionally, airlines enjoy both fuel duty exemptions and VAT relief on international tickets.
Despite rail’s greener profile, high-speed train fares often outpace budget airfares. A round-trip flight within the EU can cost as little as €40–100 but remains carbon-intensive due to emissions during take-off and landing.
By 2030, #Compliance costs for 🇪🇺 airlines could hit €27.6B.
— Airlines for Europe (A4E) (@A4Europe) May 6, 2025
Key drivers:
🔹 #ETS costs & #SAF mandate implementation: +€6.2B
🔹 Taxation: +€1.4B
🔹 Operational costs: +€1.5B
🔹 #SES inefficiencies: +€2.9B
It is time to act to keep aviation competitive. pic.twitter.com/48euVj2KSf
Public transport
Public transport operators could also face higher fuel or energy costs, especially in regions reliant on diesel-powered buses or trains. Without government intervention, fares might rise, disproportionately affecting low-income households. However, the EESC suggests using savings from subsidy cuts to fund greener alternatives, which could ultimately stabilize or even reduce fares.
What’s at stake?
The EESC calls for a “responsible” phase-out to balance environmental benefits with economic and social needs. Fossil fuel subsidies, the committee argues, are often poorly targeted and disproportionately benefit wealthier households. The European Commission is being urged to set concrete phase-out timelines and milestones to guide this transition.
“If you phase out fossil fuel subsidies,” Murafa Benga warns, “fuel costs for clients that use diesel and gasoline would increase.” This might encourage consumers to shift to EVs, though upfront costs and charging infrastructure remain barriers. However, Murafa Benga noted that member states can think of programs through which they can compensate for the increases through subsidies to switch to EV or public transport.
🇪🇺Europe spends €80B/year on #fossil fuel subsidies. The same amount could renovate millions of homes🏘️ cut emissions & fight energy poverty.#CostOfLiving
— EESC PRESS (@EESC_PRESS) April 30, 2025
We must stop paying to pollute!
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The rapporteur emphasized the need for a just transition. “Phasing out fossil fuel subsidies is critical for climate action, but we must protect vulnerable groups,” she said. “By redirecting savings to affordable public transport and energy-efficient mobility, we can ease the cost-of-living crisis while building a sustainable future.”
She also pointed out the imbalance in current policies, exempting yachts and luxury boats. “Nobody is aware of these things,” she said.
Looking ahead
The EESC’s proposal comes at a pivotal moment. With transport costs already straining budgets, phasing out fossil fuel subsidies could add short-term pressure but also catalyse a shift toward greener, more equitable mobility. Murafa Benga points to Austria’s Klimabonus, a direct payment to citizens to offset rising fuel costs from taxing fossil fuel-intensive transportation introduced in 2022, as a model for supporting travellers during the transition.
According to the document, only six of the 27 EU member states had expressed an intention to fully phase out fossil fuel subsidies, bugt without specific deadlines. For now, the EESC’s plan is a call to action, signalling that the era of cheap fossil fuel travel may be nearing its end.
