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The European Commission is showing no sign of changing its opposition to reduced VAT rates on energy efficiency measures.

In a consultation on VAT levels, it said discounts for energy products could “significantly distort decisions on the optimal energy mix as well as the optimal level of consumption” and undermine the Energy Taxation Directive.

The consultation said that if VAT was too high for vulnerable social groups, “this should be addressed by targeted national policies”.

If the UK were to raise VAT rates on energy efficiency products, it could undermine the Green Deal.

This article first appeared in Utility Week’s print edition of 19th October 2012.

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