The directive is part of European Union energy law; its core component is the setting of minimum tax rates for all Member States.

The directive is intended to ensure the functionality of the EU internal energy market and to avoid distortions of competition through different tax systems.

In addition, it should also contribute to a low-carbon, energy-efficient economy, that is, to exert a steering effect with the aim of protecting the environment and the climate.

[3] There are a number of exceptions to the directive:[3] Member States are mandated to largely exempt commercial aviation and commercial shipping in the European Community's marine waters (referred to as 'air navigation and sea navigation'), but Member States are allowed to limit these exemptions (Preamble §23).

In 2008, the Council asked the Commission to come up with proposals on how to better align the Directive with the energy and climate targets of the European Union.