Yes. Definitely. In most (all?) developed countries except the US fuel tax easily covers the costs of roads and subsidizes everything else.
The EU is determined to reduce C02 emissions rapidly. If they want to do that they could cut their fuel taxes and use C02 neutral fuel and meet their targets much more easily. Not to mention cutting dependence on authoritarian states.
Looking at local (EU) gas price structure, ~50% is the actual cost of fuel and the rest is excise tax, VAT, and expenses/profit. So $3/gal bulk cost would fit a $6/gal = 1.6 eur/litre retail price including all taxes, which would be competitive even without any subsidies that a CO2-neutral fuel might justify.
I'm not sure about the rest of Europe, but in the UK neither vehicle duty nor fuel duty are used specifically for anything road related so theoretically they shouldn't need to tax it at all (beyond the standard VAT).
