Green Budget News 31 · May 2013


Quotations of spring 2013

“The claim that climate change mitigation will cost jobs and cause economic problems is not supported by any evidence.”
Peter Liese, MEP Group of the European People's Party in an interview with ZEIT Online, April 2013.

“Fossil fuel subsidies are public enemy number one for green energy.”
Fatih Birol, International Energy Agency Chief Economist at the European Wind Energy Association conference, February 2013


Dear readers,

In this edition of Green Budget News we are proud to introduce first of all a new, more readable format – we hope you enjoy it – and second the many new topics we have been working on in the last months.
We were hugely disappointed to witness the European Parliament rejecting the European Commission’s very reasonable and measured attempt to partially rescue the European Emissions Trading Scheme (ETS) by withdrawing 900 million allowances from the scheme and returning them in 2019, to counteract the plummeting carbon price, which reached a new low of €2.81 in January 2013.
Bearing in mind that emissions reductions required by 2020 are already about to be met, there can be little justification for not going further, taking measures to tighten the cap, increase our emissions reduction targets, and make the leap to a greener, more efficient Europe and in so-doing, give our struggling economies a boost by fostering green investment and creating green jobs.
Ultimately, it is the EU that will lose out as a result of the Parliament’s cowardice, as our industries fall behind due to a lack of investment in low-carbon technologies. In the UK, where the carbon price floor kicked in this April, carbon prices will remain steady – and the stable investment climate for low-carbon technologies that much of the business community is crying out for will be the inevitable result.
We call on other European countries to ask themselves whether they should adopt this model, as main pillar accompanying or at least in lieu of backloading or other measures to improve the functioning of the EU ETS. Other news stories in this edition of GBN look at painfully slow progress in France, in spite of calls for action from the European Commission in the European Semester’s 2012 country-specific recommendations, the mainstream media, and from GBE, IDDRI and many others from civil society, the research community and business at the 2012 GBE annual conference in Paris – as well as from the country’s own Environmental Taxation Committee to take action.
Fortunately, we have many success stories as well – increases in environmental taxation in many countries, a third phase of the Environmental Tax Reform in Estonia, prompted by the government taking advice from the Stockholm Environment Institute – of course, a model we would welcome elsewhere! In the world’s single largest GHG emitter, emissions trading is now being piloted – in Shanghai, with other major cities in China to follow.
If you are interesting in joining Green Budget Europe or Green Budget Germany, or would like to help us in our work in any way – by sending us articles, information, ideas for collaboration, or making a donation - please do not hesitate to get in touch!

We wish you happy reading.

Your editors

Constanze Adolf, Jacqueline Cottrell, Anselm Görres, Kai Schlegelmilch and Petra Sieber


Carbon taxation and fiscal consolidation: the potential of carbon pricing to reduce Europe’s fiscal deficits
The European Semester for economic policy coordination
Public Hearing at the European Parliament
Re-Communicate report published on communication of renewable energy
New GBE-Project:“Communicating and realising the benefits and potential of EFR in Europe”
The European Parliament took GBE's amendments for the EU's next flagship environment strategy on board
European Employment Research Dialogue: Commission explores a tax shift
GBE at the European Resource Efficiency Platform
GBE backs attempts to reform the EU Emissions Trading System
GBG Annual Conference 2013 on visions for a post-growth society
GBE invited on 30 April to comment on a new report of the IMF on global fossil fuel subsidies

Estonia: Ecological Tax Reform helped economy out of the crisis
France: New attempts to raise diesel taxes
France: French government told to resurrect carbon tax
France: A loophole to tax the rich
Hungary: Household energy prices reduced
Hungary: Uncertainty about the road toll
Netherlands: NOx emissions trading system will be abolished by 2014
Romania: Excise duty on diesel raised
Slovakia: Government seeks to cut green energy subsidies
Spain: Government cuts green power subsidies
Spain: Controversial hike in energy taxes
UK: Carbon price floor for electricity generation
Additional reforms in EU Member States in brief

European Emissions Trading System remains a toothless tiger without structural reform
Effectiveness of EU emissions trading questioned – third phase brings regulative changes
Members of the European Parliament did not withdraw 900 million CO2 allowances – but instead chose to undermine the EU’s flagship response to greenhouse gas mitigation
What will the EU “climate policy” 2030 look like?
EU: low chances of meeting renewable energy targets by 2020 but new goals for 2030 in sight
Update on the EU Energy Tax Directive
Financial Transaction Tax under enhanced cooperation
Fighting tax evasion: Commission sets up a Platform for Tax Good Governance
European citizens’ initiative: start up a legislative revolution

OECD calls for reforming subsidy and tax policy in the energy sector to reach environmental goals more cost-effectively
World Bank and G20 call for phase-out of inefficient fossil fuel subsidies
KPMG Green Tax Index - How Taxes Can Drive Sustainability
China strengthens plans to introduce a carbon tax
China postpones launch of national carbon market to post-2015
Ecuador finalising OPEC oil tax plans
US Senate presented with carbon tax plans
US poll shows decreasing climate scepticism but weak support for carbon taxes
Additional reforms worldwide in brief
Australia: Market based carbon reforms facing an uncertain future

Communication Best Practices for Renewable Energy
The costs of energy transition - Criticism of Altmaier's trillion euro price tag
Third time lucky: Why France should implement carbon-energy taxation
The full costs of power generation - A comparison of subsidies and societal cost of renewable and conventional energy sources
Handbook Of Research On Environmental Taxation
De contrapartida financiera a oportunidad; de visión a concreción: La reforma fiscal medioambiental en Alemania y las oportunidades para la coordinación europea

International Fuel Price Survey 2012/13: Data Preview
Carbon leakage and the future of the EU ETS market. Impact of recent developments in the EU ETS on the list of sectors deemed to be exposed to carbon leakage
Energy Subsidy Reform in Sub-Saharan Africa: Experiences and Lessons
Derisking Renewable Energy Investment
Achieving energy efficiency through behaviour change: what does it take?
Petroleum product pricing and complementary policies: experience of 65 developing countries since 2009
Taxation Trends in the European Union – 2013 edition
Designing carbon taxation to protect low-income households
Bridging the aviation CO2 emissions gap: why emissions trading is needed
Powering Africa through Feed-In Tariffs
Low Carbon Development: Key Issues
Economics of Reducing Greenhouse Gas Emissions in South Asia: Options and Costs
The Long-run Macroeconomic Impacts of Fuel Subsidies
Free allocations in EU ETS Phase 3: The impact of emissions performance benchmarking for carbon-intensive industry
Why New Business Models Matter for Green Growth 
Good Intentions Meet Reality: The Dire Consequences of Spending EU Taxpayers’ Money in Hungary
Budgetary support and tax expenditures for fossil fuels - An inventory for six non-OECD EU countries
Taxing Energy Use: A Graphical Analysis
Inventory of Estimated Budgetary Support and Tax Expenditures for Fossil Fuels 2013
Energy subsidy reform: lessons and implications
Canadian Carbon Policy Year in Review and Emerging Trends, 2012
Global Energy Assessment: Toward a Sustainable Future
On picking winners: The need for targeted support for renewable energy
Greening Đổi Mới: An Outlook on the Potential of Green Jobs in Vietnam
Fossil fuel fiscal policies and greenhouse gas emissions in Viet Nam
Aviation Report: Market Based Mechanisms to Curb Greenhouse Gas emissions from International Aviation
Market Instruments and Sustainable Economy
Market Observatory for Energy: Oil bulletin

GBE Annual Conference 2013
Public Hearing at the European Parliament
Transforming Finance: fresh thinking on democracy, finance and debt
UNEP World Environment Day – Think.Eat.Save. Reduce Your Foodprint
EAERE 20th Annual Conference
REFORM group meeting
GCET 14: Global Conference on Environmental Taxation
5th World Congress of Environmental and Resource Economists

Research at ENT (Marie Curie post-docs)



Carbon taxation and fiscal consolidation: the potential of carbon pricing to reduce Europe’s fiscal deficits
CETRiE project ends after 11 months of great success and impact

The 11 months of the CETRiE project have revealed the huge potential for EFR to be integrated within fiscal consolidation packages and implemented more broadly in many countries in Europe. Our partners and contacts within finance ministries repeatedly asked for detailed and robust data to understand country-specific needs, challenges and opportunities generated by carbon-energy taxation.
GBE's role consisted of outreach for a study “Carbon taxation and fiscal consolidation: the potential of carbon pricing to reduce Europe’s fiscal deficits” written by Vivid Economics, which analysed carbon-energy taxation in selected EU member states, and policy at EU-level including the Energy Tax Directive (ETD), a reform of the EU Emissions Trading System (ETS), and Border Carbon Adjustments (BCAs). The report, commissioned by the European Climate Foundation (ECF) and Green Budget Europe demonstrates that carbon-energy pricing may raise significant revenues while having a less detrimental macro-economic impact on growth and employment than increases of other indirect or direct taxes.
CETRiE met its aim to reach key decision makers in the target countries and senior experts in e.g. Ministries of Finance and Environment, OECD, ECB, European Commission and European Parliament. Between December 2011 and October 2012 GBE organised 33 high-level and working level meetings in Spain, Hungary, Poland, France, Germany, UK, Belgium and Slovenia.
The project gained significant attention beyond the initially targeted audience. All events were well attended and participants came back to GBE with further questions or invitations to present the study in other contexts.
GBE brought together a number of ex-Finance Ministers and ex-EU-Commissioners to sign an open letter ahead of a Europe's Finance Ministers meeting in Brussels in May, to call on policy makers to take note of the report's findings and to explore smart taxation as a means of achieving fiscal consolidation. In addition, two Op-Eds were published in the Financial Times Germany and Le Monde.
The foundations laid during the first phase – in terms of contacts to high-level decision-makers within finance ministries, national partners and broad networks of contacts in target countries and international institutions – will be built on during future work to bring about real and substantial reform in carbon-energy taxation. The follow-up project was recently approved. CEPRiE “Carbon and Energy Pricing Reform in Europe” will engage in an ongoing dialogue with policy makers at highest level, including Finance Ministers wherever possible, with ministry staff at working level, stakeholders from industry and civil society, and the media, supplying them with evidence-based policy recommendations and strong arguments in favour of carbon pricing and smart taxation.
The ultimate aim of the project will be to contribute to a change in the current course of fiscal policy in selected European countries, and towards more ambitious carbon pricing mechanisms across Europe, bringing about significant reductions in greenhouse gas emissions and a substantive shift towards a low-carbon economy.

The European Semester for economic policy coordination
GBE calls for more EFR elements to live up to its full potential

Supplying the Commission with high-quality information on possible EFR measures constitutes a real window of opportunity to influence national and EU policy. Therefore, GBE submitted a set of recommendations to the EU institutions and is planning a cross-party parliamentary hearing at the European Parliament.
The European Semester is is an annual process under which the European Commission exercises much closer scrutiny of EU Member States’ specific fiscal and economic priorities and strategies. It is one of the key instruments developed in response of the ongoing crisis, to foster structural reforms and align national policies.
After issuing an 'annual growth survey'  (AGS) and overseeing a reporting process requiring all countries to submit their reform programmes for scrutiny, the Commission produces country specific recommendations (CSRs) on fiscal policy for each EU Member State.
The CSRs have potential to be a powerful tool: The Council can only reject CSRs by majority (i.e. 50 per cent of voting power) – and in the case of Eurozone countries, recommendations can only be rejected by qualified majority (i.e. 2/3 of voting power) of the Eurozone members. Not implementing these recommendations may trigger further steps through the EU economic governance tools, including the Stability and Growth Pact  and the Macro Economic Imbalance Procedure, both of which may ultimately lead to fines.
The embedding of the Europe 2020 strategy  and its ambitious sustainability, energy and social targets at the core of the European Semester was supposed to improve political ownership and delivery. However,  a closer look reveals that the European Semester creates tensions between the stability rationale prevailing in the Eurozone and the Europe 2020’s objectives for a smart, sustainable and inclusive growth. The European Semester has so far prioritised fiscal adjustment, mainly by supporting the austerity agenda. In addition, the overall consequences of fiscal consolidation and structural reforms tend to be overlooked.
Furthermore, recommendations in the CSRs relating to EFR have tended to be rather vague. Thus, substantial further work is needed to fully exploit the Semester's political dimension. 
Together with national experts, the European Environmental Bureau (EEB) and Transport & Environment (T&E), GBE developed Country Specific Recommendations  for eight EU Member States. In a letter we invited Commissioners Olli Rehn (Economic and Monetary Affairs), Algirdas Šemeta (Taxation), Janez Potočnik (Environment) and Connie Hedagaard (Climate Action), as well as a number of Members of the European Parliament, to present and discuss the CSRs. In setting out ways to accomplish the main objectives proposed, GBE put forward a number of actions and calls to the Commission to modify practices currently followed in the Semester. We also seek to establish good working relations with the so-called 'country desks' for target countries, thus creating a conduit to feed in concrete and specific recommendations for Member States.
In addition, GBE and a group of social NGO’s formed the “EU 2020 NGO Ad-Hoc Coalition” to develop “alternative country specific recommendations” to urge the Commission to ensure that more democratic legitimacy be given to the process through the involvement of national parliaments, social partners and civil society.
GBE will continue to work actively on the EU Semester. We plan to assess the CSRs to be adopted by the Council this June, evaluate their implementation at national level, and call for changes to the content and procedures associated with the Annual Growth Survey (to be presented by the Commission in November) and the 2014 CSRs 2014. This will include i.a. the inclusion of more EFR elements and increased involvement of civil society. Our aim is also to provide our national partners with powerful arguments to lobby their governments in favour of ambitious EFR policies. This is not possible without our national experts. If you are interested in contributing to our work, please contact Constanze Adolf.

Public Hearing at the European Parliament: "Strengthening the democratic legitimacy of the European Semester - Civil Society proposals for smart, sustainable and inclusive recovery"
Brussels, 14 May 2013

On 14 May 2013, GBE co-organised a cross-party parliamentary hearing  on the European Semester at the European Parliament co-hosted by MEPs Marije Cornelissen, Group of the Greens/European Free Alliance; Veronica Lope Fontagné, European People’s Party; Marian Harkin, ALDE; Sergio Gutiérrez Prieto, S&D and the Civil Society ad-hoc coalition: European Anti-Poverty Network, European Women’s Lobby, Eurochild, EASPD, Caritas Europa, Eurodiconia and the AGE platform Europe.
GBE and a group of social NGO’s formed the “EU 2020 NGO Ad-Hoc Coalition” to develop “alternative country specific recommendations” to urge the Commission to ensure that more democratic legitimacy be given to the process through the involvement of national parliaments, social partners and civil society.
The European Commission, the Council and Members of the European Parliament welcomed the initiative and agreed with more the than 70 participants that austerity and sanctions are not working to tackle the ongoing crisis and that Citizens need a voice in the process.
Constanze Adolf, Director of GBE´s Brussels office who presented the set of Country Specific Recommendations developed by GBE in cooperation with T&E and EEB concluded: “This was a very timely and encouraging discussion. We need to get the environmental and social dimension of the European Semester right, particularly those relating to: a tax shift from labour to environment and resource use, phasing out environmental harmful subsidies or a 20% increase in energy efficiency.” For more details.

Re-Communicate report published on communication of renewable energy
commissioned by the International Energy Agency’s RETD

The Re-Communicate project was commissioned by the International Energy Agency’s Renewable Energy Technology Deployment (IEA-RETD) – a technology cross-cutting and policy-focussed platform to accelerate the deployment of renewables.
Re-Communicate was based on previous work of the IEA-RETD. This suggests that much of current public discourse about renewable energies is characterised by misunderstandings, outdated or wrong information, and that misperceptions about impacts, costs and effectiveness of RE amongst the general public, at a political level and within the industry sector constitute a major barrier to the widespread use of RE technologies. Thus, the objective of RE-COMMUNICATE was to provide ideas, techniques and case studies on how the benefits of renewable energies can be better communicated to and by policy makers, decision makers and other stake-holders.
The final result, a scoping study  entitled “Communication Best Practices for Renewable Energy”, was published in April 2013. The report suggests ways in which policy makers can overcome common communication barriers to the widespread use of renewable energy technologies, such as the misconceptions amongst the general public about the benefits, opportunities and capabilities of renewable energies. It concluded that more targeted, effective communications campaigns can be achieved through the use of more consistent, holistic and rigorous approaches to pre- and post-campaign development. The report also suggested ways of taking findings from behavioural economics into account when designing communications activities, as well as suitable approaches for addressing inaccurate responses to RE in the media.
The project’s preliminary results were presented at a well-attended workshop "IEA-RETD Country Experiences with Renewable Energy Communications – Barriers, best practice, knowledge gaps and ways forward" in Brussels on 12th February. The final report as well as the presentations from the two workshops held in the course of the project can be found on the IEA-RETD website.
The scoping study also suggested that a platform for the exchange of knowledge, experience and insights in the field of communication to promote renewable energies as a possible way forward. IEA-RETD has invited stakeholders interested in contributing to a 'Communications Knowledge Platform for Renewable Energy", proposed in the report, to contact

“Communicating and realising the benefits and potential of EFR in Europe”
EU-wide project starting May 2013 for Green Budget Europe and partners

Green Budget Europe and partners the Danish Ecological Council, the Copenhagen-based think tank Concito, and University College London’s Energy Institute have been awarded funding to run a two-year Europe-wide project on improving perceptions and understanding of EFR in Europe by improving communication of EFR issues.
We would like to extend our sincere thanks the VELUX foundations, VILLUM FONDEN and VELUX FONDEN. VILLUM FONDEN and VELUX FONDEN are non-profit foundations founded by VILLUM KANN RASMUSSEN – founder of VELUX and other companies in the VKR group, with the purpose of bringing daylight, fresh air, and a better environment into people’s everyday lives. We feel extremely honoured that they have entrusted us to carry out this project – and we can’t wait to get started at our first project meeting in May!
All partners have worked hard to develop the concept for the project in the past months, which will set out to improve the communication of EFR on a number of levels, from politicians and business, through to the man and woman on the street. The project will be supported by GBE's eminent network of experts and the former German Finance Minister Hans Eichel, who worked intensively with Green Budget Europe during 2012 on the CETRiE project.
The project sets out to enhance the prospects for the implementation of Environmental Fiscal Reform (EFR) in Europe by improving the communication of its benefits and advantages in comparison to other policy instruments. As most readers know, experience has shown that one of the most fundamental barriers to the implementation of EFR is a general lack of understanding of EFR amongst policy-makers, stakeholders e.g. in the business sector, the media and the general public. Survey responses often reveal misunderstandings of what EFR is about – for example, while the polluter pays principle is supported by the majority, EFR is all too rarely perceived as a means of implementing it.
In response to this, the project sets out to communicate what EFR is about in an accessible way. During the project, a number of different communication strategies will be developed to reach diverse target audiences, such as policy-makers, stakeholders in the business sector, the media, and the general public.
We are very much looking forward to involving many of our partners in and readers of Green Budget News in the project. We will keep you informed of the project’s progress – please keep a close eye out for news and events!

The European Parliament took GBE's amendments for the EU's next flagship environment strategy on board

GBE calls for clear steps, ambitious targets and concrete timelines to strengthen Environmental Fiscal Reform proposals within EU's next flagship environment strategy, the 7th Environment Action Programme which is currently being discussed in the EU institutions. This new programme will define policy priorities up to 2020.
The 7th EAP (Environment Action Programme) is decided as a so-called “ordinary legislative procedure” , which means all EU institutions are involved in shaping the programme. This gives the programme a certain power in comparison to existing non-binding so-called roadmaps of the EU, such as the “Energy Roadmap 2050” or the “Resource Efficiency Roadmap”.
The proposal includes a chapter on Environmental Fiscal Reform, highlighting the need to phase out Environmentally Harmful Subsidies and emphasising the use of shifting taxes from labour to environment and resource use.
“The 7th Environmental Action Programme should learn from its predecessors and hence should first of all tackle the uneven implementation record of environmental legislation”, Constanze Adolf, Brussels GBE Office Director comments. “The full legislative procedure should support mainstreaming urgent environmental priorities – which are by nature always economic and social issues – through the whole set of EU policy areas.” Thus, GBE will put a special emphasis on strengthening the weak chapter on Environmental Fiscal Reform, given its potential to change behaviour and thus spur more efficient use of energy and natural resources. “It is time that the EU came up with a clear, concise and binding roadmap to phase out Environmentally Harmful Subsidies and to make use of the whole set of Market-Based Instruments to implement environmental policies in the most cost-efficient way”, Constanze Adolf concludes. GBE met the assistant of the rapporteur in the European Parliament MEP Gaston Franco, as well as the shadow rapporteurs Jo Leinen (S&D) and Gerben-Jan Gerbrandy (ALDE), and submitted amendments to the draft report.
For GBE, the 7th EAP should include a commitment to shift the tax burden towards environment / resource use of 10 per cent by 2020. Member states should be bound to present timetables for the implementation of this target by 2014. This must also be evaluated and sanctioned via the annual Growth Survey and the European Semester. Environmentally Harmful Subsidies should be phased out by 2020 and the EU should make potential access to future financial resources at EU level dependent on strict environmental criteria, and earmark them for environment-friendly measures.
On 24 April the Environment Committee of the European Parliament voted in favour of

  • three legally binding targets for renewables, climate and energy efficiency for 2030 to be adopted by 2015
  • a reform of the ETS

These are good news after the backloading disaster. Furthermore, the EP took the GBE amendments on board and voted
  • for a 10 per cent tax shift from labour to environment and resource use until 2020
  • Member States should develop concrete plans how to phase out environmentally harmful subsidies by 2015

Next steps:
The Parliament, the Commission and the Council will now try to develop a common compromise position (so-called “trialogue”) in order to reach an agreement by mid-/ the end of June.
There is a risk that some Member States will water the proposal down. You could help to keep the ambition on EFR elements for the next years high by lobbying your national governments. Please come back to Constanze Adolf with any questions or suggestions.
Download the position paper GBE published last year. Read GBE's contribution to last year’s consultation.

European Employment Research Dialogue: Commission explores a tax shift

In February 2013, DG Employment of the European Commission organised the European Employment Research Dialogue (EERD)  to explore the issue of shifting the burden of labour taxation to environmental sources. During their presentations at the panel, GBE Vice-President Aldo Ravazzi, Wise Patron Frank Convery and Steering Committee Member Paul Ekins provided important insights into their work and research related to Envi-ronmental Fiscal Reform (EFR). In the framework of the Employment Package 2012 and the Annual Growth Survey 2013, the Commission has advised Member States to reduce taxes on labour while increasing other forms of taxation, such as environmental taxes.
The EERD welcomed academic researchers as well as experts from relevant Commission services and representatives of Member State Committees, to engage in an open debate and exchange ideas. The conference specifically addressed the impact of EFR on job creation and the effect on taxation systems in dif-ferent countries, as well as outcomes in terms of progressivity or regressivity of environmental taxes.
The programm included both presentations on findings from existing research at national and European level, as well as an analysis of the perspectives for future research. Read a summary  of the conference.

GBE at the European Resource Efficiency Platform

As a member of the European Environmental Bureau (EEB), Green Budget Europe was chosen to represent the umbrella organisation at the meeting of Working Group III in January, focussing on Framework Conditions for Investments in Resource Efficiency.
The European Resource Efficiency Platform's objective is to provide high-level guidance to the European Commission, Members States and private actors on the transition to a more resource-efficient economy. The Platform's active stakeholder involvement aims to form a common understanding of the problem, find solutions to distributional issues and create a shared agenda of action to realise the vision set out in the Roadmap to a Resource Efficient Europe.
At the meeting of Working Group III, GBE contributed to recommendations on how to phase-out Environmentally Harmful Subsidies (EHS), emphasising the role of Country Specific Recommendations within the European Semester process and common learning. The outcomes of the meeting on EHS, water and waste pricing and natural capital accounting will feed into policy proposals expected from the Platform by mid-2013. The next EREP meetings are scheduled on 17 June 2013 and 28 November 2013.
The Platform's members include European Commissioner Potočnik, Commissioners Hedegaard, Šemeta and Rehn, members of the European Parliament (MEPs), ministers, business CEOs, academia and representatives of NGOs and civil society.
Read the Platform's Manifesto.

GBE backs attempts to reform the EU Emissions Trading System

The carbon price crashed to a record low of €2.81 in January 2013, and several auctions at the European Energy Exchange (EEX) have had to be cancelled – symptoms of structural problems in the EU-ETS. In the context of consultation processes, Green Budget Europe submitted statements calling for reform measures and put them forward for discussion at a "stakeholder meeting" of DG Clima at the European Commission. Backloading is an important first step in order to stabilize the carbon market in the short term and to bridge the time gap until structural reform measures deploy. However, GBE strongly supports more ambitious climate targets for 2020, strengthening Europe’s position in international competition in the long run.
The so-called “backloading proposal” of the European Commission would address the surplus in the short term by postponing the auctioning of 900 million CO2 allowances from 2013 to 2019 and 2020. This measure would increase and stabilise the carbon price until structural improvement can be implemented. Regrettably, although the backloading proposal was approved by the Environment Committee, the subsequent vote in the European Parliament rejected the proposal by 315 votes to 334 in April 2013. Now, the proposal has gone back to the Environment Committee, which is likely to submit a watered down proposal later on in the year.
In the first place, in order to address the long-term effects of the current imbalance between growing supply and stagnating demand, the European Commission presented six possible structural options to improve the system:

  • To increase the climate effort by raising the current 20 per cent greenhouse gas reduction target to 30 per cent by 2020 compared to 1990
  • To permanently retire a number of allowances in phase 3
  • To revise the annual linear factor, thus progressively reducing the overall cap on CO2 allowances
  • To include other sectors (such as transport) in the ETS
  • To limit access to international credits (offsets) after 2020
  • To introduce a price management mechanism, i.e. a carbon floor price fixing a minimum price level

for the auctioning process or a price management reserve stabilizing the supply-demand balance
Find GBE's statements concerning backloading(“Review of the Auction Time Profile for the EU Emissions Trading System”) or structural measures (“Options for structural measures to tackle the supply-demand imbalance of the EU ETS”) online.

GBG Annual Conference 2013 on visions for a post-growth society

The conference opened with a highlight when GBG’s Vice-Chair Kai Schlegelmilch awarded this year's Adam-Smith-Prize for Environmental Economic Policy to Hans Eichel, German Minister of Finance 1999 until 2005. With the award, Green Budget Germany honored Hans Eichel’s major contribution to the German Environmental Tax Reform implemented in 1999 and his efforts towards an agreement on the EU Energy Tax Directive. Green Budget Germany is very pleased that Hans Eichel will support GBG’s activities as a new member of the advisory board.
GBG Chair Dr. Anselm Görres introduced the subject of the annual meeting and illustrated the thrust of less grey  and more green growth. During several workshops, three key drivers for growth, i.e. job creation, population growth and public finance and debt, were investigated and analysed. Various indications showed quite clearly that the pressure for economic growth declines if income and wealth are distributed more equally in society. However, social disparity is tending to increase.
Find further information in GBG’s German press release  and event documentation.

GBE was invited on 30 April to comment on a new report of the IMF on global fossil fuel subsidies

Global fuel subsidies are estimated at US$ 1.9 trillion in 2011, including tax subsidies in advanced countries that arise from the under-pricing of energy.
Constanze Adolf, Director of GBE's Brussels office  presented GBE's work and offered support to promote the phasing out of EHS which was well received. The full paper and additional material can also be found on the IMF website.



    Estonia: Ecological Tax Reform helped economy out of the crisis

    Since June 2005, when the Estonian Government adopted its Strategy for an Ecological Tax Reform, all following Governments have committed themselves to its continuous implementation. After successfully leading Estonia out of the economic crisis, the reform project is now proceeding towards its third phase, where new emission and resource use fee levels will be introduced.
    The global financial and economic crisis of 2008-2009 was successfully overcome in Estonia. On the one hand, the Government applied tough austerity measures (the State Budget was cut twice in 2009). On the other, it launched a second phase of ETR, generating additional revenues to compensate the income gap due to low domestic consumption. Doubling the tariffs of resource fees in 2010 compared to the previous year did not only generate badly needed income to the budget but also created a strong incentive for more efficient production and sustainable consumption patterns. The agreement in 2009 also included a massive state support scheme for refurbishment, which brought the Estonian construction sector (most severely suffering from the crisis) back to pre-crisis levels already by the end of 2011.
    In 2011, environmentally-related taxes and fees (both excise taxes and resource fees) in Estonia amounted 449 million Euros, of which fuel and electricity excise formed 87 per cent, emission fees 8 per cent, resource fees 3 per cent and transport taxes 2 per cent. The share of environmental taxes and fees accounted for 14 per cent of total tax income.
    In 2010, the share of environmental taxes and fees in Estonia’s GDP was 3.1 per cent which slightly exceeded the EU average (incl. energy related taxes 2.6 per cent and emission and resource fees 0.5 per cent of GDP). Compared to other EU Member States, Estonian environmental fees are exceptional due to a low share of transport related taxes and high share of energy and resource use taxation.
    Share of environment taxes in GDP in per cent (source: Taxation Trends in EU, 2011)

    In order to prepare the third phase of ETR, the Estonian Ministry of Environment commissioned an impact analysis of environmental taxes between 2001 and 2011. Based on the findings of the Stockholm Environment Institute Tallinn Centre, the Government will propose new resource use and emission fee levels for the period 2016-2020. In addition, the environmental tax system may be amended with new taxes targeting transport and waste sectors or chemicals use.
    Valdur Lahtvee; Program Director, SEIT

    France: New attempts to raise diesel taxes

    French Environment Minister Delphine Batho supports higher taxes on diesel fuel to cut pollution for health reasons and to reduce demand pressure on refineries. As in many European countries, diesel has been taxed less than gasoline in France for decades due to its use in the agricultural sector.
    The diesel tax rate makes it 20 cents cheaper than gasoline for each litre. As consumers favour the cheaper fuel, about 73 per cent of new cars sold in France last year run on diesel, consuming more than 80 per cent of the fuel used on French roads.
    The beneficial treatment of diesel has led to a level of demand far exceeding what domestic producers can supply. The French lobby group for petroleum industries (UFIP) estimates that while France last year had net petrol exports of 4 million tonnes, it imported five times as much diesel.
    Ministers are divided on the issue. Delphine Batho backs higher taxes mainly on health grounds, although she acknowledged the need to protect the purchasing power of people living in suburbs and the countryside. "That means the evolution of the duty of diesel must first of all be achieved in a progressive fashion, and must above all be accompanied by measures on social justice."

    France: French government told to resurrect carbon tax

    The French government should re-table a proposal to introduce a carbon tax by June, a committee on environmental taxation said last week. The proposal, initially put forward by the previous centre-right government, was rejected by France's constitutional court in 2009.
    The court said it was unfair because there were too many exemptions for installations covered by the EU's emissions trading scheme (ETS). These exemptions were not justified, the court pointed out, because carbon allowances for ETS installations are given out for free until 2013.
    The environmental taxation committee, launched in December, is made up of parliamentarians and repre-sentatives from industry and civil society groups. It has called for the proposal to be amended to take into ac-count the issues raised by the court.
    It stresses that, based on current projections, emissions from the transport and building sectors will have to fall significantly to meet France's 14 per cent reduction target relative to 2005 levels for sectors not covered by the ETS. (…)
    The committee's recommendations echo past conclusions from the European Semester in favour of greater green taxation in France, and are expected to feed into the future national debate on a new taxation package planned for 2014.
    Republished with permission of ENDS Europe. A 14-day, no obligation trial is available from

    France: A loophole to tax the rich

    The 75 per cent tax on the richest class of the French population, which was rejected by France's constitutional court last year, might be revised and imposed in a different way. President Francois Hollande has now sug-gested laying the burden on businesses rather than on individuals.
    Hollande revised his original plan to tax individuals earning above 1 million Euros, which received large public support but was ruled “unfair”. The new tax, which needs to be approved by parliament, would now tax employers paying their workers more than 1 million Euros at 75 per cent for a predetermined period of two years.
    “Hollande said he hoped the proposal would persuade companies to lower executive pay at a time when France's economy is suffering, unemployment is soaring and employees are being asked to take pay cuts”, reported the Guardian.

    Hungary: Household energy prices reduced

    In December 2012, the Hungarian Parliament passed a law according to which electricity and gas prices for households were reduced by 10 per cent. The government tried to justify this move by asserting that the (foreign-owned) energy companies made extremely large profits, and took most of this profit out of Hungary. This might be true, although no assessments or any figures were made public to underpin these claims.
    In Hungary, electricity and gas prices for households have been always determined by the government under certain rules taking into account the costs of the companies concerned.
    Suspicions about critical claims rose further when Prime Minister Viktor Orbán stated in the Parliament that Hungarian household energy prices are the highest in the European Union, although this statement clearly contradicts EU energy price statistics, which locates household energy prices in Hungary at about average in the EU.
    The price reduction will clearly have detrimental effect on the environment: it will lead to more energy consumption and less investments into efficiency and renewables. It will also result in slower return on the already completed investments in these fields. These consequences send out a negative sign for investors in general, indicating that business conditions in Hungary are unpredictable.
    Energy companies have compensated for their losses by raising energy prices for industry, which is now com-plaining that this reduces their competitiveness on the international markets.
    Read another article for further information.
    András Lukács; President, Clean Air Action Group

    Hungary: Uncertainty about the road toll

    The Hungarian Government has declared several times its commitment to the implementation of a distance- and pollution-based road toll for trucks. However, in reality, its measures for practical implementation have been controversial.
    Nothing happened until February 2012, when the Government Decree 036/2012. (II. 21.) declared 1 July 2013 to be the starting day of the road toll. One month later, Prime Minister Viktor Orbán admitted during a public event that he had obstructed the implementation of the road toll, due to pressure from hauliers, and promised that he would not do so in the future.
    The next step was public procurement to assign a consortium for consultancy purposes in August, which was very effective and resulted in a tender being issued in September 2012 to implement the electronic toll collection (ETC) system on about 6,000 kilometers of the road network. The winner of the tender was announced in December. No second place finisher was declared because the next best price offer price was more than the government’s procurement target amount. However, a few weeks later, the winner, Getronics Ltd., announced its withdrawal from the implementation of the toll because its most important subcontractor had resigned.
    The Ministry of National Development responsible for transport then entered into negotiations and tried to find another subcontractor. Finally, a little more than five months before the declared starting day of the toll, the public procurement was closed unsuccessfully.
    The Clean Air Action Group (CAAG) recommended collaboration with the Slovak State and that Hungary join the ETC system already operating in Slovakia, but this proposal was rejected by the Government. At the end of March, Government Decree 88/2013. (III. 25.) declared the procurement of the toll system a state secret, on the pretext that during an open procurement process “secrets would be disclosed which would be detrimental to state security”. No explanation was given why no such concern was raised during the first tender process, and what change occurred that would justify a secret procurement. According to suppositions expressed in the press, the decision was motivated by the intention of the government to commission a certain company with the implementation of the toll.
    Now, three months ahead of the announced start of the Hungarian road toll, there is full silence about further plans.
    András Lukács; President, Clean Air Action Group

    Netherlands: NOx emissions trading system will be abolished by 2014

    Besides the EU ETS reducing greenhouse gas emissions of carbon dioxide (CO2), nitrous oxide (N2) and perfluorocarbons (PFCs), the Netherlands also have a second emissions trading scheme functioning in the country. The Dutch national NOx emissions trading system, established in 2005, aims to help larger sources to reach their targets under the National Emissions Ceilings Directive in flexible and cost-effective ways. However, because the system proved to be ineffective and created a substantial administrative burden, it will finally be abolished by 1 January 2014.
    Why did the Dutch NOx trading system fail? First, the trading system is limited by the effects of the parallel implementation of EU legislation on pollution prevention. As the IPPC Directive prescribes the use of best available techniques (BAT), some companies were forced to take NOx reduction measures, resulting in an oversupply of credits on the market. For this reason, the system never reached its goal to incentivise emission reductions at the lowest cost level.
    Second, the number of market players is small and most are, as a consequence of the IPPC Directive, either net buyers or sellers. Under such conditions, it is difficult for trade to become lively.

    Romania: Excise duty on diesel raised

    The Romanian government increased excise duty on diesel by 4.5 per cent from 1 January 2013. In Romania, diesel is more expensive than gasoline.
    The ordinance adopted by the government in January raised the tax from 374 Euro/ton (0.316 €/litre) to 391 Euro/ton (0.33 €/litre).
    Romania is one of the few European countries where the price of diesel (about 1.4 €/l) is slightly higher than the price of the gasoline. Romanians pay a very high price for fuel compared to their average income, which is one of the lowest in EU (about 260-300 €/month).

    Slovakia: Government seeks to cut green energy subsidies

    Annual subsidies for renewable energy installations could be cut by up to 20 per cent, according to a draft law tabled by the Slovak government in December. The law is likely to be adopted in early 2013.
    Another plan is to limit the subsidies for photovoltaic (PV) installations to those with a capacity of no more than 30 kilowatts. The size of the installations eligible to the so-called feed-in tariffs has already been scaled back to 100 kW following an unanticipated solar boom in the member state.
    Subsidies for hydropower will also be limited to plants of up to five megawatts. Hydropower is the main source of renewable energy in Slovakia.
    The government explains that without these changes, the Slovak economy could be seriously damaged due to increased electricity prices for end-users.
    Republished with permission of ENDS Europe. A 14-day, no obligation trial is available from

    Spain: Government cuts green power subsidies

    The Spanish government has announced a reduction in financial support for renewable energy, which will fur-ther discourage investment in a sector already hit by a temporary 35 per cent reduction in tariffs and a 7 per cent tax on generation.
    These measures do not only raise new barriers to energy transition and green growth urgently needed in a country experiencing economic recession. According to a Spanish renewable energy think-tank, they also fail to stop the electricity deficit and to tackle its fundamental cause, i.e. the way prices are set in the country’s electricity market.
    Additionaly, the Spanish Ministry of Industry declared that it would not extend controversial subsidies to coal-fired power plants beyond 2014.

    Spain: Controversial hike in energy taxes

    Higher energy taxes were introduced in Spain on 1 January 2013 following the approval of fiscal measures by the country’s parliament before Christmas. The renewables and cogeneration sectors say the tax hike will disproportionately affect them. The measures, which aim to tackle Spain’s €24bn electricity deficit, were put forward by the government in September 2012. All forms of electricity production will be subject to a flat tax of 7 per cent, as opposed to 6 per cent in the initial proposal.
    The 7 per cent tax will hit Spain’s wind and solar power sector harder because they are unable to pass on this cost to consumers like other energy producers. They are solely reliant on the fixed price set through feed-in tariffs. Spanish wind power association AEE estimates the new tax will cost producers €300m in 2013.
    As reported before, there will also be extra charges on fossil-fuel and hydropower generators, and on natural gas and nuclear waste. But an amendment adopted in December reduced the additional tax on the use of gas in industry from €1.15 to €0.15 per gigajoule. This lower rate does not apply to cogeneration. Denying cogeneration the lower €0.15 rate will have a negative impact on the combined heat and power production (CHP) sector which, according to trade body Acogen, will have to pay four times more than their less efficient competitors. “It is very strange that cogeneration is treated this way as it is not in the spirit of the Energy Efficiency Directive,” Fiona Riddoch of COGEN Europe told ENDS.
    Download the new Energy taxation law here.
    Republished with permission of ENDS Europe. A 14-day, no obligation trial is available from

    UK: Carbon price floor for electricity generation

    It is widely agreed that the current EU-ETS price is inadequate to divert investment from fossil fuel to low-carbon energy, risking expensive, high-carbon technological lock-in and reducing our chance of meeting demanding emission reduction targets by mid-century. In response, the UK is introducing a ‘Carbon Price Floor’ (CPF) for the electricity sector from the 1st April 2013, to underpin the EU-ETS and the weak price signal it provides, as part of a raft of ‘Electricity Market Reform’ measures aimed at encouraging the deployment of renewable and nuclear electricity.
    The Climate Change Levy (CCL), which taxes the consumption coal, natural gas and LPG, currently provides an exemption for these fuels (and others) when used for the generation of electricity (although the subsequent consumption of this electricity is taxed). The CPF will remove this exemption and require generators to pay a ‘Carbon Price Support Rate’ (CPSR) on their fossil fuel consumption. This rate will be in addition to EU-ETS obligations, with a target CPF (CPSR plus the EU-ETS price) of £16/tCO2 in 2013, rising to £30/tCO2 in 2020. This is expected to lead to an additional £6.1 billion of low-carbon electricity investment by 2030, according to government projections.
    The initial CPSR will be £4.92/tCO2. This rate was announced in 2011, when the EU-ETS was trading at around €15/tCO2. Since then, the value has plummeted to around €5/tCO2, leading to a likely CPF of around £10/tCO2 in April 2013 – over a third less than the stated target. As part of the 2013 UK Budget announced on 20th March, the CPSR for 2015/16 will be £18.08/tCO2, rather than £12.06/tCO2 set in Budget 2012 – itself an increase from £9.86/tCO2 announced in 2011 for this period.  This lack of short-term responsiveness of the CPSR (a two-year lag is required to give adequate time for consultation), undermines the certainty of achieving the target floor price in a given year, but still provides a mechanism to strengthen the currently wholly inadequate investment signal of the EU-ETS price. Even at its relatively low introductory rate this April, the CPSR is likely to be higher than the EU-ETS price, and in the absence of strong EU action to reduce the number of EU-ETS permits, this is likely to remain the case in future years.
    There are powerful arguments for extending the CPF idea to EU27 in order to stimulate low-carbon investment across the EU and prevent intra-EU effects on competitiveness. However, the unanimity requirement for EU-wide taxation measures makes such an extension extremely unlikely.
    Find additional information and data in a
    Ministerial Statement. Access details of each tax policy measure announced for the 2013 UK Budget.
    Paul Drummond and Paul Ekins; UCL Institute for Sustainable Resources, University College London.

    Additional reforms in EU Member States in brief

    Czech Republic

    • The introduction of a CO2 component was abolished by the Government in March 2013. Changes in taxation cannot be expected before the next elections in two years’ time.
    • From 1 January 2013, the rate of tax refund for diesel consumed in agriculture (an Environmentally Harmful Subsidy) was reduced and the refund will be entirely abolished from 1 January 2014.
    • Eco-tax on lorries delayed by two months: the kilometre tax will apply from 1 October rather than 20 July as initially planned, because its implementation is proving more difficult than anticipated: a nationwide trial will now begin in July.
      The tax will apply to lorries weighing more than 3.5 tonnes and that use local roads outside of the tolling system for motorways. It will be levied through electronic devices installed in each lorry and operated by satellite.
    • Increased rates of vehicle taxation from 1 January 2013: the new motor tax rates are in some cases 25 per cent higher than last year.
    • Car Tax Rates in Ireland for all cars registered after July 2008 are based on CO2 emissions. The rates and bands were revised and increased from January 2013.
    • Older cars registered before July 2008 will continue to have their motor tax based on their engine capacity. The rates were also increased from January 2013.
    Changes with effect from 1 January 2013:
    • The packaging tax has been abolished (revenue loss about € 300 mln).
    • The tap water tax and Eurovignet have been maintained (revenue in deviation from earlier calculations: plus € 125 mln resp. € 115 mln).
    • The gradual reduction of fiscal advantages for (very) efficient cars (by reducing the CO2 limits) started in July 2012 and has been strengthened by 1 January 2013.
    • The exemption for power plants of the coal tax has been removed (revenue € 115 mln).
    • The reduced fuel tax tariff for red diesel has been terminated (revenue € 250 mln).
    • From 1 January 2013 the calculation of the registration tax of motor vehicles is solely based on their CO2 emissions.
    Northern Ireland
    • In April 2013, Environment Minister Attwood launched Northern Ireland’s new 5p Single Use Carrier Bag Levy. Retailers must now charge shoppers at least 5 pence for each new single use carrier bag, regardless of its material (plastic, paper, starch and other natural materials).


    • Poland is working on two separate hydrocarbons bills - on taxation and on exploration and extraction procedures. The hydrocarbons law will come into effect in 2015, with a standard rate of 12,5%, but Poland will not levy the tax on hydrocarbons until 2020 in order to attract investors in shale gas extraction. the draft envisages numerous breaks depending on the profitability and costs of extraction, according to Finance Ministry proposals.


    European Emissions Trading System remains a toothless tiger without structural reform

    Given the economic crisis, an over-allocation of free permits and generous rules allowing the use of even cheaper carbon credits from abroad to substitute for EU permits, there is a surplus on the market that roughly equals the annual emissions of the ETS sector. Instead of creating a stable and strong price signal around € 30 per allowance, the carbon market is now characterised by fluctuation and a price level below € 5, which is by far too low to stimulate innovation and climate-friendly technologies.

    Price per tonne of CO2 (source: GBG, 2013)

    With an ambitious reduction target in place, emission reductions result from higher energy efficiency and investments in renewable energy technology. Therefore, the cap leads to long-term, strategic changes, whereas low emissions during economic recession only help in the short run and lead to a high emissions trajectory as soon as the economy recovers.
    Therefore, the current situation is threatening the achievement of the EU target to cut CO2 emissions close to zero by 2050. Last year, the EU already achieved the 2020 goal of 20 per cent CO2 reduction – mainly due to low production levels during the recession.
    More and more large companies(like Unilever, Shell and E.On) call for action to improve the ETS to ensure that the market rewards innovation and that the investments they made in climate-friendly technologies pay off in the future.
    Due to the over-allocation of free permits, Europe’s 10 biggest polluters (iron, steel and cement companies) have accumulated 304 million tonnes of surplus allowances during the second trading period (2008-2012), says NGO Sandbag. It estimates that they could have made windfall profits of up to 3.8 billion Euros by selling surplus allowances they got for free. These companies could hence benefit from the scheme without making any effort to reduce their CO2 emissions.

    Effectiveness of EU emissions trading questioned – third phase brings regulative changes

    The viability of the flagging EU Emissions Trading scheme (ETS) has been called into question again following the release of new data by the European Commission. New emissions data for the 11,000 industrial installations covered by the EU-wide cap and trade scheme shows that greenhouse gas output fell in 2012 by 1.4 per cent despite the ETS’s current ineffectual state, pointing at background economic conditions and direct regulation as the main driver.
    New data on the current surplus will be released in May which is expected to confirm that the market has around 2 billion of excess allowances. “The emissions trading scheme set a cap on emissions from power stations and factories of 10.5 billion tonnes of CO2 equivalent over the five year period from 2008-2012, but data released today finds verified emissions sitting 8 per cent below the cap at only 9.7 billion tonnes” reports the carbon trading campaigning and research group Sandbag .
    Third phase brings significant changes
    Launched in 2005, the EU ETS is now in its third phase, running from 2013 to 2020. A major revision approved in 2009 in order to strengthen the system means the third phase is significantly different from phases one and two and is based on rules which are far more harmonised than before. The main changes are:

    • A single, EU-wide cap on emissions applies in place of the previous system of 27 national caps;
    • Auctioning, not free allocation, is now the default method for allocating allowances. In 2013 more than 40 per cent of allowances will be auctioned, and this share will rise progressively each year;
    • For those allowances still given away for free, harmonised allocation rules apply which are based on ambitious EU-wide benchmarks of emissions performance;
    • Some more sectors and gases are included.

    Members of the European Parliament did not withdraw 900 million CO2 allowances – but instead chose to undermine the EU’s flagship response to greenhouse gas mitigation

    Green Budget Europe strongly regrets the negative “backloading” vote of the European Parliament on 16 April 2013. The proposal aimed at partly tackling the oversupply of emissions allowances in the EU's Emissions Trading System (ETS). 334 against 315 MEPs decided to reject the proposal of rapporteur Matthias Groote (S&D) to pull 900 million CO2 certificates out of the market and to reintegrate them in 2019.
    Backloading would not have repaired the ETS. However, it would have bought time to allow for more fundamental structural reforms of the system. The dossier which will now be sent back to the European Par-liament’s Environment Committee will most probably be watered down. A rejection of the backloading decision means that the EU Commission is not likely to present any measure before 2020 – while other countries of the world implement their own carbon markets successfully.
    Climate change abatement, driven by 27 separate mechanisms to meet the Kyoto targets, will exact a far higher cost to the economy than necessary to reduce carbon emissions – not to mention the implications for the European single market, and the resulting unnecessarily high administrative burden.
    The backloading proposal was not seen to drive the price by more than 2 Euros per CO2 allowance. However, a vote in favour of backloading would have been an important sign that the EU is committed to its aim of tackling climate change.
    It is now up to the European Parliament to come up with a new proposal and for the Council to agree on a forward-looking compromise. For GBE, a real solution until 2020 would mean an emissions reduction target of at least 30 per cent by 2020 that could be either achieved by increasing the linear reduction factor or by permanently retiring 1.4 billion allowances.
    Read GBE's German position paper calling for the backloading proposal as part of the EU Emissions Trading System.

    What will the EU “climate policy” 2030 look like?

    Günther Oettinger, EU Commissioner for Energy and Connie Hedegaard, EU Commissioner for Climate Action presented a green paper on “A 2030 framework for climate and energy policies” on 27 March. The Green Paper includes a number of general reflections and summarises the results of the climate and energy roadmaps.
    In essence, the Commission launches a public consultation lasting until 2 July, allowing Member States, other EU institutions and stakeholders to express their views. It asks which targets the EU should set – a greenhouse gas emissions reduction target (also known as 'Climate target'), an EU-wide renewables target, and an EU-wide energy efficiency target for 2030 - and whether these should be binding.
    “The paper reads as if we would have a lot of time but no clear view about what needs to be done”, Constanze Adolf, Director of the GBE Brussels Office stated. “However, the opposite is the case: The Commission is well aware of the position of the different key players in the field and is not short of evidence, intelligence or proposals about decisive steps for the future European climate policy. Therefore, it should not undermine its role of setting the agenda. We do not need questions but actions to avoid very costly climate policies in the future because of hesitation with serious implications.” For this reason, GBE would have welcomed a concise dossier with three (or more) binding climate targets.
    The Commission will produce an analysis of the consultation in autumn 2013. The European Parliament’s elections in May 2014 will probably delay decision-making. The next parliament can, at best, only be expected to define its approach in the second half of 2015.
    However, long-term low-carbon investment and Environmental Fiscal Reform need a stable policy environment to provide incentives for innovation and investment. Ambitious and well prepared policies would give the right signal to EU governments, industry, scientists and civil society, which all need to work hand in hand. This could provide the EU with a fresh impetus in the international climate negotiations for a post 2020 regime, to be finalized in 2015.
    The consultation is open until 2 July 2013. Read more

    EU: low chances of meeting renewable energy targets by 2020 but new goals for 2030 in sight

    According to the latest European Commission analysis, most EU Member States will not meet their 2020 renewable energy targets unless new incentives are put in place. The only countries well on track with regard to the long term target are Austria, Estonia and Sweden. Meanwhile, the Commission is moving forward on new targets for 2030.
    “The analysis shows most member states either reached or exceeded their 2011/12 interim targets in 2010, the year for which the most recent data is available. This is thanks to a strong growth in 2009 and 2010. But the impact of the economic crisis means many countries might end up with renewable energy shares in 2020 that are lower than in 2010, according to a consultancy study released at the same time”, reports ENDS Europe.
    On 27 March 2013, the European Commission published its first Renewable Energy Progress Report  under the framework of the Renewable Energy Directive. Since the introduction of legally binding renewable energy targets, most Member States experienced significant growth in renewable energy consumption. 2010 figures indicate that the EU as a whole is on its trajectory towards the 2020 targets with a renewable energy share of 12.7 per cent. However, as the trajectory grows steeper towards the end, more efforts will still be needed from the Member States in order to reach the 2020 targets. Find details online

    Update on the EU Energy Tax Directive 

    Ahead of the last meeting of the Council Working Party on Indirect Taxes, the Irish presidency distributed a new proposal which included a number of new suggestions. Compared to the previous Irish proposal from January concerning transport fuels, the new suggestion means slightly higher minima in 2015, but lower rates later down the line. The new proposal does not include any figures for 2027.
    The approach of setting minimum tax rates for carbon and energy content remains in the Irish proposal. However, the difference between proposed minimum tax rates for transport fuels in group I (liquid + "non-sustainable" biofuels, e.g. gasoline and diesel) and group II (gaseous + "sustainable" biofuels, e.g. LPG) is more significant than in the previous proposal, mainly due to lower figures for group II, which results from less weight being given to energy content than previously.
    The reports from the meeting indicate a more positive tone than before. To everybody´s surprise, it seems that the Polish delegate (in spite of the pretty marginal changes) called the new proposal "a tremendous step forward" and declared they could even accept that the new minima could be based on common values for CO2 emissions and energy content. Some member states expressed agreement with the Irish proposal, including the Czech Republic, the Netherlands and Denmark.
    Phase-ins and derogations dominating negotiations
    Members with the lowest purchasing power like Bulgaria, Romania and Lithuania remarked that the phase-in derogations that were part of their accession agreements have only recently ended, which means that in several cases they have recently raised their fuel taxes considerably. In relation to their low purchasing power, countries like Bulgaria and Romania at the moment actually have the highest fuel taxes in the EU (see figure below: fuel taxes in February 2013 related to purchasing power per person in 2011). Their governments believe it is politically impossible to accept further hikes, referring, among other things, to recent protests in Bulgaria against higher electricity prices, which forced the government to resign.

    On May 16th, the council working party on indirect taxes should have met and discussed the latest memo from the Irish presidency, but due to a strike among the Council staf the meeting was cancelled!
    For this, it seems uncertain whether the revision of the Energy Tax Directive will even be put on the agenda for the meeting of the Ministers of Finance June 21st. A precondition is probably that the presidency manages to arrange a new meeting with the Working Party, which might be difficult with such short notice.
    The discussions are likely to focus on derogations and phase-ins rather than on minimum rates. The NGO Transport & Environment suggested linking phase-in rules shall to purchasing power (a model which is already used in the "Effort-sharing decision" from 2009 and which defines the non-ETS GHG emission reduction mandates). If this formula is applied, fast and rather substantial increases to fuel tax minima will become mandatory for all richer member states already from the early stages of the revision coming into force, leaving countries like Luxembourg, Denmark and Spain no choice but to raise their diesel taxes.
    Magnus Nilsson; Senior Campaigner, Transport & Environment

    Financial Transaction Tax under enhanced cooperation 

    In mid-February 2013, the European Commission adopted a proposal for a Council Directive implementing a tax on financial trading in 11 countries. From January 2014, the levy is expected to raise between 30 and 35 billion Euros per year and should make banks more accountable following the financial crisis.
    The financial sector was a major cause of the crisis and received substantial government support over the past few years. Through the FTT, the financial sector will properly participate in the cost of re-building the economies and bolstering the public finances of the participating Member States (France, German, Belgium, Austria, Slovenia, Portugal, Greece, Slovakia, Italy, Spain and Estonia). The 16 other EU members refused to back an earlier, pan-EU proposal.
    The FTT based on enhanced cooperation mirrors the scope and objectives of the Commission’s original proposal of September 2011. The approach of taxing all transactions with an established link to the FTT-zone is maintained, as are the rates of 0.1 per cent for shares and bonds and 0.01 per cent for derivatives.
    The Directive will reduce the number of divergent national tax regimes in the EU, will generate significant revenues and help to ensure greater stability of financial markets, without posing undue risk to EU competitiveness.
    As in the original proposal, the "residence principle" will apply. This means that the tax will be due if any party to the transaction is established in a participating Member State, regardless of where the transaction takes place. The FTT will not apply to day-to-day financial activities of citizens and businesses (e.g. loans, payments, insurance, deposits etc.), in order to protect the real economy. Nor will it apply to the traditional investment banking activities in the context of the raising of capital.

    Fighting tax evasion: Commission sets up a Platform for Tax Good Governance 

    The European Commission set up the new Platform for Tax Good Governance to monitor Member States’ pro-gress in tackling aggressive tax planning and clamping down on tax havens.
    Find the Commission’s Action Plan and Recommendations online. Visit the website on tax evasion and tax avoidance.

    European citizens’ initiative: start up a legislative revolution 

    Exactly one year ago, a ground-breaking initiative was launched enabling ordinary people to directly ask the European Commission to come up with new European legislation on topics that are important to them. Since then the European Citizens’ Initiative (ECI) has been used to raise issues ranging from protecting the environment to mobile phones rates and stopping experiments on animals. Right2water is the first ever ECI to have cleared all the hurdles of the legislation.
    In order to launch a citizens’ initiative, one million signatures have to be collected from at least seven EU countries in less than a year. A minimum number of signatures has to be reached in each country. After a hearing in the European Parliament, the Commission has three months to decide if it will propose legislation. If it doesn't, it is obliged to explain why.
    Fourteen initiatives have been introduced so far. Some are about every day issues, such as the initiative for a monthly flat-rate for mobile phones in Europe or the one to set a speed limit of 30 km per hour in urban areas.
    The “right2water” initiative is the first successful ECI demanding that water and sanitation are declared a human right in the EU. It also expresses its opposition to EU liberalization of water and sanitation services and calls for promoting the provision of water and sanitation as essential public services for all citizens. Up to now it has collected over 1.5 million signatures across Europe, and continues counting. Eight countries have passed the minimum number of signatures required and only a few thousand signatures are needed to pass the threshold in several other nations. Read a press release.
    Mr Lamassoure, a French member of the EPP group, was pleased with what he observed the first year: "I welcome the fact that most of the citizens’ initiatives registered by the Commission have been proposed by ordinary people rather than by civil society groups. It shows that the sense of belonging to a European public space is growing."
    Access the official register of all currently open initiatives.



    Australia: Market based carbon reforms facing an uncertain future

    Australia provides an interesting case study of a two-pronged market based approach to greenhouse gas abatement with the introduction of a carbon pricing scheme in 2012. This article outlines the recent progress of Australia’s greenhouse reduction strategies and foreshadows a difficult road ahead for market based greenhouse reduction strategies in that country.
    Australia provides an interesting case study of a two-pronged market based approach to greenhouse gas abatement with the introduction of a carbon pricing scheme in 2012, which has operated alongside a range of pre-existing mandatory Renewable Energy Target. Whilst there are some very positive outcomes from the current arrangements, the future of both schemes may be bleak after the forthcoming Federal election to be held on 14 September 2013. This article outlines the recent progress of Australia’s greenhouse reduction strategies and foreshadows a difficult road ahead for market based greenhouse reduction strategies in that country.
    The Australia carbon price mechanism took effect from 1 July 2012 (see GBN No. 29 at p 29). It was part of a comprehensive Clean Energy Future Plan, which set an initial price of $23 per tonne for certain liable entities emitting greenhouse emissions in excess of 25,000 tonnes per annum. The Clean Energy Future Plan also established several new renewable energy incentives to operate in addition to the pre-existing Renewable Energy Target schemes (‘RET’). The first version of this scheme was introduced in 2000 with a mandatory target of 9,500 GWh of additional renewable electricity to be reached by 2010 (ca. 1% of total electricity generation at that time). The first scheme successfully launched a new industry in large scale renewable electricity generation, particularly wind-farms, which enabled the target to be reached several years ahead of schedule. In 2009 an ‘extended’ RET was introduced providing a much more ambitious national target of 45,000 GWh by 2020 (a 20% target) – subsequently reduced to 41,000 GWh by 2020 after small-scale renewable sources were separated out for different form of incentive.
    In December 2012 the extended RET was extensively reviewed by the Australian Climate Change Authority, which recommended that the RET should be continued in broadly the same form, despite the subsequent introduction of the carbon price mechanism. One of the key factors supporting continuation was ’persuading investors (and their financiers) to continue with their plans for long-term investments in renewable generation.’ Another factor was the ongoing political uncertainty over the future of the carbon price. This recommendation was accepted by the Australian Federal Government in March 2013.
    Two months later, in May 2013 the Federal Government released its 2013-2014 Budget, including an interim report on the effectiveness of the carbon price mechanism for the first nine months of its operation. This statement revealed that greenhouse emissions from electricity generation have reduced by 7.7% during this period whilst electricity generation from coal fired power stations has reduced by 8%, and renewable energy generation increased almost 30%. The strong increase in renewable energy generation was due mainly from new large scale wind farm investments prompted by the extension of the RET to 20% in 2009, together with strong growth in rooftop solar PV systems in the residential housing sector, driven initially by a range of State and Federal government incentives, and more recently by rapidly reducing prices for imported solar panels.
    In response to the Federal Budget Mr Tony Abbott, the leader of the Liberal-National Party Coalition (the Opposition), re-affirmed his long standing commitment to abolish the ‘carbon tax’ (as he calls it), along with the ‘mining tax’ (the mineral resources rent tax). In addition, the shadow Treasurer Joe Hockey has refused to give any commitment to the continuation of funding for renewable energy programs, leaving open the prospect that the RET scheme will be weakened - most likely by reducing the 41,000 GWh target, and perhaps by widening the range of technologies that are regarded as renewable. This uncertainty about the future of these two fundamental pillars of Australian greenhouse regulation has significantly curtailed new investment in large scale renewable energy projects. New wind farm projects have also been restricted by tough new planning rules introduced by several State governments (particularly the most populous States of New South Wales and Victoria).
    A major concern in this debate is the undue influence that the fossil fuel and mining industries could exert over a newly elected conservative government. There has already been a prolonged public relations campaign originating from these sectors seeking to blame the carbon price and renewable energy incentives like the RET for everything from sharply increasing electricity and gas prices, to declining profitability of coal mines and power stations and stagnating demand for electricity. In fact, most of these problems arise from a broader malaise (including over-reliance upon a monolithic national electricity market). For instance, the Australian Energy Markets Commission has estimated that household electricity prices have increased by over 90% in recent years largely due to massive new investment in infrastructure for the national grid. The carbon price has contributed to that price increase by about 6%, but households have been fully compensated for this extra burden through amendments the income tax system in 2012. The renewable energy subsidies have contributed about 7% to electricity prices. However, there are now over 1 million Australian households that have installed solar panels to reduce their reliance upon the national grid, and insulate themselves from increasing electricity prices.
    Recent economic data has revealed that carbon price will add about 0.7% to CPI in Australia in its first full year of operation. Thus the ‘price signal’ it creates for consumers is quite minimal and also fully compensated by tax cuts. In the business sector, heavy emitters and emission intensive trade exposed industries have also generous compensation to ease the burden. As a consequence the carbon price has had little real effect on greenhouse emissions in Australia to this stage. It will also soon transition to a flexible price phase with linkages to overseas markets from 2015, which is expected to reduce the permit price to $15.00 per tonne or lower. Nevertheless the carbon price creates an important framework for future management of greenhouse emission across the whole Australian economy. By contrast, the RET has already promoted strong growth in renewable energy technologies over the last decade, and (along with voluntary ‘no regrets’ strategies) it has been the backbone of Australia’s implementation of the Kyoto Protocol during the first compliance period. Both schemes have provided valuable experience in the application of market based strategies to address complex environmental threats. The possibility of these schemes being dismantled after the next Australian Federal election shows that there is still a large gap between optimal policy instruments and the political reality in a fossil fuel based nation like Australia.
    By Wayne Gumley, Faculty of Business and Economics, Monash University, 17 May 2013

    OECD calls for reforming subsidy and tax policy in the energy sector to reach environmental goals more cost-effectively
    In January 2013, the OECD published two new reports providing information on the structure and level of energy taxes and on fossil fuel support measures in the 34 OECD member countries. In addition to a systematic analysis of current energy tax rates and support measures, they present profound evidence of how reforming subsidies and rationalising energy taxes can at the same time help to improve public finances in a period of fiscal crisis and to meet environmental objectives.
    “Taxing Energy Use” shows that there are substantial and often illogical variations between tax rates on different fuels and different uses across and within OECD countries. The report calculates the taxation per unit of energy and per unit of carbon dioxide emissions resulting from the current fuel tax rates. The data underlying the publication show that energy taxation is typically not related to the environmental impact of fuel use and that low rates and exemptions also apply to especially detrimental energy sources.
    On average, the effective tax rate in terms of carbon emissions on diesel for road use is 37 per cent lower than the comparable rate on gasoline.
    In heating and industrial uses, the average effective tax rate in carbon terms on oil products is €24 per tonne of CO2, compared with €13 per tonne for natural gas; the average rate on coal is only €5 per tonne, despite its significant negative environmental impacts.
    The “Inventory of Estimated Budgetary Support and Tax Expenditures for Fossil Fuels 2013”   increases transparency on the structure, nature and scale of fossil fuel support measures in the 34 OECD member countries. The study identifies more than 550 support measures for production, consumption and general services that create a sum of direct and indirect support estimated in excess of US$55 billion annually. Petroleum products benefitted from roughly two-thirds of the value of all support measures, with the remainder equally split between coal and natural gas.
    The report also highlights potential benefits of reforming support to fossil fuels and progress made by a number of OECD countries in recent years.
    Germany reduced its total amount of estimated support for fossil-fuel production by more than half, to about €2 billion (0.1 per cent of GDP) in 2011, reflecting a decision to phase out support to the hard coal industry by 2018.
    The United States has proposed a federal budget for the 2013 financial year that would eliminate a number of tax preferences benefitting fossil fuels, which if enacted could increase government revenues by more than US$23 billion over the 2013-17 period.
    “Phasing out inefficient measures would help rein in budget deficits and free up funds to support other policy priorities, while still reducing greenhouse-gas emissions”, said Ken Ash, OECD Trade and Agriculture Director.
    Referring to best practice examples, the OECD recommends integrating reforms to fossil fuel subsidies in a package that includes broader structural changes. In order to smooth the path of reform, governments should provide targeted and transparent compensatory measures for economic restructuring and poverty alleviation.
    In the study on energy taxation, the OECD refers to GBE's CETRiE (Carbon and Energy Tax Reform in Europe) report.

    World Bank and G20 call for phase-out of inefficient fossil fuel subsidies
    At the World Economic Forum in January 2013, World Bank chief Jim Yong Kim asserted that countries should phase out subsidies for fossil fuels to help mitigate the impact of climate change, but felt removing them would be “politically difficult”. He added that tackling climate change requires both a stable carbon price and a way to make the market work for carbon.
    The Group of 20 (G20) Finance Ministers and Central Bank Governors' Meeting took place in February 2013, in Moscow and concluded with the adoption of a communiqué in which G20 Finance Ministers committed to reporting on progress made to rationalise and phase-out, over the medium-term, inefficient fossil fuel subsidies that encourage wasteful consumption, while providing targeted support for the poorest.

    KPMG Green Tax Indey - How Taxes Can Drive Sustainability
    The KPMG Green Tax Index measures how countries are using taxes to influence corporate sustainability behavior. The index ranks each country’s green-tax incentives and tax penalties to show which areas of the world are the most tax-friendly for corporate sustainability initiatives.
    Comprised of data concerning 21 countries, KPMG’s survey found that all countries have green tax systems that warrant attention from corporate tax and sustainability teams. The research identified over 200 individual tax incentives and penalties tied to corporate sustainability. At least 30 of these have been introduced since January 2011.
    The United States top the overall ranking of tax incentives and penalties, followed by Japan, the United Kingdom and France. The US performs best primarily due to its extensive program of federal tax incentives for energy efficiency, renewable energy and green buildings. When green tax penalties alone are considered, the US drops to 14th position.
    KPMG’s new tool is designed to increase awareness of the complex, fragmented and rapidly evolving green tax landscape worldwide. It aims to encourage companies to explore the opportunities of green tax incentives, and to reduce exposure to green tax penalties.
    Accordingn to KPMG, certain investments that drive change and secure competitive advantage may never be made if green tax systems are not fully understood and used. Investments that struggle to make a case on a pre-tax basis, can flourish after green tax analysis. Business leaders should not underestimate the potential of green tax incentives to deliver efficiency and productivity benefits, drive innovation and contribute to the bottom line.
    Based on an original article by Kathleen Hoffelder on

    China strengthens plans to introduce a carbon tax
    The Chinese government has recently confirmed that plans to introduce a carbon tax in the country are progressing. The tax will be part of a package of tax reforms, adding CO2 to the existing scope of environmental levies. In addition, Beijing is also considering new levies on scarce resources, luxury goods and damaging products and services.
    In 2012, the Chinese Ministry of Finance prepared a report on the viability of environmental taxes. Now, a carbon tax on large polluters at a rate of 10 yuan (£1) per tonne is expected to be introduced by 2015, before climbing steadily up to 2020.
    The new policy measures on the one hand reflect the rising pressure to cope with the smog crisis in Chinese cities and on the other the government’s goal to reduce carbon intensity within the Chinese economy by 40 to 45 per cent compared to 2005 levels by 2020.
    “At the moment, emissions trading seems to be the mechanism of choice, as evidenced by the pilot emissions trading schemes emerging in seven provinces and Municipalities,” said Terry Townshend of Globe International. It is not yet clear how this carbon pricing mechanism would work together with a carbon tax, i.e. whether both instruments would apply to the same facilities, or how they might interact. Although carbon pricing was included in the 2011-2015 five year plan, a revised timetable means that China now plans to launch a series of pilot emission trading schemes, regulating up to 1 billion tons of emissions, in seven manufacturing centres in 2015. Even at the pilot stage, this will create the world’s biggest cap and trade scheme outside Europe.
    At international level, China’s progress on carbon pricing will help to reduce resistance to more ambitious climate policy in the EU and criticism of carbon pricing mechanisms in the US. If China’s economy, as the world’s largest emitter of greenhouse gases, can bear carbon pricing in terms of competitiveness, there is little room left for excuses.

    China postpones launch of national carbon market to post-2015
    China’s proposed national carbon market will not launch in 2015 as originally expected. At a recent meeting of the World Bank’s Partnerships for Market Readiness (PMR), which helps countries to establish carbon trading programmes, China indicated work would only begin in 2015. This amounts to a reinterpretation of the 12th Five-year plan whereby 2015 is the start not the end date for the policy’s development.
    A government official contacted through an intermediary said: ”A national carbon market is unlikely to be completed in 2015.” This is also in line with comments by the Minister responsible for climate change at a conference last year who said the China-wide scheme would be developed by 2020.
    “The delay was very much anticipated,” Guoyi Han, research fellow at the Stockholm Environment Institute (SEI) said. “There are fundamental reasons embedded in the complexities of setting up a fully functional, market-based trading mechanism in a still heavily government intervened economic system. Others are technical and capacity related,” he said.
    “Still others might be circumstantial such as the slowdown of the economic growth last year in China. That may have eased the urgency on carbon emission control.”
    Republished with permission; abridged and modified version based on an original article by John Parnell on

    Ecuador finalising OPEC oil tax plans
    Ecuador will introduce plans for a carbon tax on oil at the May meeting of the Organisation of Petroleum Exporting Countries (OPEC). The initiative would see a 3-5 per cent tax levied on every barrel of oil exported to rich countries. Funds would be transferred directly to the Green Climate Fund (GCF). Ecuador believes it could raise up to US$80bn a year.
    Ecuador Ministerial Advisor Daniel Ortega said hopes were high it would be accepted by the world’s larger oil producers in May. “It’s still in the design stage, but it will be taken to the OPEC meeting in the next few months. The idea will be for it to be first entertained in the OPEC arena, develop a status, and at the final stage it will be taken to the UNFCCC,” he said. “We think it is a proposal that can generate a sufficient amount of resources, so as perhaps to match 80 per cent of what is needed for the Green Climate Fund.”
    Ecuador has already consulted some OPEC partners, and Ortega says the concept is “politically acceptable to everyone”. Ortega also stresses that the effect on demand for oil will also have to be assessed – a critical concern for all 12 OPEC members.
    OPEC could in theory take a unilateral decision and impose the tax, but it could face protests from key importers such as the EU and USA. The Organisation’s oil exports represent about 60 per cent of the total petroleum traded internationally, and because of this market share, OPEC’s actions influence international oil prices. But to be effective it would need to be matched by other leading oil producers, such as Russia or China.

    Sourcing funds for climate mitigation and adaptation projects in the developing world is becoming an increasingly tough process. The Green Climate Fund is expected to start its work in Songdo, South Korea in the second half of 2013, which means that it can launch activities in 2014. But it is currently a bank shaking its tin can on a street corner. The Doha round of talks ended with no new cash on the table.
    Developed countries repeated a commitment to deliver on long-term climate finance support to developing nations, with a view to mobilizing US$100 billion both for adaptation and mitigation by 2020. Germany, the UK, France, Denmark, Sweden and the EU Commission announced concrete finance pledges totalling US$6bn for the period up to 2015.
    Republished with permission; abridged and modified version based on an original article by Ed King on

    US Senate presented with carbon tax plans

    Washington’s resolve to act on climate change was tested in February when the Senate was presented with new plans for a national carbon tax. However, the White House ruled out any plans to propose a tax on carbon emissions favoured by many environmentalist groups, although a spokesman confirmed that President Obama would pursue stricter carbon-pollution regulations through the Environmental Protection Agency.
    Democratic Senator Barbara Boxer and Independent Bernie Sanders arranged a press conference to announce what they call “comprehensive legislation on climate change”: “Under the legislation, a fee on carbon pollution emissions would fund historic investments in energy efficiency and sustainable energy technologies such as wind, solar, geothermal and biomass. The proposal also would provide rebates to consumers to offset any efforts by oil, coal or gas companies to raise prices.”
    The announcement follows a series of indications in Washington that climate change is becoming a pressing issue. President Obama raised it in his election victory and inauguration speeches before adding more detail in his State of the Union Address.
    The appointment of climate hawk John Kerry as Secretary of State and the establishment of a Climate Caucus has added to the expectation that Obama’s second term will see him turn soundbites into action. (…) ”I urge this Congress to get together, pursue a bipartisan, market-based solution to climate change, like the one John McCain and Joe Lieberman worked on together a few years ago. But if Congress won’t act soon to protect future generations, I will,” said Obama.
    In 2010 Senator Boxer described a “reduce and refund” policy to divert the costs of renewable energy away from consumers. (…) “Why should we not step up to the plate? We need to do everything we can. It will create jobs here, reduce pollution and help our budget. It’s win, win, win,” she said.
    Terry Townshend of GLOBE International says efforts to pass ambitious, national climate policies have been difficult to push through both the Senate and the House of Representatives. “There were a number of attempts to pass a comprehensive climate change bill in the 111th Congress – the most significant of which was the American Clean Energy and Security Bill (ACES) referred to as the “Waxman‐Markey Bill”, which passed the House of Representatives in June 2009 but was rejected by the Senate – all attempts have failed,” he says. (…)
    The US currently has two regional carbon trading schemes applicable to electricity generators in California and a coalition of nine states on the Eastern Seaboard.
    Republished with permission; abridged and modified version based on an original article by John Parnell on

    US poll shows decreasing climate scepticism but weak support for carbon taxes
    A recent Duke University survey of public opinion on climate change and climate policies suggests that Americans are sceptical concerning market-based instruments but positive towards old-fashioned regulation.
    Among those who consider climate change as a “very serious threat”, there was a small majority of support, decreasing with a lower perceived urgency. The proposal to couple a carbon tax with an energy rebate for individual taxpayers only led to little additional approval. Concerning carbon markets (i.e. cap and trade systems), the poll found that most Americans are unfamiliar with the approach and are therefore neither opposed, nor in favour of emissions trading.

    Conclusion of the policy brief
    "A large majority of Americans are now either convinced the climate is changing or think that it is probably changing, but fewer Americans are convinced that carbon taxes or markets are satisfactory policy responses. Carbon taxes remain decidedly unpopular despite the recent uptick in discussion as lawmakers look for ways to reduce the federal deficit. While partisan differences persist in beliefs about climate change and attitudes toward government policies, majorities of Democrats, Republicans, and Independents support more traditional policy approaches, including emissions regulation and requirements to produce more clean energy. The public’s preference for emissions regulation and clean energy requirements appears to be in line with the Environmental Protection Agency’s current mandate to regulate greenhouse gases under the Clean Air Act. The public is also highly supportive of the Clean Energy Standard approach that President Obama has promoted in his last two State of the Union addresses."
    Download the policy brief.

    Additional reforms worldwide in brief

    • China’s financial centre Shanghai announced it would start trials of emissions trading in June 2013 in order to cut its energy consumption and carbon emissions per unit of GDP by 3.5 per cent this year. The program will cover 200 producers of steel, petrochemicals and electricity that discharge about half of the city’s total emissions.
    • China is working to revamp its fuel pricing system to allow refiners to adjust domestic prices of gasoline and diesel more swiftly in response to changes in world crude prices.
    • In a first step in 2013, the retail price ceiling for gasoline and diesel has been raised.
    • Fuel-hungry Indonesians are consuming up to 15 per cent more subsidized fuel than has been allocated in the 2013 national budget, weakening the rupiah and creating a hole in the nation’s finances.
    • Fuel subsidies could reach IDR30 trillion as the subsidized fuel quota may expand by 51 million kilolitres due to on-going economic growth and the migration of users of non-subsidized fuel to subsidized fuel.

    South Africa
    • Introduction of a carbon tax to mitigate the effects of climate change at the rate of ZAR120 per ton of carbon-dioxide equivalent effective from 1 January 2015. The rate will increase at 10 per cent per year during the first phase of implementation between 2015 and 2020.
    • An additional ZAR300m has been allocated to the Green Fund, previously given ZAR800m, which is used to encourage companies to develop creative low-carbon projects.

    Thailand plans to launch a voluntary emissions trading market in October 2014, and will soon begin consultations with business to build support for the scheme.

    The latest country to join China, Australia and the EU in using carbon markets to cut emissions could be Vietnam. The nation is setting an 8-10 per cent carbon intensity reduction target for 2020, compared to 2010. A carbon market could be in place by 2018 to support these efforts..



      Communication Best Practices for Renewable Energy

      Scoping study commissioned by IEA-RETD and written by Green Budget Europe/Germany, IISD and Collings and Monney, April 2013)
      The report suggests ways in which policy makers can overcome common communication barriers to the widespread use of renewable energy technologies.
      IEA-RETD has invited stakeholders interested in contributing to a 'Communications Knowledge Platform for Renewable Energy", proposed in the report, to contact
      More information about RE-COMMUNICATE is available here. The report is available online.

      The Costs of Energy Transition - Criticism of Altmaier's trillion euro price tag
      Analysis conducted on behalf of Greenpeace Energy and BWE, created by GBG, March 2013

      Green Budget Germany produced a brief study in German reviewing Minister Altmaier's claim that the energy transition would cost a trillion euros by the end of the 2030s. By subtracting costs that investments in renewables and efficiency offset, they found net benefits, not net expenditures.
      Read a full article on the publication. Download the study in German.

      Third Time lucky: Why France should implement carbon-energy Taxation
      Constanze Adolf and Jacqueline Cottrell, in: International Tax Review, February 2013 

      As one of the biggest Member State of the EU, the “Grande Nation” faces severe economic problems. France needs to raise revenue to pay off debt and reduce deficits. At the same time, it needs to look at consumers to start spending, to kick-start growth and get money flowing in economy once more. Smarter taxation will be essential to getting the balance right.

      The full Costs of power generation - A comparison of Subsidies and societal Cost of renewable and conventional Energy Sources
      Study conducted on behalf of Greenpeace Energy and BWE, created by GBG, August 2012
      In Germany, the “EEG surcharge” covering the cost of feed-in tariffs paid for renewable energy is directly and transparently shown on private energy bills. However, costs from direct and indirect subsidies for conventional power are not separately reported in power prices and paid in power bills; instead, they are part of the governmental budget. The current situation makes renewable energy appear to be the only source of power generation which is not competitive with conventional energy on the free market. This study systematically compares direct and indirect state subsidies for renewable and conventional energy from 1970 to 2012.
      Both subsidies and external costs are often not directly linked to the price of conventional energy, but they nonetheless have to be paid either as taxes or as the societal cost of climate change and pollution. The resulting price of a kilowatt-hour of wind power for society in 2012 is 8.1 cents, compared to 7.6 cents for hydropower. In contrast, the total cost of power from lignite and hard coal add up to 15.6 and 14.8 cents, respectively, with nuclear power reaching at least 16.4 cents per kilowatt-hour. The cost of electricity from natural gas is 9.0 cents.
      Find the 20-page-summary of the report online.

      Handbook Of Research On Environmental Taxation
      Janet E. Milne, Mikael S. Andersen, 2013

      book provides a splendid treatment of environmental taxation that encompasses the basic conceptual issues, problems of tax design and implementation, and several insightful case studies that show how environmental taxes actually work in practice.
      GBE vice-president Kai Schlegelmilch especially contributed to
      chapter 7, “Designing environmental taxes in countries in transition: a case study of Vietnam”. He advised the Ministry of Finance on behalf of the GIZ (, the German development agency, on how to design and introduce the ecotax legislation which came into force beginning 2012.
      More information about Vietnam is available on our
      homepage. Click here to purchase this book at a discounted rate.

      De contrapartida financiera a oportunidad; de visión a concreción: La reforma fiscal medioambiental en Alemania y las oportunidades para la coordinación europea
      Constanze Adolf, in: Eloy Álvarez Pelegry, Macarena Larrea Basterra (eds.): Energía y tributación ambiental, Marcial Pons, Madrid, Barcelona, Sao Paolo, pp 81-98.

      The example of the German experience illustrates challenges and opportunities of the Environmental Tax Reform and discusses how the European Union could help to develop ambitious and effective policies in order to enhance the capacity of Member States and regions to further Environmental Fiscal Reforms.



      "International Fuel Prices Database"
      GIZ, 2013

      The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH on behalf of the German Federal Ministry for Economy Cooperation and Development hosts this database which allows to compare global fuel prices, taxes, price policies, etc. of almost all countries in the world. Please consult the “International fuel price database” for regular updates here.

      International Fuel Price Survey 2012/13: Data Preview
      GIZ, April 2013

      As a first snap-shot of the upcoming 2012/13 edition of GIZ International Fuel Prices 2012/2013, this data preview presents retail prices of gasoline and diesel in 170 countries, gathered in a mid-November 2012 survey. The full report (available in mid-2013) will provide a detailed account of international fuel pricing data.

      Carbon leakage and the future of the EU ETS market. Impact of recent developments in the EU ETS on the list of sectors deemed to be exposed to carbon leakage
      CE Delft, April 2013

      By giving free allowances to industries prone to carbon leakage, the EU ETS tried to combine a restrictive climate policy with the goal of shielding energy-intensive industry from high carbon costs that would affect their competitiveness. This study shows that applying more realistic assumptions regarding price, supply and trade conditions would imply a drastic reduction of the number of sectors eligible for additional free allowances. A revised assessment indicates that if the 2009 allocation had been based on more realistic assumptions, the sectors deemed at risk of carbon leakage would have fallen from the current 60 per cent of sectors, representing 95 per cent of industrial emissions, to a mere 33 per cent of sectors, accounting for only 10 per cent of emissions.

      Energy Subsidy Reform in Sub-Saharan Africa: Experiences and Lessons
      IMF, April 2013

      The reform of energy subsidies is an important but challenging issue for sub-Saharan African (SSA) countries. This paper discusses ways in which SSA countries could respond to the following questions: Why is it important to reduce energy subsidies? What are the difficulties involved in energy subsidy reform? How best can a subsidy reform be implemented? The paper draws on various sources of information on SSA countries: quantitative assessments, surveys, and individual (but standardized) case studies.

      Derisking Renewable Energy Investment
      Analysis conducted on behalf of Greenpeace Energy and BWE, created by GBG, UNDP, April 2013

      This report introduces an innovative framework to assist policymakers to quantitatively compare the impact of different public instruments to promote renewable energy. The report identifies the need to reduce the high financing costs for renewable energy in developing countries as an important task for policymakers acting today. The report presents findings from illustrative case studies in four developing countries and draws on these results to discuss possible directions for enhancing public interventions to scale-up renewable energy investment.

      Achieving energy efficiency through behaviour change: what does it take?
      EEA, April 2013

      This report provides a review of available literature on measures targeting consumer behaviour in order to achieve energy savings. It focuses on energy efficiency measures and behaviour change; structural factors - such as the impact of liberalisation and the energy mix and energy tariff structures; and the rebound effect.

      Petroleum product pricing and complementary policies: experience of 65 developing countries since 2009
      World Bank, April 2013

      Unable to cope fully with steadily climbing world oil prices since mid-2009, many of the 65 countries reviewed in this paper have progressed slowly or even reversed course in reforming pricing of petroleum products. End-user prices in July 2012 varied by two orders of magnitude across the countries surveyed. More than two-fifths, including some that had only recently adopted automatic pricing mechanisms, froze the prices of gasoline, diesel, or both, for months or even years on end during the study period.

      Taxation Trends in the European Union – 2013 edition
      Eurostat, April 2013

      This latest edition of the Eurostat report offers a breakdown of tax revenues, i.e. according to whether they are raised on consumption, labour or capital. Environmental taxation in the EU raises on average 3 % of GDP.
      For 2011, the concluded that the lowest environmental tax revenues in relation to GDP can be found in Spain, France, Lithuania, Romania and Slovakia, all below 2 %. Denmark (4.1 %) and the Netherlands (3.9 %) have highest levels, followed by Slovenia (3.4 %).
      The environmental taxation trends can be found on page 41-44 and the related tables on pp. 237. Country chapters analyse the tax system in each of the 29 countries covered, the revenue trends and the main recent policy changes. Please find the full report here.

      Designing carbon taxation to protect low-income households
      Simon Dresner et al., March 2013

      This study tries to answer the question whether it would be possible to increase carbon taxes on household energy use and transport, while protecting low-income households from negative impacts. There are strong policy arguments for removing environmentally damaging subsidies and for introducing carbon taxation to incentivise efforts to reduce carbon emissions. Green tax reform would shift taxes away from productive activity, such as income and employment, towards harmful activity such as pollution. The difficulty from the perspective of social justice is that green taxes are unlike income tax; they do not directly relate to the ability to pay. Download the full report or a summary.

      Bridging the aviation CO2 emissions gap: why emissions trading is needed
      D. S. Lee et al., March 2013

      This new study published by a leading atmospheric scientist of Manchester Metropolitan University shows that only the adoption of a global ‘market-based measure’ can bring the International Civil Aviation Organisation’s (ICAO) and aviation industry’s shared goal of 2020 ‘carbon neutral growth’ by 2050 within reach. The total impact of all other CO2 reduction measures currently on the table is shown to be insufficient. Download the full report or find a summary online.

      Powering Africa through Feed-In Tariffs
      Heinrich Böll Stiftung, World Future Council and Friends of the Earth, March 2013

      Africa is facing a severe energy crisis and failing to meet the increasing demand for electricity. This study shows that Renewable Energy Feed-in Tariffs (REFiTs) are a promising mechanism to unlock renewable energy development in Africa. It assesses the existing and drafted REFiT policies in 13 African countries with the aim of examining the policy drivers and socio-economic effects of REFiTs and analyse both supportive and obstructive factors for their effective implementation.

      Low Carbon Development: Key Issues
      Frauke Urban and Johan Nordensvärd, March 2013

      This textbook addresses the interface between international development and climate change in a carbon constrained world. It discusses the key conceptual, empirical and policy-related issues of low carbon development and takes an international and interdisciplinary approach to the subject by drawing on insights from across the natural sciences and social sciences whilst embedding the discussion in a global context.

      Economics of Reducing Greenhouse Gas Emissions in South Asia: Options and Costs
      The Asian Development Bank (ADB), March 2013

      This report synthesizes the results of studies conducted under an ADB technical assistance activity in five countries: Bangladesh, Bhutan, the Maldives, Nepal, and Sri Lanka. The study estimates GHG emissions out to 2030 under an expected energy-use mix scenario, including the penetration of some clean technologies, and the impact of a carbon tax. The study highlights the potential of cost-effective and energy-efficient technologies at household level, in industry and agriculture.

      The Long-run Macroeconomic Impacts of Fuel Subsidies
      Michael Plante, Federal Reserve Bank of Dallas, March 2013

      Many developing and emerging market countries have subsidies on fuel products. Using a small open economy model with a non-traded sector, this report shows how these subsidies impact the steady state levels of macroeconomic aggregates such as consumption, labour supply, and aggregate welfare. These subsidies can lead to crowding out of non-oil consumption, inefficient inter-sectoral allocations of labour, and other distortions in macroeconomic variables.

      Free allocations in EU ETS Phase 3: The impact of emissions performance benchmarking for carbon-intensive industry
      CDC Climat Research, February 2013

      From Phase 3 (2013-20) of the European Union Emissions Trading Scheme, carbon-intensive industrial emitters will receive free allocations based on harmonised, EU-wide benchmarks. This paper analyses the impacts of these new rules on allocations to key energy-intensive sectors across Europe. The report reveals that free allocations to benchmarked sectors will be reduced significantly compared to Phase 2 (2008-12). This reduction should both increase public revenues from carbon auctions and has the potential to enhance the economic efficiency of the carbon market. Lastly, the analysis finds evidence that the new benchmarking rules will, as intended, reward installations with better emissions performance and will improve harmonisation of free allocations in the EU ETS.

      Why New Business Models Matter for Green Growth
      OECD, February 2013

      New firms tend to engage in more radical innovation than existing firms, and scaling up new business models can therefore help reduce environmental pollution, optimise the use of natural resources, increase productivity and energy efficiency, and provide a new source of economic growth. Although the market for green goods and services is growing, the development of new business models is affected by a range of barriers, many of which can be addressed by well-designed policies. In order to enhance effectiveness and sustainability, Market-Based Instruments need to play a decisive role. The new OECD report acknowledges the role of green taxation and the phasing out of environmentally harmful subsidies for innovative business models to evolve.

      Good Intentions Meet Reality: The Dire Consequences of Spending EU Taxpayers’ Money in Hungary
      Clean Air Action Group, February 2013

      The Clean Air Action Group (CAAG), a national federation of 121 Hungarian environmental NGOs, calls for action against the devastating effect of EU spending on Hungarian society, its economy and the environment. Inappropriate rules concerning the use of EU money, coupled with weak or non-existent enforcement of the EU acquis and national commitments, lead to the result that EU money in Hungary is reducing economic competitiveness of the country, increasing social inequalities and undermining democracy – thus acting against EU targets. CAAG proposes radical changes to EU spending to improve the situation. Download the paper.

      Budgetary support and tax expenditures for fossil fuels - An inventory for six non-OECD EU countries
      Institute for Environmental Studies (IVM), VU University Amsterdam, commissioned by the European Commission, DG Environment, January 2013

      This study provides information on measures supporting the production or consumption of fossil fuels in six EU Member States: Bulgaria, Cyprus, Latvia, Lithuania, Malta and Romania. In order to ensure comparability, the methodology and approach are similar to that taken by the OECD in “Inventory of estimated budgetary support and tax expenditures for fossil fuels”.

      Taxing Energy Use: A Graphical Analysis
      OECD, January 2013

      This report provides the first systematic statistics of effective energy tax rates – on a comparable basis – for each OECD country, together with “maps” that illustrate graphically the wide variations in tax rates per unit of energy or per tonne of CO2 emissions.

      Inventory of Estimated Budgetary Support and Tax Expenditures for Fossil Fuels 2013
      OECD, January 2013

      This inventory is concerned with direct budgetary transfers and tax expenditures that relate to fossil fuels, regardless of their impact or of the purpose for which the measures were first put in place. It has been undertaken as an exercise in transparency, and to inform the international dialogue on fossil-fuel subsidy reform.

      Energy subsidy reform: lessons and implications
      IMF, January 2013

      Energy subsidies have wide-ranging economic consequences: they aggravate fiscal imbalances and depress private investment, distort resource allocation and accelerate the depletion of natural resources. Most subsidy benefits are captured by higher-income households, reinforcing inequality. Even future generations are affected through the damaging effects of increased energy consumption on global warming. This paper provides (i) a comprehensive estimate of energy subsidies for 176 countries; and (ii) an analysis of “how to do” energy subsidy reform, drawing on insights from 22 country case studies undertaken by IMF staff and analyses carried out by other institutions. The study estimates that energy subsidies amount to $1.9 trillion worldwide, the equivalent of 2.5 per cent of global GDP, or 8 per cent of government revenues.

      Canadian Carbon Policy Year in Review and Emerging Trends, 2012
      IISD, 2013

      Carbon policy in Canada went through an important transition in 2012. The federal government began to fully assert its vision of carbon policy, while a number of provinces charted new directions in the post-Kyoto era. In this note, IISD recaps Canada's carbon policy year in review, identifies four key trends and presents a series of policy recommendations for 2013.

      Global Energy Assessment: Toward a Sustainable Future
      GEA Writing Team, October 2012

      The Global Energy Assessment (GEA) assesses the major global challenges for sustainable development and their linkages to energy; the technologies and resources available for providing energy services; future energy systems that address the major challenges; and the policies and other measures that are needed to realize transformational change toward sustainable energy futures. Further Information...

      On picking winners: The need for targeted support for renewable energy
      ICEPT (Centre for Energy Policy and Technology), Imperial College London, October 2012

      This report shows that a carbon price alone will not be enough to rid the UK of its dependence on fossil fuels or unleash a British revolution in the fast-growing clean energy sector. The government's upcoming Energy Bill must put in place clear and targeted subsidies that can give investors and industry the confidence they need.

      Greening Đổi Mới: An Outlook on the Potential of Green Jobs in Vietnam
      Nguyen chi Quoc, September 2012

      Vietnam succeeded in providing rapid and continuous economic growth, vast poverty reduction, broad-based improvements and welfare for a majority of the Vietnamese population. However, the country’s past economic model is unsustainable and non-competitive in the long run. Given these challenges in the socio-economic and socio-ecological sphere, this report identifies green transition as one of the central strategic tasks for the years to come.

      Fossil fuel fiscal policies and greenhouse gas emissions in Viet Nam
      UNDP, April 2012

      This report focusses on subsidies and taxes in Viet Nam’s energy sector and their effects on economic development and income distribution in the context of responding to climate change. Viet Nam is capping electricity and fossil fuel prices, which amounts to very substantial indirect government subsidies to energy prices. These policies are not sustainable, are benefiting the better off more than the poor, and are counter-productive for future growth and modernisation, whilst also contributing to climate change. Fossil fuel fiscal reform may have economic, social and environmental benefits, as has been shown in many other countries.

      Aviation Report: Market Based Mechanisms to Curb Greenhouse Gas emissions from International Aviation
      WWF, 2012

      According to WWF, a global system to regulate runaway greenhouse gas emissions from aviation is technically and economically feasible and could help address climate change. The new report outlines four options, and weighs their pros and cons, to develop a global system to regulate emissions from aircraft. These include offsetting, offsetting with a revenue generating mechanism, a cap and trade emissions trading system, and a levy with offsetting. The report finds that the latter three options can both cut pollution at the least cost to industry, and also generate funds that could be used to support global efforts to address climate change, while maintaining a level playing field between airlines.

      Market Instruments and Sustainable Economy
      Ana Yábar Sterling et al (eds.), 2012

      This book publishes many of the papers presented at the Global Conference on Environmental Taxation in Madrid 2011 of the same name (while other papers from this conference were published in the “Critical Issues in Environmental Taxation” series volumes XI and XII).

      Market Observatory for Energy: Oil bulletin

      The Market Observatory for Energy presents consumer prices and net prices (excluding duties and taxes) of petroleum products in the EU member states each week. The Oil Bulletin is designed to improve the transparency of oil prices and to strengthen the internal market. Find the latest version online.



      GBE Annual Conference 2013
      Winterthur, SWITZERLAND, 24-25 October 2013

      Details will be published on our website

      EAERE 20th Annual Conference
      Toulouse, FRANCE, 26-29 June 2013

      European Association of Environmental and Resource Economists (EAERE) and Toulouse School of Economics (TSE)
      . Details.

      5th World Congress of Environmental and Resource Economists
      Istanbul, TURKEY, 28 June - 2 July 2014

      EAERE, AERE, Istanbul Technical University in cooperation with EAAERE. Details.


      REFORM group meeting
      Salzburg, AUSTRIA, 26-31 August 2013

      GCET 14: Global Conference on Environmental Taxation
      Kyoto, JAPAN, 17-19 October 2013

      The deadline for the Call for Papers is 15 May 2013. Details.




      Research at ENT (Marie Curie post-docs)
      ENT Environment and Management ( wants to support, as host institution, Marie Curie Fellowship applications for research in the fields of (i) municipal waste management, (ii) environmental taxation (under the supervision of Dr. Ignasi Puig Ventosa) or (iii) fishing policies (under the supervision of Dr. Miquel Ortega Cerdà).
      We are looking for experienced researchers (holding a PhD or more than 4 years of research experience since obtaining a university degree giving access to doctoral studies) from any nationality that have not resided or carried out their main activity in Spain more than 12 months since August 2010.
      The interested researchers that meet all the requirements of the Marie Curie call (FP7 People Programme), and would like to develop their research in the specified fields for a full-time period of 12-24 months at ENT offices in Vilanova i la Geltrú (Barcelona, Spain), are invited to send their expressions of interest.
      There are two open calls of our interest:
      Intra-European Fellowships for Career Development (IEF): mobility from any EU Member States or Associated Countries to Spain.
      International Incoming Fellowships (IIF): mobility from non-European Third Countries to Spain.
      See the call for eligibility requirements, salary conditions and other relevant aspects.
      Interested researchers please submit by May 20th (internal deadline), 2013 a detailed curriculum vitae (including publications), indication of which call is of your interest, and a 1-page abstract of the research proposal to Mar Santacana.



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