The Eighth Annual Global Conference on Environmental Taxation
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NGO-Workshop 6: Policy Proposals for a Low-Carbon Future

Efficiency in energy-consumption by sustainable tax-policy

Jan-Karsten Meier, UnternehmensGrün, Germany

“The price of energy decides over their efficiency of use.”

In this fact the government of Germany introduced an additional tax for fuel, gas and electrical energy in 1998. This decision was disputed by the conservative party, the lobbyists of the trade associations and parts of the European Commission just from the beginning.
But after the change of government in 2005 nobody of the former opponents wants to stop the “ecological tax”.

Why that?

The answer is: The tax writes a story of success! It was a good answer taken in front of the question asked in the UNO-climate report 2007. Of course there are technical weakens in the detail and a comparatively slight order of magnitude. But the consumption of fuel in Germany is in fact decreasing since 1999. And the costs of human labour would be up to 1,7% higher, because a big part of the tax is to subsidize the pension system.

But the further development of a tax-system, which promotes a sustainable use of energy has been stopped for years.

The reasons for such a system are compelling:

  • Germany as well as Europe is one of the biggest consumers of fossile energy and one of the biggest emittents of CO² in the world.
  • High prices of energy will energize ideas in increasing the efficiency of energy-production and -use.
  • High prices of conventionally energy produced will be a good promotion for saving energy in industry, traffic and private homes.
  • High prices of energy will limitate the increasing substitution of manpower through automation.
  • Germany and Europe are rather dependently both in all kinds of fossil energy like oil, coal and gas, and the nuclear fuel as well in imports from other parts of the earth.

The efforts to retain the climate of the earth for the human life in used standards may not stop!

Most important to reach that goal is a uniform proceeding of whole Europe in tax-policy of the energy consumption as an economical instrument for decrease the emission of CO². National single-handed attempts will promote the extorting barness by political lobbyists.
Calculable continuously rising energy prices initiate future efficiency strategies without shock shortage or price explosions.
Moving away energy-intensive industries in the non-European Union foreign countries can by a tariff policy, which works itself – similarly the import-value-added tax – oriented at the energy input against.
Illogical tax preferences for the air traffic are to be terminated.
The research in technologies of efficiency are to be promoted primarily as European task of community. The developing techniques of the energy efficiency will promote the export hit to other countries and continents and thereby the European economic growth.


A Plea for a EU Fossil Energy Tax

Eberhard Rhein, European Policy Center, Brusseles, Belgium

Substantially higher prices for fossil energy would generate a powerful spur to the vast transformation of the global energy sector required to curb global warming.
In the absence of the market forces generating higher price levels, governments should resort to imposing high excise taxes on fossil energy. The EU should take a lead. Such a tax, if high enough, would be substantially more effective than the present system of indirect taxation of C02 emissions – through emission caps –, which only affects a few energy-intensive industries, but not the bulk of the consumers and services. It will not be easy to convince EU ministers of finance to embark on a fossil energy tax, which should be tax- neutral both for consumers and member states. But in view of the climate risks at stake no effort should be spared to convince them that such a tax is urgently needed to give the right signals to investors and consumers to rationalise the use of fossil energy invest in alternative technologies.


Some Business Benefits of full pricing by taxation

Dr Paul E. Metz, INTEGeR…consult, e5 European Business Council for Sustainable Energy

1. The world’s and national energy supply faces three crises: the climate impact; the depletion of fossil fuels; and the energy poverty of 3 billion citizens. Road congestion is related. The problems have indeed been recognised, but have failed to trigger a timely free market response. Such market failures require – sometimes named “precautionary” –government interventions.
2. The best free market conform policy measures are taxes and auctions. Both cause direct price corrections that make the market work – again.
3. The sustainable – i.e. ecological and social – tax (and subsidy) reform in EU member states of 1990 – 2005 was successful, but has slowed down.
4. This is not only due to the more recent political focus on emission trading, efforts to save the Kyoto Protocol from obstruction by Bush and the defence of subsidies by addicted big business.
5. It is also due to the erroneous, compromised ways applied to implement the reform measures, including the failure to tax land.
6. The ecological tax reform was in its original design a revenue neutral shift – not more tax income for states, but better taxes that give more correct market prices to scarce resources. The revenues from these new taxes should be given back to citizens in lower tax rates and/or a Citizens Dividend or “ecobonus”. This also reduces energy poverty.
7. Emission trading is by design a global instrument, generating a world market price for GHG emissions. The gradually in-creasing price for emissions will further improve the demand for more GHG-efficient products and services. However, it cannot be expected that this gradual price development will trigger needed breakthrough innovations. And full auctioning to make emission trading fair is still a distant dream.
8. Therefore, ETR must be strongly accelerated in developed countries like the EU and member states. Much higher carbon and landuse tax levels are necessary to achieve the sufficient rate of innovative investments in clean and adequate energy and transport systems.
9. The next steps can be made attractive for the majority of citizens and companies by guaranteed revenue neutrality. If higher tax revenues are needed, ETR should not again be abused for this, like at this moment in The Netherlands. Two separate operations are absolutely necessary.
10.Conclusion – much higher carbon and landuse taxes are necessary to force the rapid and broad deployment of energy effi-ciency and renewable energies – only revenue neutrality makes this socially acceptable and even beneficial.


Cap and share and global certificate trading

Nicola Creighton, The Foundation for the Economics of Sustainability, Ireland

Cap and Share seeks to provide an ethical solution to climate change. It is based on the belief that every human being has a right to an equal share of the Earth's very limited capacity to accept further greenhouse gas emissions. Under it, global emissions would be capped at their current level and then brought down year by year at a rate that had a good chance of achieving the temperature target adopted by the European Union, namely, that the Earth's average temperature does not rise by more than 2° Celsius above the level it was in pre-industrial times.

Each year, the tonnage of emissions that the world community decided that it could risk releasing over the following twelve months without missing the temperature target would be shared equally amongst the Earth's entire adult population. Each of us would actually receive a certificate conveying our individual emissions entitlement. These certificates would be valid for a year, during which time we could sell them to financial intermediaries such as banks and post offices, who, in turn, would sell them on to oil, coal and gas producers. The producers would need to acquire enough certificates to cover the carbon dioxide emissions from every tonne of fossil fuel they sold that year and international inspectors would check to ensure that they did.

Cap and Share has the advantage over other proposals for curbing climate change that it does not have to be adopted by the whole world, or even a group of countries, before it can be used. It can be used to control the emissions from a particular sector of a national economy and the Irish government is considering using it to reduce the greenhouse emissions from road transport. Tradable emissions permits would be given to every adult resident in the country which they would sell on receipt at the current market price.  The financial intermediaries would sell the permits on to every firm importing motor fuels into Ireland. It has also been suggested that C&S should run in parallel with the existing EU Emissions Trading System to cover emissions from transport and small-scale heating, which are currently excluded.


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