FOUNDATION FOR ALTERNATIVE ENERGY - SLOVAKIA
CO2 / ENERGY TAX FOR CENTRAL AND EASTERN EUROPE
Emil Bedi
APRIL 1994
C O N T E N T S
I wish to thank numerous coleagues and friends who gave generously
of their time, expertise, and encouragement at every step of this
project. In particular I want to acknowledge the assistance of
Lise Backer, Reinhold Pape and Gunnar Boye Olesen who provided
me helpful comments. My special thanks belong to Swedish NGO Secretariat
on Acid Rain for support of this project.
Emil Bedi
Many NGOs from Central and Eastern Europe (CEE), working on energy
issues, are trying to develop alternative energy policy which
could reflect the ideas of sustainable development and which could
give solutions to the threat of global climate change. This attempts
are in CEE urgently needed , because nearly all governments in
the region are building their energy policy on pollution-rich
fossil fuel combustion or nuclear power. Most of the NGOs in
the region has soon recognized that it is not enough just to say
'no' to particular subject , but that they could achieve
much more if they force their own energy policy option. Building
bricks of the new NGO energy strategy has been declared in various
documents like Celakovice statement 1 or Greenway Energy Group
meeting in Bratislava 2 .
Due to the democratization process of the society in CEE we live
at a time when NGOs are more able than ever to affect their political
representatives. Active lobbying of some NGOs for energy savings
and renewables has led to the point where NGO representatives
became the partner for governmental organizations and are involved
in continual dialog on energy policy orientation. Some decision-makers
accepted this new way of thinking and are ready to implement at
least principles of energy efficiency into official policy. Transformation
process in CEE towards market economy brings new opportunities
in this area. But declining gross domestic product (GDP) and the
lack of domestic financial resources created the barrier which
is too high for most of the countries in the region to realize
the sustainable option.
Foreign investors supported by large Western banks with their
attempts to revitalize the nuclear power in CEE , undermine this
process of change. CEE NGOs are facing the new challenge - they
have to fight against much stronger opposition than decaying domestic
utilities. The new incentives which could strengthen their standpoints
are required. CO2/energy tax and creation of domestic financial
resources for energy efficiency program and utilization of renewable
energy sources could by one of possible options .
This publications is intended to review this idea which could
strengthen energy policy of sustainable development in CEE. Part
one provides information related to introduction of CO2/energy
taxation in this region. Part two gives overview of what is going
on in OECD countries in this way.
Everyone who burns fossil fuels or uses electricity generated
with fossil fuels contributes to the growing concentration of
carbon dioxide in the atmosphere. In Central and Eastern Europe
that includes everybody. All carbon dioxide emissions contribute
more or less equally to the atmospheric buildup, which threatens
longlasting changes in global climate.
The Intergovernmental Panel on Climate Change (IPCC) reported
in 1990 and 1992 concluded that 'emissions resulting from
human activities are substantially increasing the atmospheric
concentrations of greenhouse gases...these increases will enhance
the greenhouse effect, resulting on average in an additional warming
of the Earth's surface'3.
Stabilization of the temperature level below the proposed highrisk
limit 2.0 grades Celsius above the preindustrial level recommended
by researchers of Stockholm Environment Institute 4 and adopted
by the IPCC can be achieved if global emissions of carbon dioxide
are reduced by 60 % by the middle of the next century. The reduction
of this order calls for ca 80 % reduction of European per capita
emissions if all the Earth's inhabitants are to be reassured
of the same right to use fossil fuels.
Energy policy is of central importance to the global warming.
The US Environmental Protection Agency has estimated that 60-65%
of the greenhouse gases are produced either directly or indirectly
by energy use 5 . CO2 is the most important greenhouse gas
and is believed to contribute to more than half of the global
warming effect. Development of effective energy policy oriented
on reduction of CO2 emissions is thus crucial point.
Since the amount of carbon dioxide emitted per unit of each fossil
fuel burned is known with reasonable accuracy , and since there
is now no economically feasible way to prevent carbon dioxide
emissions when fuels are burned, the best way to regulate these
emissions seems to be to impose a tax on the carbon content of
each fuel and a tax on electricity. It is not yet possible to
quantify accurately the potential economic damages from climate
change , so the net economic savings from appropriate CO2/energy
tax cannot be estimated.
CO2/energy tax policy need to be considered in a broad international
context. One reason for this is obvious. The Climate Convention
was signed by over 150 countries (including CEE) at the Earth
Summit in early 1992. But only industrialized countries are required
to adopt limitation strategies. CEE countries did not committed
to reduce carbon dioxide emissions yet.
Introduction of carbon/energy tax and the fact that it is going
to take several decades to reduce our consumption of fossil fuels
means that this tax could generate large revenues for a very long
time. Governments of CEE countries thus would have an opportunity
to use this revenues where marginal benefits for the environment
and energy policy are greatest. CO2/energy tax which can be considered
as environmental tax thus should be used to induce changes in
energy use especially in promoting renewable energy technologies
and energy efficiency.
2.1 PATHWAYS TO REDUCTIONS OF EMISSIONS OF GREENHOUSE
GASES
The problem of limiting global climate change is complex. There
are many variables, some of which are under human control like
emissions levels, research into alternative technology, choices
of consumption, rate of decrease of forested areas of the world,
value added on future generations - and many of which are beyond
our control - like response of biosphere to emissions, capacity
of the oceans to absorb CO2 etc.
On the global level adoption of a definite goal e.g. limiting
warming commitment to 0,3 grade Celsius over next 30 years
or cutting total emissions by 50 % - would constitute the first
step (partially done by most OECD countries) in a plan to limit
climate change. Commitment to reduce carbon dioxide emissions
is thus the challenge for CEE countries. Second step to achieve
the goal is to seek the incentives that could stimulate
the change of current emissions .
2.1.1 POLICY OPTIONS
Most promising policy approaches which could be adopted by governments
of CEE countries include :
1. direct control through environmental regulations like
limits of emissions or setting e.g. efficiency standards. This
way seems to be effective and easy to implement. For example vehicle
and appliances efficiency standards in the US appear to have significantly
increased energy efficiency.
2. change of energy consumption by altering the price structure.
Excise taxes, pollution charges and cutting subsidies are simple
ways to implement social and environmental costs of energy use
into its price and thus affect emissions of greenhouse gases.
2.1.2. TECHNOLOGY OPTIONS
There is many technology options to chose from. Most interesting
for implementation in CEE are:
1. Switching from higher to lower carbon content fossil fuels
such as from oil or coal to natural gas. In some cases this can
be done with little new investment, such as with dual- fuel boilers.
Attempt to reduce CO2 emissions by switching to nuclear power
is along other dangers the most expensive option 6 and thus
cannot be considered as appropriate way of reducing CO2 emissions.
2. Switching from fossil fuels to renewable fuels. This
is the only solution to our energy needs which support sustainable
development. Sun (solar hydrogen), biomass, wind and other renewable
fuels are able to cover future energy consumption in all regions
of the world 7 .
At present biomass offers the most competitive and abundant renewable
energy source in CEE. The possibility of producing a wide range
of solid, liquid and gaseous biofuels, including methanol, ethanol,
biogas and diesel substitutes at competitive prices should encourage
decision-makers for its wider utilization.
3. Increasing of energy efficiency. There are at least
two reasons for improving energy efficiency in CEE. First we are
wasting the fuels and financial resources and second it costs
less to save fuels than to burn it 8. There are many ways how
and where to increase energy efficiency. In CEE most promising
options on demand side are: improving heating and lighting efficiency
(better isolation, district heating systems, compact fluorescent
lamps) and on supply side: combined heat and power production
.
When electricity is produced from combustion of fuels 60-70
per cent of the total energy content of the fuel is typically
lost as waste heat. Combined heat and power production take advantage
of the heat generated, for industrial process applications or
for space and water heating in buildings. In these systems only
20-40 per cent of the total energy content of the fuel is lost.
2.2. PRESENT SITUATION IN CEE
Changing centralized economies to market oriented ones has led
in CEE to fast decline of GDP. For most of CEE countries this
decline presents loss 10-40% since the begin of transformation
process in 1989.
Current situation in carbon dioxide emissions in CEE depends
on overall energy consumption which has decreasing tendency
(see table 1). This trend has not been caused by special CO2
abating measures but only due to economic recession. More important
feature is that decline of energy consumption is not adequate
to the decline of GDP. The reason for this is that energy-intensive
industry sometimes due to 'special governmental treatment'
has been protected against sudden exposure to market conditions
(e.g. Slovak government has guaranteed electricity prices for
Aluminum Works in Ziar nad Hronom which are lower than regular
tariffs just to keep lower price of Slovak aluminum on world markets).
This sector still counts for large share of production capacity
of most CEE countries and historically it is the most effective
sector in making hard currency.
TABLE 1. CO2 EMISSIONS FROM ENERGY USE IN SOME CEE COUNTRIES
Despite its decreasing tendency per capita CO2 emissions or emissions
per unit of GDP are still too high in CEE (see table 2). If appropriate
measures (energy efficiency) will not be introduced this trend
is expected to change in the near future due to the rise of energy
consumption as the result of development of the tertiary sector
and expected economic growth.
TABLE 2. PER CAPITA AND PER UNIT OF GDP EMISSIONS OF CO2
Note that comparison of CO2 emissions per unit of GDP between
CEE and OECD countries does not express buying power in different
countries.
According to this discrepancy between energy consumption and
the output of the goods and services (GDP), it is reasonable to
assume that emissions of CO2 in CEE countries should decline
at a faster rate as compared to e.g. OECD countries. This
is because marginal cost of reducing consumption of primary energy
and thus reduction of carbon dioxide emissions are generally lower
in CEE than in the OECD countries.
Energy efficiency of CEE countries is half as energy efficient
as those of market economies (see table 3 with the outlook for
the future). This was advocated, in particular in the Agenda 21
UNCED process, the framework convention on Climate Change. Reducing
this gap by half would save 540 million tones of oil equivalent
(mtoe) in the year 2000 and 600 mtoe in 2010 (see table 3 of
which 90 per cent would be fossil fuels. A reduction of CO2 emissions
of about 10 per cent in the CEE translates , all other things
being equal, into a 5-6 per cent reduction of global CO2 emissions.
TABLE 3. ENERGY INTENSITY OF CEE COUNTRIES 1973-2010
Energy intensity is measured by primary energy consumption in
tones of oil equivalent per USD 1000 of GDP in 1980 dollars.
Note: Comparison of energy intensities between OECD and CEE
countries are very frequently cited in the connection with huge
wasting of energy in CEE countries. But wasting of energy will
probably be not as high. The reason for this is that GDP depends
except others even on foreign trade. But products exported from
CEE, like steel , cement or aluminum which are mostly high energy
intensive are often traded at dumping prices on western markets
. This situation which is partly caused by protection barriers
of Western European markets has impact on GDP of CEE countries.
From this point of view high energy consumption vs. GDP ratio
in East seems to be influenced not only by wasting of energy but
even by market forces or barriers in East-West trade. See also
note under table 2. Nevertheless the energy wasting is the reality
in CEE countries.
The high level of energy consumption in CEE is due to :
1. Historical economic development in which priority has been
given to heavy industries like iron, steel or petrochemicals
which are high energy consumers.
2. Low efficiency in the production, transformation, transport
and distribution of energy products, in particular for electricity
generation and the transport of heat.
3. Obsolete and poorly maintained industrial installations
and, in general, inefficient consumption of end-use systems like
badly insulated houses, non-regulated space heating, etc.
All these facts has been fueled by low and heavy subsidized energy
prices in past which made most of energy saving measures ineffective.
Oil shocks in 70s and 80s which due to sharp increase of oil price
stimulated higher energy efficiency in OECD countries had only
minor impact on CEE countries because of dependence on cheap
Russian oil and the fact that price was overall less important
factor in centrally planned economies than in market economies.
Adjustment to world energy prices seems to be the way followed
by countries like Hungary, Poland, Czech and Slovak Republics.
But this is a slow process which must be made carefully. For example
, it is not acceptable to make a consumer pay the economic cost
of obsolete and ineffective district heating. Only when the heating
system has been brought to compliance with standards of rational
operation can the consumer be asked to pay full price. Consumers
do not have the technical or financial capacity to manage programs
for rehabilitation of buildings and heating systems. Establishment
of consistent energy-efficiency programs for all sectors of social
and economic activities seems to be the appropriate solution.
2.3. ENERGY SUBSIDIES
Energy price is important. The trend of global energy consumption,
both absolute and per unit of GDP, dropped sharply after the oil
price rises of 1970s and after the price collapse of 1986. Energy
productivity has improved faster in countries with higher energy
prices. These and other factors confirm that energy demand can
respond quite strongly to price changes, and have convinced many
analysts that 'price is more important than we thought'
9 . Energy pricing , and the use of CO2/energy taxes to limit
emissions are central issues in discussing responses to the greenhouse
effect. However, to understand the issues it is important to start
from the present reality. Energy subsidies are common and in CEE
( including former USSR ) are quite high ( see table 4 ). Coal
prices for instance are less than the production costs in many
countries of the region.
TABLE 4. ENERGY SUBSIDIES IN THE WORLD
[OECD Economic Studies No.19, Winter 1992 ].
The economic costs of energy subsidies in CEE are much higher
than in developed countries. Subsidies always give incentives
to behave inefficiently. They draw governmental expenditures away
from much more important applications, encourage wasting, and
make use of indigenous resources much less attractive thus leading
to ever greater dependence upon fossil fuel.
Removing subsidies ( especially for coal industry ) would be expected
to cut carbon dioxide emissions not only via energy savings but
also via interenergy substitutions ( natural gas for coal ) which
reduce the average carbon content of energy demand.
Steps towards removing energy subsidies in CEE countries ( also
in the former USSR ), have been introduced during past 2-3 years.
These reforms, although partial in scope, certainly contributed
to lower carbon emissions in the past and should do it in the
future.
Removing existing distortion in energy markets mostly caused by
energy subsidies should be the ultimate goal not only for CEE
countries but even for some developed countries. It seems clear
that especially in CEE this will be slow process.
2.4. PRINCIPLES OF CO2 / ENERGY TAXATION
Since cutting subsidies is long term process sometimes connected
with social problems - CO2/energy taxation should be therefore
a natural focus for policy.
2.4.1. CO2 TAX
When the main aim is to limit carbon dioxide emissions, the most
effective tax is one on carbon directly, rather than on particular
energy activities. Since carbon emissions come from a large number
of desegregated energy users ( e.g. houses, cars ), it is not
practical to tax the emissions , but it is quite possible to tax
carbon-based fuels in proportion to their carbon content.
The CO2 tax has the virtue of treating all fossil fuels according
to their emissions of carbon dioxide and thus can be much more
cost effective way than energy tax. It is clear that CO2 tax reduces
emissions of sulfur, NOx, VOC and heavy metals more than a similar
energy tax. But pure CO2 tax will stop nuclear power plants being
replaced by e.g. natural gas as it has been proposed by many NGOs
in some CEE countries. In the case of nuclear power it could be
useful to introduce a tax on energy or uranium that is equal to
the tax on oil.
2.4.2. ENERGY TAX
Energy tax means taxing all forms of nonrenewable energy using
the same charge per unit of primary energy. Tax of this kind would
also be levied on the use of uranium and other fissionable substances
in nuclear reactors. But single energy tax without CO2 tax would
not be able to differentiate between various fossil fuels with
regard to their content of carbon. This lack of effect on emissions,
compared with straight carbon dioxide tax, will be particularly
pronounced in regions whose electricity production is based on
coalfired condensing power stations and which are potentially
capable of utilizing natural gas in combined cycle gas fueled
power plants. Here emissions could be reduced by more than half
due to increase of efficiency and lower carbon content of natural
gas.
Short comparison of pros and cons of energy vs. CO2 tax is in
table 5 10 .
TABLE 5. ENERGY vs. CO2 TAX
2.5. WHY DO WE NEED CO2 / ENERGY TAX IN CEE
There are several reasons why do we need CO2/ energy tax in CEE
. One of them is that carbon dioxide is a global pollutant
and its taxation ought to be the same worldwide ( hoping that
developed countries will introduce this kind of taxation ).
Another reason is that environmental taxes may be effectively
used to reduce different kinds of emissions or to use energy
in an efficient way. Such taxes have several advantages. Except
of pollution reduction they can take into account the interests
of future generation since most energy sources and raw
materials are scarce.
Furthermore taxes like this can contribute to the structural
change of economy by strengthening the competivity of technologies
( renewable energy, energy efficiency ) which are more sustainable
than the present choice.
But in CEE exists other urgent reasons which need to be reviewed
separately.
2.5.1. REVITALIZATION OF NUCLEAR ENERGY
Any attempt to phase-out nuclear energy in CEE failed on the question
how to encourage its substitution by other options like natural
gas, energy efficiency or renewables. As the result of this failure
we are facing revitalization of nuclear power in some CEE countries.
Construction of new nuclear power plants in some CEE has been
halted due to the lack of financing. Nevertheless new nuclear
power plants are presently being build (despite financial uncertainties)
with the help of foreign investors. Westinghouse has contracted
with Czech utility CEZ to provide uranium fuel and USD 225 million
worth instrumentation to Temelin nuclear power plant. A loan of
USD 420 million guaranteed by Export-Import Bank to cover the
costs of completion was approved. Just recently French EdF has
got 51% shares of nuclear power plant in Mochovce,Slovakia. EBRD
has been selected for financing (DM 1,3 billion) nuclear power
plant completion. What is going on in the Czech and Slovak Republics
is being prepared in other regions of CEE (Russia, Ukraine).
Money for revitalization of nuclear industry in CEE are taken
out of pockets of taxpayers in the West who fund Export-Import
Bank, EBRD, Int. Atomic Energy Agency etc. It is ironic that much
of the public money going to finance the rescue of the nuclear
industry in the East is coming from governments in countries where
public opinion has turned against nuclear power. Western nuclear
companies are also pressing new CEE governments to complete partially
constructed reactors and build new reactors , ignoring safer,
more job-creative renewables and energy conservation strategies.
Absence of appropriate legislation including full insurance,
the costs for radioactive waste disposal, security and lower public
awareness attract foreign investors. Export of electricity to
West which is intended to cover the cost of the new nuclear power
plants is thus just another way of exporting radioactive waste
and nonviable technologies from developed to CEE countries.
Note:
Most of CEE countries except of Russia heavy depend on foreign
fuel sources. In the case of e.g. Slovakia this means 86% of primary
energy which is mainly imported from Russia (oil and gas). In
the case of possible problems with export of electricity to Western
Europe it could mean not only phasing out of this nuclear power
plant but even 30 % of country's electricity consumption. Vulnerability
of CEE countries due to overdependance on foreign sources thus
could lead to uncertain economic development and halting of the
transformation to market economy .
2.5.2. SHIFT FROM TAXING 'GOODS' TO TAXING 'BADS'
At present the political debate has mainly dealt with how much
we tax, not what we tax. This is unfortunate , for
what we tax is important.
In most countries the governmental budget relies largely on personal
income taxes (salaries and wages) and corporate income taxes which
are also taxes on investment and capital gains . These taxes do
exists along with sales, value added and property taxes.
Our present taxes fall mostly on just those activities that make
the economy productive : work, savings and investment. Naturally,
such taxes discourage people from undertaking these vital activities.
A better system would place more of the tax burden on activities
that make the economy unproductive and that should be discouraged
like resource waste and pollution.
Environmental taxes (charges) are one of several incentivebased
instruments of environmental policy. Such taxes and charges are
mechanisms for dealing with the systematic failures in market
incentives that arise when individual actors do not pay full costs
(external costs) of their activities.
Shifting the tax burden away from economic 'goods'
toward environmental 'bads' seems to be inevitable
in effective and environmentally friendly policy. Economic productivity
and environmental protection are not incompatible and that is
why economy would benefit from this shift as a whole.
2.5.3. EXTERNALITIES
When an activity entails disturbances to the environment for which
no compensation is paid, those disturbances can be referred to
as an external cost. Externalities from using fossil fuels, then,
can be described as effects like acid rain, climate change, radiation
or urban smog which are not reflected by market energy prices
. These costs are paid by whole society and environment. Economic
theory suggest that the costs of such impacts should be incorporated
into the energy price. The tax can be seen as an attempt to
correct these disturbances.
In practice it is not easy to estimate the costs of for instance
acidification and to quantify the greenhouse effect is likely
to be far more uncertain . Nevertheless there is no doubt that
attempts to include external costs into the price of energy are
urgently needed.
Another problem related to fossil fuels is their exhaustibility.
Sooner or later , finite resources of these fuels will 'run
out' or come to be available at extra high cost. This future
scarcity, however, is not reflected by presentday prices. Thus
it may be reasonable, by taxing presentday consumption of fossil
fuels, to give consumers an indication of the high scarcity
price in future.
2.6. PRESENT TAXES AND CHARGES IN CEE
Paradoxically, when it comes to making polluters pay for costs
that they impose on the rest of society, some CEE countries are
more progressive than many developed countries which still have
not managed to implement comprehensive pollution charges. Their
levels , if implemented , are far below efficient rate (the Swedish
NOx and SO2 tax and Norwegian taxes provide exceptions).
Actually unite charges for SO2 in Czech Republic, Slovakia and
Poland ( 35-75 USD/tone ) are one of the highest. These charges
are levied on the whole tonnage of emissions including those
under the emissions permits. In some CEE countries charge revenues
are used for financing of environmental measures.
Nevertheless up till now , the application of emission charges
has in most cases not been very successful in terms of pollution
abatement. This has been caused by philosophy of circling state
money to state enterprises and back. Enterprises, protected from
the risk of bankruptcy simply paid charges, without modifying
emissions. Furthermore charges have been intended to finance certain
items of national government expenditures or have been so low
that they cannot possibly have adequate steering effect.
2.6.1. LEGISLATION
Environmental charges and fines are instruments which are in operation
in a number of CEE countries for quite a long time. Experiences
from some countries are reviewed below.
ESTONIA
has had a system of environmental fines since the mid-1980s. These
financial instruments were levied to provide revenues for Estonian
Fund for Nature Protection and Rational Use of Natural Resources
, established in 1983. Fines paid by polluting enterprises, agricultural
farms and army establishments were used for compensating for damage
caused by pollution, for investments in environmental technology
projects , etc. In 1990, the Fund was reorganized . The major
current problem with the system of charges was the effect of hyperinflation,
which has almost completely wiped out the real revenues from charges.
HUNGARY
has had a system of pollution charges since the 1970s, levied
in the form of penalties for air pollution, waste water pollution,
generation of hazardous wastes, and noise/vibration, and a nature
protection penalty. Penalties are calculated on the basis of emissions
of pollutants, at rates reflecting the health impact of substances.
Since 1991 the Central Environmental Protection Fund has collected
the penalty revenues.
CZECH REPUBLIC AND SLOVAKIA
have a system very similar to that introduced in Hungary . The
revenues from charges are collected by Ministry of Environment
and through Environmental Fund are used for financing of projects
oriented on nature protection, research, training and new environmentally
sound technologies.
POLAND
also has a system of environmental fees established under the
previous economic system. This system of fees , now more than
ten years old, had initially little impact on the environment.
More recently , fees have been increased sharply and this combined
with the market reforms has substantially improved its effectiveness.
At present revenues collected in this way correspond to 40 % of
country's environmental investment expenditures. This revenues
are fully earmarked and they are distributed through 50 environmental
funds.
RUSSIA
introduced a number of taxes partly for environmental purposes.
These include a land tax, payments for the right to use natural
resources, payments for industrial water consumption etc. In addition
pollution charges on air and water pollution and on waste disposal
have been levied since 1991-1992, based on permitted pollution
levels and pollution in excess of those levels. Rates are aiming
to reflect the pollution damage and human health risk. Regional
and local authorities have the right to exempt polluters from
these charges. The revenues are largely distributed to state non-budget
ecological funds, responsible for environmental protection systems
(municipal sewage facilities, waste disposal facilities, monitoring
systems etc.). High inflation and refusing of paying charges by
enterprises due to poor financial situation creates a number of
problems.
Many CEE countries have experience with environmental funds financed
from earmarked revenues coming from charges and taxes. Although
there are several problems to be solved in the future this
philosophy of collecting, administration and distribution of revenues
(earmarking) could be implemented in the framework of CO2/energy
taxation in the same way .
2.7. RECYCLING THE TAX REVENUE INTO SPECIFIC CO2 SAVING
MEASURES
Extensive capital shortage in CEE is one reason why discount rates
are frequently much higher than in developed countries and thus
make it impossible to finance energy efficiency and renewable
energy projects. Government investment in this way is restricted
and new incentives to find financial resources inside of domestic
economy must be found. Recycling the tax revenue into carbon dioxide
saving measures could do the job.
A study by the Technical University of Athens for the European
Commission highlights the potential role of recycling the tax
revenues into specific carbon dioxide measures 11 . Where the
bulk of the revenue is diverted into energy conservation , renewables
and more efficient fossil fuel combustion, projected CO2 emission
reductions are three times greater than the case where the
tax revenues are put into a more general budget. The study concludes
that this would not only allow the European Union (EU) stabilization
target to be met, but a reduction of up to 22% in CO2 emission
from current levels.
2.7.1. UNDERVALUED ENERGY EFFICIENCY AND RENEWABLE ENERGY
STRATEGIES
Heritage of the centralized energy planning and monopoly energy
supply companies, as we can see them in CEE, favors large-scale
investments in supply side . Decentralized , democratic planning
based on least-cost principles including environmental and social
costs giving the same opportunity to independent producers utilizing
renewables as to the large producers are still strongly undervalued
by CEE governments.
To launch in CEE countries, the effective sustainable energy programs
which are urgently needed both for the economy and the environment,
the tax incentives and other subsidies that now favor fossil and
nuclear energy should be re-directed to demand side efficiency
and to renewables.
2.7.2. STRUCTURE OF THE POSSIBLE CO2/ENERGY TAX
Creation of appropriate fund, from taxes like CO2/energy tax and
higher taxes on inefficient consumer products ( appliances, vehicles
) is the promising way. From this fund the incentives for energy
conservation measures and renewable energy projects can be provided
by grants or low-interest loans which are presently not available
for potential investors in CEE.
It seems reasonable to start with small CO2/energy tax in CEE.
Due to high energy consumption few per cent of energy price added
as the tax could create a large amount of money sufficient for
building demonstration projects. Pilot projects based on renewables
or case studies on energy efficiency are presently urgently needed.
Decissionmakers, private investors and public could be provided
with informations on what is really possible.
It is not important to set exact figures for CO2 or energy taxes
at this stage of development in CEE but it is very important to
set up new way of considering energy prices and its taxation.
From this point of view starting with small tax on coal, natural
gas, petrol and uranium could do good job. Such tax would create
considerable revenues in each CEE country.
2.7.3. CO2/ENERGY TAX REVENUES FOR ENERGY EFFICIENCY PROGRAMS
Two things in energy sector of CEE countries seems to be clear:
1. energy saving potential is high
2. the policy of 'getting the prices right' ( market
prices ) is for consumers in CEE not enough.
Due to several barriers market forces as e.g. price increase without
appropriate energy policy ( demand side management, efficiency
standards, legislation ) are insufficient to mobilize the resources
in energy efficiency sector in CEE.
The main barriers include :
1. lack of information about future energy prices and technological
possibilities
2. high initial capital cost for households and unwillingness
to take risk associated with long term investment
3. lack of experience in cost-effectiveness analysis and in calculating
the rate of return of investment
4. subsidies to energy producers.
Direct interventions are needed to strengthen market mechanisms
and to remove institutional and market barriers. Some projects
in CEE countries demonstrated that quite modest investments in
overcoming these market failures can yield large benefits in terms
of reducing demand for energy and avoiding related pollution.
By installation of for instance metering equipment, temperature
regulation systems and insulation on some buildings energy savings
up to 30 % can be achieved. Payback times for such investments
are mostly shorter than one year.
In CEE exist a large gap in investment to energy efficient (savings)
and renewable technologies. Revenues from CO2/energy tax used
for stimulation of these investments could overcome the above
mentioned barriers.
EXAMPLE: POLAND
While energy prices in Poland have already reached the level of
prices in West Europe, the average month salary in Poland is much
lower ( like in other CEE countries ), about USD 200. As a result,
a sufficient price incentive exists for consumers to save energy.
In the study , 'Demand-side Management in Poland: Assessment
and Pilot Program' coordinated by the US Agency for International
Development and the World Bank, a cost ranking of electricity-saving
measures called a conservation curve , was developed - the first
in CEE. Despite being a conservative study by North American standards,
the conclusions are striking. Of the end uses assessed, 16 percent
savings can be achieved at less than avoided cost of electricity
( assumed to be relatively low 2,7 cents/kWh ). This amounts
to about 2000 MW worth of power plants. If a modest pollution
externality cost of 2,1 cents/kWh is included to reflect the high
pollution impacts of the coal and lignite used in the region today,
the cost-effective electricity savings jump to 36 percent of the
total electricity consumption, which is equivalent of 5000 MW
of power station.
The study for Poland outlines a proposed six-year 'National
Demand-Side Management Program Summary .' The summary projects
an investment of nearly USD 259 million for a program to cut
peak demand by 764 MW and save 1745 GWh of electricity by the
year 2000. A series of implementation programs for improved efficiency
in lighting , drive motors, refrigeration, industrial processes,
and insulation is recommended.
It is likely that demand-side management could help achieve similar
or even larger savings throughout CEE . But until world lending
institutions like World Bank or EBRD will overemphasize energy
supply investments and fail to evaluate energy efficiency potential
in CEE - financing of such programs will always be a problem in
this region. Even in this case CO2/energy tax could do this job
by creating domestic financial resources and avoiding to increase
foreign debt at the same time.
2.7.4. FINANCIAL INCENTIVES FOR ENERGY EFFICIENCY IN CEE
Governments of CEE are revising their energy policies and are
developing new legislation and institutions. From the following
overview of present state of the financial incentives for energy
efficiency can be seen that first steps to the right direction
has recently been made or are under consideration by some CEE
countries .
BULGARIA
Financial incentives will be treated in the new law on energy
efficiency.
CZECH REPUBLIC AND SLOVAKIA
In force are selective customs and tax tariffs to enhance the
use of energy efficient equipment appliances. This instrument
is being used in combination with other administrative measures
.
HUNGARY
The main incentives are being financed by foreign credits and
are used for the implementation of energy policy, diversification
of fuels and energy efficiency. Its focus is on industry.
LITHUANIA
No taxation schemes in force at present. It is however possible
for industries to obtain subsidies for manufacturing of products
with high thermal efficiency and for measuring equipment.
POLAND
There are no financial incentives at the present, Probably due
to restructuring problems of the Polish economy.
ROMANIA
No tax incentives measure in force. The Energy Conservation Agency
can give grants on energy efficiency investments.
RUSSIA
The government is considering the following fiscal measures :
1. raise tariffs according to quantities of consumed energy, which
exceeds the contract,
2. establish an Energy Conservation Fund, from which subsidies
for the efficient use of energy can be granted,
3. abolish taxation on enhanced energy efficient investment by
research and development departments in the fuel and energy
industry,
4. establish tax discounts for energy efficient equipment (expenditures
on reconstruction and/or modernization are allowed to be included
in the cost-price).
SLOVENIA
For energy conservation investments subsidies and favorable loans
are available. The government is financing projects for efficient
energy use. Equipment for efficient energy use as well as for
renewable energy can obtain at low interest rate and tax deduction.
UKRAINE
Environmental clean technologies can be favored for a certain
period of time by tax reductions. For industrial and public sectors
a reduction in tariffs is applied to increase end-use efficiency.
2.7.5. CO2/ENERGY TAX REVENUES FOR RENEWABLES ( TOWARDS
FOSSIL FREE FUTURE )
A study prepared by Stockholm Environmental Institute 12 shows
that future based on renewable energy sources is in fact credible.
It is technically and economically feasible to halve the current
global use of fossil fuel and to maintain our transport systems,
industries and homes with a renewable energy sources like solar,
wind, hydro, biomass, and geothermal. The study suggests that
a steady replacement of fossil fuels with energy efficient technologies
and renewables could reduce global emissions of carbon dioxide
by 52% by 2030, and 71% by 2075.
Improving energy efficiency in all regions of the world , and
developing a solarhydrogen energy system are the building bricks
of fossilfree future scenario. The overall costs of such a scenario
are estimated to be equal to or less than those for carrying on
with our current wasting of energy sources. Making such a future
a reality will however require major political changes.
The role that renewable energies could play in CEE is still
underestimated by decision makers.
Due to organizational barriers ( local and decentralized sources
are hard to get centralized financing ), political obstacles and
some specific technical problems ( fluctuation with time, dispersion
in space ), the short term market type considerations in favor
of fossil fuels or nuclear are still common praxis.
Renewable energy sources are victims of both policy failure
and market failure.
Energy markets belong to the most distorted commodity markets.
Producers of energy from fossil and nuclear fuels sell their output
well below to the true cost to the economy. Those who produce
energy from renewables and impose negligible cost on the rest
of society are still in disadvantage to their competitors with
fossil fuels.
Internalization of external costs due to environmental damage
could open the way for renewables.
For example, a draft EU directive suggests a limit of 0,1 % sulfur
content in gasoline after 1.10.1994 and 0,05% after 1996. Today,
biofuels satisfy these requirements, but fossil fuels have to
be refined with added cost estimated at 5 ECU and 11 ECU per barrel
respectively to meet this directive 13 .
Sometimes it is believed that simple removing existing subsidies
from fossil fuels will solve the whole problem of broader penetration
of renewables on the market. This is correct approach in the optimal
world. But in the real world neither full internationalization
of externalities nor the withdrawal of governmental intervention
is likely to occur in the near future. As long as nonrenewable
energy sources , in particular coal and nuclear power, remain
heavily subsidized the development of renewables will not be brought
about by the market forces.
Renewables requires support by public expenditure to counterweight
large resource transfers from taxpayers to nuclear, coal, gas
and oil power producers. Budgets of CEE countries are very unreliable
sources of capital necessary to cover renewable energy projects.
Revenues from CO2/energy taxes thus should be the right tool which
can provide financial resources for projects which support sustainable
and fossil-free development.
Furthermore supporting domestic renewable sources helps to:
1. Reduce imports and may ease balance-of-payments problems
of many CEE countries.
2. Provides more jobs than fossil fuels.
3. Increase countries energy security .
2.8. RECOMMENDATIONS FOR ACTIONS IN CEE
During time of major structural changes in CEE countries there
exist the potential advantage to use CO2/energy tax as well as
other environmental taxes to redirect the pressure of market forces
towards achieving of substantial environmental improvements. To
cut CO2 emissions and to change energy policy towards sustainable
one will need:
1. To adopt carbon dioxide target as it has been done
by OECD countries .
2. To include externalities in the price of energy and
to cut subsidies to fossil fuels which
have damaging environmental impacts, discourage energy savings
and the development
of renewable energy sources.
3. To introduce small ( few per cent of present energy or fossil
fuel price CO2/energy tax
and use the earmarking revenues from tax as
the financial resource for energy
efficiency and renewable energy sources.
4. To establish appropriate administrative institutions responsible
for effective distribution of
tax revenues .
2.9. BARRIERS FOR CO2/ENERGY TAXATION IN CEE
There are several specific problems which create the barriers
for the introduction of CO2/energy tax in CEE.
1. Differences between CEE countries in the transformation process
to market economy create different conditions for implementation
of such taxation. In countries like Poland, Hungary, Czech Republic,
Slovakia or Slovenia transformation of economy reached
the point where CO2/energy tax should be seriously considered.
2. Many enterprises in CEE are still in monopoly position
and are able to pass any environmental tax on to their customers.
CO2/energy tax would, in this situation, raise substantial revenues,
without achieving environmental goals. Setting energy standards
should improve the situations.
3. High inflation especially in countries of former USSR
countries could create severe problems for the operation of the
tax. The revenues from CO2/energy tax will erode by inflation.
Possible way how to overcome this barrier is the introduction
of tax with automatic indexing against rate of inflation.
4. In some CEE countries, the organization of agencies
responsible for enforcing environmental and especially energy
policy is still largely unchanged from previous system. Lack
of skilled people and information create serious barrier.
5. Energy policy of CEE countries will depend on future legislation
and this can be negatively influenced by Energy Charta signed
by CEE countries. It is too early to estimate all negative impacts
on energy sector in the region coming from this document, nevertheless
privatization of energy sector by foreign investors and export
of electricity from CEE could be taken in consideration.
According to planned Charta protocols huge energy resources in
CEE can be exploited on a large scale with minimal environmental
standards. CEE countries should play a role of cheap energy supplier
for the West. From an environmental point of view, future export
of electricity from CEE to West ( Poland is already a big exporter
of electricity to Austria ) could only be accepted if it is guaranteed
that exported electricity is provided without deterioration of
the environment - but it is not the case for CEE at present.
Most of OECD countries committed to lower CO2 emission. The emission
targets and condition under which they should be adopted are summarized
in table 5.
TABLE 6. NATIONAL CARBON DIOXIDE EMISSION TARGETS IN OECD
COUNTRIES
3.1. THE EU CO2/ ENERGY TAX PROPOSAL
Through a resolution by the Council of Ministers, the EU has undertaken
to stabilize combined emissions from its 12 member countries in
2000 at the 1990 level. The Commission proposes that fossil fuels
should be taxed on the basis of their carbon dioxide emissions,
and that this portion of the tax be set at 50 % of the total tax
of ECU 17,7/tone oil equivalent (USD 3/barrel of oil equivalent)
in 1993. The other half of the tax should be assessed on the thermal
value of energy sources used.
With the view to achieving a gradual introduction of the tax,
it was supposed to set USD 3/barrel from 1 January, 1993,
rising by USD 1/barrel to USD 10/barrel by the year 2000 14 .
A few examples of proposed taxes on products are reviewed in the
table 6.
TABLE 7. TAXATION OF PRODUCTS IN ECUs ON THE BASIS OF 3 USD/BARREL
The values in brackets represent the tax per gigajoule (GJ),
the amount of the energy tax is ECU 0,21 per GJ in all cases.
3.1.1. WHAT COULD BE THE IMPACT OF THE TAX ON THE ECONOMY
A key element of the EU tax proposal is that it should be fiscally
neutral, i.e. increases in energy costs would be offset by
reduction in other taxes. There are a number of exemption
from the tax, the most important being special treatment for energy
intensive industries. Taxes for such a industries will be reduced
by 2590%. The exact reduction will depend on each firm's costs
of energy as per cent of its value added. With the exemption of
large scale hydro ( more than 10 MW ) , renewable energy is exempt
from the tax.
What could be the impact of such tax on economy? The answer depends
on many factors , most noticeably the scale of the tax and the
uses to which the revenues are put.
Energy is such a large business that relatively small tax would
suffice to raise large sums. A tax adding just 1 per cent to the
price of coal would rise around USD 2,5 billions if applied globally
15 . Yet the price impact of such a tax would be quite negligible
- far smaller than for instance, the uncertainties in predicting
price of oil a week ahead. Furthermore for the great majority
of manufacturing industry , energy costs only represent between
0% and 5% of total production costs.
If CO2/energy taxation would be introduced in EU according to
schedule it would raise estimated revenues of 56 billion ECUs
in 1993 and 97 billion ECUs in the year 2000. Such taxation would
have a varying impact on different fuels and industries. It is
estimated that the price effects of the tax in the year 2000 would
be:
69 % price increase for petrol and diesel,
15 % for electricity,
31 % for natural gas,
39 % for heavy fuel oil and
63 % for coal.
A study for European Community 16 provides a very detailed information
of likely impacts of the EC CO2/energy tax by country and industrial
sector. The tax receipts in the assessment are assumed to be recycled
through reducing income taxes (35%), employer's social security
contributions (40%), corporate taxes (10%), and energy conservation
measures (15%). The main conclusions of the study are that :
1. The tax 'stimulate the hightech, capital goods producing
sectors'.
2. There is an accelerating trend in energy efficiency. The
industrial energy intensity reduces
between 14% and 39%, compared to 1990, according to country.
3. The real GNP growth rate is only 0,07% lower, on average
each year.
4. The acceleration of price inflation is 0,23% on average.
The impact of CO2/energy tax on private households would be modest.
This direct impact would only represent between 0,5% and 1,3 %
of total household expenditure 17 . Nevertheless special treatment
of low-income families is needed because they spend relatively
higher share of their expenditure on the energy compared to average
household.
More generally can be concluded that :
1. The economic impacts of the EU tax are likely to be small,
and may well be positive.
2. If tax revenues are recycled directly into the measures
cutting CO2 emissions such as energy savings, renewables and
cogeneration, CO2 emissions could be reduced more efficiently
and to a far greater extent.
3.1.2. IS THE EU TARGET MEETING STABILIZATION OF CONCENTRATION
OF CO2 IN ATMOSPHERE ?
It is questionable if commitments of OECD countries will meet
CO2 stabilization in atmosphere. The chairman of IPCC, Dr. Bert
Bolin, warned the opening plenary of INC 9 that achieving current
commitments by industrialized countries to limit CO2 emissions
would represent 'only a very modest first step to reach a
stabilization of CO2 concentration'. 'Even stabilizing
the total global emissions would not stabilize atmospheric concentrations
for several hundred years'.
Furthermore EU has made the introduction of CO2/energy tax conditional
on other major OECD countries taking similar steps. It is unclear
today when the tax will be introduced EU countries have decided
to make a decision in December 1994, before the UN conference
on Climate Change.
A new Greek proposal includes a USD 3/barrel tax with a possibility
for countries to opt-out if they implement the EU CO2 stabilization/reduction
policy with other measures.
3.2. US ENERGY TAXATION
The US administration proposed an energy tax as part of a package
of measures to reduce the federal budget deficit and to stimulate
economic growth. The US tax proposal, which contains a basic rate
on the thermal heat content of energy products plus an additional
oil supplement foresees considerably lower tax rates than EU tax
proposal
The static receipts of the US energy tax, if introduced would
amount to roughly USD 22 billion annually which corresponds to
0,4 % of US GDP in 1992.
Nevertheless this proposal was defeated in Congress and replaced
by a 4,3 cent/gallon increase in gasoline taxes.
3.3. JOINT IMPLEMENTATION - ANOTHER CO2 ABATING POLICY
As part of the new plan , Clifton's administration launched a
program to encourage international emissions reductions known
as joint implementation.
Joint implementation is perceived to offer a means of obtaining
credits against emission reduction obligations within one's own
borders, by undertaking emission reduction projects in other countries.
Defining joint implementation in the worst way, some fear that
industrialized countries will only plant forests in developing
countries, with little consideration of the net benefit to the
latter-but allowing the former to receive credit for greenhouse
gas reductions while increasing their own emissions at home. Defined
more positively , joint implementation offers a means to stimulate
cooperation between industrialized and developing countries to
reduce global greenhouse emissions in the most cost-effective
manner possible.
Joint implementation in CEE countries without carbon dioxide commitments
should undermine possible realization of the Climate Convention's
objective. Thus all parties involved in joint implementation should
have similar emission commitments and clear emission baseline.
Joint implementation as a part of climate convention
is hard to be expected before 2000. For CEE countries ( if introduced
) it seems to be the way towards nuclear implementation, because
nuclear power is considered by most decision-makers as appropriate
CO2 abating measure.
3.4. EXISTING CO2/ ENERGY TAXES IN OECD COUNTRIES
High energy taxation is common in majority of developed countries.
According to OECD study 18 existing taxes are on average the
equivalent of a USD 70 /ton carbon. There are however large differences
between countries, and coal and natural gas are in most cases
taxed much lower taxed than oil and in many countries not taxed
at all. Oil used in domestic sector is subject on average to
a tax of USD 135/ton. This calculation is based on the present
average taxation of light oil in the EU(countries weighted for
number of inhabitants). The highest taxation is in Italy, Germany
and Denmark, while Belgium, Luxembourg and the UK have particularly
low taxes. Only a few countries have , so far , introduced
carbon dioxide taxes. Beside Netherlands the Nordic countries
has been the most progressive in this way. In all these countries
CO2 tax co-exists with traditional energy taxes.
3.4.1. CO2/ ENERGY TAXES IN THE NORDIC COUNTRIES
All of the Nordic countries (Denmark, Finland, Norway and Sweden)
have taxes on energy products which are among the highest in the
world . Nevertheless these countries have introduced, or have
decided to introduce , new taxes with the specific aim of curbing
CO2 emissions.
At present , only emissions of CO2 from energy use are being taxed.
In all of these countries, the scope and rates vary between sources
of emission and exemptions from taxation and other forms of tax
relief are common. Existing or proposed CO2 taxes in the Nordic
countries are high in comparison with international norms. For
example, CO2 taxes on gasoline in Sweden and Norway in 1992 reached
a level equivalent to 15 and 22 USD/barrel of oil. This can be
compared with the proposal by EU to impose a CO2/energy tax of
10 USD/barrel of oil by the year 2000. Calculated as the average
tax on all CO2 emissions imposed CO2 taxes equivalents are reviewed
in the following table.
TABLE 8. CO2 TAXES IN THE NORDIC COUNTRIES
1) for private consumers, not including general energy taxes
DENMARK
has newly implemented a CO2 tax, which came into force for industries
in January 1993. Denmark will also rely on measures other than
taxation in its greenhouse abatement strategy. In particular,
fuel substitution in the electricity sector will play a central
role. The Danish CO2/energy tax revenue is partly used to increase
energy efficiency and cogeneration. A number of support schemes
are set up for efficiency improvement, to increase the number
of consumers in district heating systems together with a partly
exemption of gas used in cogeneration stations.
FINLAND
Finland has made no formal commitment to cut its CO2 emissions.
However, the issue has been discussed in the Parliament, and Parliamentary
Committee has proposed stabilization of emissions by the year
2000. Modest CO2 tax was introduced in 1990. A further increase
in the tax and other measures to curb emissions will hinge on
future statements or commitments by the Parliament.
NORWAY
In May 1989, the Norwegian Parliament stated that emissions of
CO2 should be stabilized by 2000 at the 1989 level. The goal is
preliminary, and should , according to the Parliamentary decision,
be continuously analyzed. Norway has introduced CO2 tax in January
1991 . Moreover, additional resources have been allocated to various
energy conservation programs.
SWEDEN
Some of the most progressive examples of environmentally oriented
taxation are the Swedish taxes on S02, NOx and on CO2. Those taxes
are close to marginal abatement costs, so considerable effect
can be expected.
In 1990 and 1991, Sweden undertook a comprehensive tax reform,
wherein CO2 taxes were seen as an important component. Improved
energy efficiency and electricity conservation objectives continue
to dominate Swedish energy policy. Furthermore, various measures
are in place to encourage production and consumption of renewable
energy sources, in particular peat and wood 19 .
The current trends for climate change and the projected changes
over the next century calls for global action . An immediate start
must be made towards increasing energy efficiency and phasing
out fossil fuels by renewables.
The challenge to policymakers responding to global warming is
to design a flexible policy framework capable of reducing the
concentrations of greenhouse gases in the atmosphere and designing
of sustainable energy path. The success of the future environmental
policies in the world lies in partnership, experience sharing
and multilateral learning . Introduction of CO2/energy taxation
in some OECD countries seems to be the right way to follow in
CEE. It seems clear that unless a large number of OECD countries
do not introduce such a kind of tax there are little chances
to introduce it in CEE. Nevertheless there is growing support
in OECD-countries for a system, where countries with CO2/energy
taxes can set similar duties on energy-intensive imports from
countries without CO2/energy taxes. There is yet no official proposal
for this; but if it is implemented it will hit CEE-countries without
such a taxation.
Some CEE governments are currently proposing changes in their
energy pricing in order to bring them more into line with the
market prices. But it is still too less in order to bring them
into line with the external costs of fuel use. Cutting subsidies
and internalization of external costs is a long term process.
What CEE countries need do just now is to start or strengthen
the process of utilization of renewables and increasing of energy
efficiency. Form this perspective introduction of small carbon
or energy tax could do useful job. This seems to be viable option
for CEE countries not only from the point of view of reduction
of CO2 concentration in atmosphere or fossil free future but even
from political and economical reasons. Growing support in OECD
countries for system, where countries with CO2/energy taxes can
set similar duties on energy-intensive imports from countries
without CO2/energy taxes could hit especially CEE countries.
Another reason why it would be useful to discuss this problem
just now is the revitalization of nuclear power in CEE. Governments
of CEE are now looking for Western capital . And it flows into
nuclear industry much easier than into any other industry . Too
few is presently hearing the underfunded voices for renewable
energy strategies that would generate more jobs, than ever created
by Western nuclear companies. There are no examples of such huge
investment into energy efficiency or renewables in CEE like we
can see it now in nuclear industry.
Energy efficiency and renewable energy projects are at present
not favored by CEE governments because lack of money and preference
towards nuclear energy. The political and economic changes taking
place in CEE present a unique opportunity to re-orient the policy
towards sustainable development. To achieve this goal allocation
of revenues from CO2/energy tax for energy efficiency and renewables
could be viewed as appropriate tool for generating financial resources
inside of own country.
Development of renewable energies and energy efficiency is difficult
to handle by centralized administration and large institutions
. From this point of view the concerned NGOs could be the leading
force in promoting this option and ease the change of this sustainable
energy path.
1 Energy in Central and Eastern Europe, Nuclear Power and Energy
Efficiency: Two Options, Celakovice Conference,
1992
2 Renewable Energy in Central and Eastern Europe, Greenway
Energy Group Seminar, Bratislava, 1993
3 Intergovernmental Panel on Climate Change, 'Climate Change:
the IPCC
Scientific Assessment.' Cambridge University Press, 1990
and 1992
4 F.R. Rijsbermann, R.J. Swart, Targets and Indicators of Climate
Change , The Stockholm Environment Institute, 1990
5 US EPA, Policy Option for Stabilizing Global Climate, Report
to Congress, February 1989
6 Friends of the Earth, Getting Out of the Greenhouse, 1989
7 Greenpeace Int., Energy Without Oil, SEI, January 1993
8 A.Lovins, The Negawatt Revolution: Solving the CO2 Problem,
1989
9 Michael Grubb, Energy Policies and the Greenhouse Effect,
The Royal Institute of Int. Affairs, Dartmouth, 1992
10 Georg Loeser, Instruments of Intervention: Fiscal and Regulatory
Measures, Eco-Taxes,1992
11 P.Capros, Energy Pricing and Substitution in CO2 Reduction
Analysis. Technical University of Athens, 1993
12 SEI, Fossil Fuels in a Climate Change, 1992
13 G. Gosse, The State of Biomass in the Year 2000, European
Directory
of Renewable Energy Suppliers and Services, 1993
14 Commission of the European Communities, Proposal for a Council
Directive Introducing a Tax on Carbon Dioxide
Emissions and Energy, 1992
15 M.J. Grubb, The Greenhouse Effect: Negotiating Targets, Royal
Institute of
International Affairs. London, 1989
16 The Economic Impact of a Package of EC Measures to Control
CO2 Emissions, Report to the Commission of the
European Communities , DRIEurope November 1991
17 Europe Environment, No. 410, May 18, 1993
18 P. Hoeller, J. Coppel, Energy Taxation and Price Distortions
in the Fossil Fuel Markets : Some Implications for Climate
Change Policy, OECD, Paris,
1992
19 OECD DOCUMENTS, Climate Change . Designing a Practical Tax
System, Paris, 1992
MILLION TONES CO2
1988 1989 1990
1991
USSR 3820 3798 3692
3604
CZECHOSLOVAKIA 235 228 215
199
HUNGARY 80 76 73
69
POLAND 462 441 358
354
Tones of CO2 per 1000 Tones of CO2
per
1991 USD of GDP
capita
USSR 1 409 12,5
Hungary 1 316 6,5
Czechoslovakia 1 308 13,0
Poland 1 244 9,3
USA 1 015 20,1
EC 668 9,7
Sweden 329 6,5
1973 1990
2010
Western Europe and Northern 0,59 0,47 0,33-0,34
America
Central and Eastern Europe 1,03 0,92 0,60-0,71
ENERGY SUBSIDIES
IN 1985 PRICES
Fomer USSR 163 bil. USD
CEE 22 bil. USD
CHINA 14 bil. USD
WORLD TOTAL 235 bil. USD
ENERGY TAX CO2 TAX
Basic idea 1. including external climate impacts of CO2
costs of energy
production + use
2. resource limitation
Taxed quantity energy content of specific carbon
content of
energy carriers energy carriers
Strategy and signal 1. priority for energy shift to low or non
carbon
efficiency and saving energy carriers
2. pro renewables
Winners 1. energy efficiency and 1. nuclear energy
savings 2. natural gas
2. tax-free renewables 3. oil instead of coal
4. efficiency+renewables
Losers 1. all fossil fuels 1. coal
2. nuclear energy 2. oil (but winner to 1+2
End-of-pipe no yes
encouragement
Problems + additional 1. nonspecific on CO2 1. risk shifting and
aspects accumulation
(
nuclear, natural gas
2. methane emission
3. distortion of competition
( regional,
international
COUNTRY CO2 TARGET
AUSTRALIA No higher than 1988 by the year 2000 ,20% reduction by
2005.
Condition: to be implemented if others take like actions
AUSTRIA 20% reduction by 2005 compared with 1988 level.
Condition: still needs parliamentary approval.
BELGIUM EU target: No higher than 1990 level by year 2000
CANADA 20% reduction by 2005, compared with 1988 level.
DENMARK 20% reduction by 2005, compared with 1988 level.
Comment: Implementation plan adopted .
FINLAND No higher than 1990 level by year 2000
Comment: policy goal, not a formal target .
FRANCE No higher than 1990 level by year 2000.
Comment: per capita per year target. Reduction from 2,3
to 2,0 tones CO2 per inhabitant within 25 years.
GERMANY 2530 % reduction by 2005 compared with 1987 level.
GREECE EU target: No higher than 1990 level by year 2000.
IRELAND EU target: No higher than 1990 level by year 2000 .
ITALY No higher than 1988 level by year 2000 20% reduction by
2005 .
Comment: nonbinding resolution .
JAPAN No higher than 1990 level by year 2000
Comment : on per capita basis .
Condition: to be implemented if others take like actions.
LUXEMBOURG EU target : no higher than 1990 level by 2000, 20%
reduction by 2005.
NETHERLANDS No higher than 1990 level by year 1995, 35% reduction by
2000.
Comment: unilateral action committed .
NORWAY No higher than 1989 level by year 2000
PORTUGAL EU target: No higher than 1990 level by year 2000 .
SPAIN EU target: No higher than 1990 level by year 2000 .
SWEDEN No higher than 1990 level by year 2000
SWITZERLAND No higher than 1990 level by year 2000
UK No higher than 1990 level by year 2000
UNITED STATES No higher than 1990 level by year 2000
Comment: Clinton`s April 1993 statement commitment do not
have statutory legal force and is based on voluntary
actions.
PRODUCT UNIT CO2 TAX ENERGY TAX TOTAL
TAX
Petrol 1000 l = 32,7 6,59 6,87 13,46
GJ (0,202) (0.412)
Diesel fuel oil 1000 l = 35 7,66 7,76 15,42
GJ (0,207) (0,417)
Heavy fuel oil 1000 l = 40,2 8,77 8,44 17,21
GJ (0,218) (0,428)
Natural gas 1000 m3 =34,6 5,44 (0,16) 7,14 12,58
GJ (0,370)
Hard coal 1000 kg = 25 6,5 (0,26) 5,25 11,75
Low-grade GJ 4,9 (0,26) 3,99 (0,48)
Anthracite 1000 kg = 19 8,93
GJ (0,48)
Coke 100 kg = 26 7,8 (0,30) 5,46 13,26
GJ (0,51)
Opencast lignite 1000 kg = 7,5 2,25 (0,30) 1,58 3,83
Lignite GJ 5,6 4,2 (0,51)
briquette 1000 kg = 20 (0,28) 9,8
GJ (0,49)
Peat 1000 kg = 10 3,0 2,1 5,1
GJ (0,30) (0,51)
COUNTRY CO2 TAX EQUIVALENT
SWEDEN 28 USD/ton CO2
NORWAY 27 USD/ton CO2
FINLAND 2 USD/ton CO2
DENMARK 15 USD/ton CO2 1)
ZIVOTNE PROSTREDIE:
Organizacie
/ Granty /
Casopisy /
Publikacie /
Kalendar
/ Legislativa
English version