Green Budget News 32 · March 2014

 


Quotations from 2013

"Europe will soon be the only continent dependent on imported energy. (…)The emphasis on competitiveness and prices is an indication that environmental and climate concerns are falling down the EU's list of priorities, however.”
Herman van Rompuy, European Council President on the European Council Summit, May 2013

"I refuse to condemn your generation and future generations to a planet that’s beyond fixing. We will be judged as a people, and as a society, and as a country on where we go from here."
US-President Obama's Climate Change Quotes: Best Lines From Georgetown Speech - external-report, June 13

“21st century policies are needed for a 21st century global economy, which means thinking more creatively, more cohesively, and more collaboratively than in the past about global sustainable development.”
Christine Lagarde, IMF Managing Director at the United Nations Inaugural Meeting of the High-level Political Forum on Sustainable Development (HLPF) in New York, September 2013


Editorial


Dear readers,

Welcome to the first 2014 edition of Green Budget News!

2014 will be an exciting year for Europe, with parliamentary elections in May and a new Commission on the way. For the first time, due to new treaty provisions, the European Parliament will have a crucial role to play in creating the Commission. First, because EU leaders in the Council will have to “take into account” the results of the European parliamentary elections when choosing an candidate, and second, because any prospective Commission President proposed by the Council will subsequently have to be approved by majority vote in the European Parliament.

Greater democracy is hugely important for the EU. The Lisbon Treaty, the European Semester of fiscal policy coordination, the Stability and Growth pact and the Excessive Debt procedure – all reflect the increasing power of European institutions. At the same time as this power increases, a growing disinterest and a sense of disenfranchisement is reflected in falling voter turnout in EU elections – from 62% in 1979 to just 43% in 2009.

This time around, fears abound that the election will create a European Parliament with a larger percentage of Euro-sceptic parties than ever before. In times of economic downturn, Euro-sceptic parties have been able to capitalise on the frustrations and fears of European citizens, portraying the European Union as bureaucratic and unaccountable and criticising the power of the troika.
A more democratic approach to European policy processes would be good news for environmental fiscal policy in Europe – not least, if unanimity voting on fiscal policy was replaced by qualified majority voting - but how can we achieve that?

First, we can all vote in the European elections, and make our opinions known and heard – loud and clear. We can pass on our demands to our MEPs, or send them the Green Ten’s proposals for a smarter and more sustainable Europe. We should also make a point of staying in touch with our MEPs once they are elected.

Second, we can push for the inclusion of environmental and social goals within the European Semester process and push for the involvement of the European Parliament, to democratise the process. GBE has been campaigning hard, with other organisations, to make the Semester more transparent and accessible to the European Parliament and civil society, and to bring the environmental and social issues to the table.

Third, we can come out in support of changes to make the EU decision-making in Council more democratic, by making European Council decision-making on fiscal policies on the basis of qualified majority voting, rather than unanimity. Green Budget Europe is a strong supporter of reform in this area. However, the lack of democratic accountability here, so often criticised by certain elements in the media, is fiercely protected by a select few EU Member State governments.

2014 has already seen the Commission announce disappointing and unambitious climate and energy targets for 2030 – a 40% reduction in GHG emissions and a 27% renewable target – targets in line, pretty much, with business as usual. Discussions on energy savings have been postponed. At a time when the Sustainable Development Goals are being discussed, and a new international climate agreement is being negotiated and will be finalised in Paris next year, this lack of ambition sends out all the wrong signals and undermines the EU’s climate leadership.

It is up to us, as voters, to send the European institutions a strong message in support of sustainability and prosperity, decent green jobs, smart fiscal policy, and world-leading climate policy.

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 Julia von Fink.

 
 

Content
 
GBE ACTIVITIES
GBE Annual Conference 2013: "Environmental Taxation and Emissions Trading - Making Market-based Instruments work"
CEPRiE “Carbon and Energy Pricing Reform in Europe”
FRE-COMMUNICATE! - Communicating and realising the benefits and potential of Environmental Fiscal Reform in Europe
GBE’s work on the European Semester
GBE as expert for the EECS option to improve the use of MBIs
The 14th GCET – Global Conference on Environmental Taxation
Brainstorming meeting on creating a network for knowledge exchange and peer-to-peer learning on economic instruments for the environment
Green Revenues for Green Energy: Environmental Fiscal Reform for Renewable Energy Technology Deployment in China
Turning public budgets towards sustainability - Expert workshop on linking environmental, social and human rights budgeting


GREEN BUDGET REFORM IN EU MEMBER STATES
Portuguese government sets up inter-ministerial Environmental Tax Reform commission
UK government rolls back green taxes in populist move
British retail council proposes new energy tax to replace business rates
The Netherlands: Fiscal Plan 2014 and its “greening the fiscal system” implications
The Dutch Energy Accord for Sustainable Growth
Spain: New tax on greenhouse fluorinated gases
France implements carbon element in 2014 budget law and discusses an outline for its energy transition
ECOTAX - French Road Tax for lorries has been suspended indefinitely
New Security of Supply Tax in Denmark
Elections in Germany – improvements on the social agenda but no ambitions on EFR
Greece: proposal for an Environmental Fiscal Reform
Drastic energy price cut in Hungary
Hungary: Road Toll for Trucks
Hungary: The Putin-Orbán nuclear deal
Hungary: Corruption in government enables enormous VAT fraud
New Hungarian laws help organised crime
Progress on Environmental Fiscal Reform in Switzerland


GREEN BUDGET REFORM AT EU LEVEL
GBE reactions to the Council decision on a General Union Environment Action Programme to 2020 (7UAP)
European Commission proposals on backloading and a market stability reserve
40% - 27 % - and NOTHING on energy efficiency: is that the way to Paris in 2015?
More for less: Unambitious agreement for the budgetary framework of the EU until 2020 and the Annual Budget 2014
EU Annual Budget 2014
Financial Transaction Tax: The long way to make “the polluter pays”
Proposals to green new Common Agricultural Policy watered down
Reform of fisheries subsidies secured
Priorities of the Greek Presidency: Finally an ETD decision?


GREEN BUDGET REFORM WORLDWIDE
Post-election update from Australia; Abbott Government switching from carbon pricing to ‘direct action’
Mexico launches first carbon exchange to cut CO2 emissions  
Oman: OMR 740m fuel subsidies under review
China expands partnership with California to combat climate change
China could overtake the U.S. market-based climate protection efforts
Saudi Arabia: Energy subsidies need deft handling
Egypt: Fuel subsidies to be cut ‘gradually over five to seven years
Libya: Fuel subsidies removed over 30 months in three stages
Malawi tax on second-hand vehicles cuts emissions
Release: New Global Commission Aims to Identify Pathways to Economic Prosperity and a Safe Climate
Costa Rica is considering Environmental Fiscal Reform to consolidate its budget

GBE/GBG PUBLICATIONS
Green Revenues for Green Energy: Environmental Fiscal Reform for Renewable Energy Technology Deployment in China
Less pain more gain: The potential of carbon pricing to reduce Europe’s fiscal deficits
The financing of the Energy Transition in Switzerland – survey, measures and investment opportunities
Environmental policy as a crisis policy


OTHER RELEVANT PUBLICATIONS
Harmful subsidies under fire
Aviation in the Emissions Trading Scheme: What happened in 2012 under “Stop the Clock”
Energy use policies and carbon pricing in the UK
Ireland's Carbon Tax and the Fiscal Crisis
Report on energy taxes in Spain
Subsidies with an impact on the environment - methodology, inventory and case studies
GHG Mitigation in Australia: An Overview of the Current Policy Landscape  
Green Budget Reform in Slovenia: responding to the crisis with a sustainable vision
Economic and environmental implications of automobile feebates: A Simulation Analysis
Tax reforms in EU Member States 2013 – Tax policy challenges for economic growth and fiscal sustainability
The Political Economy of British Columbia's Carbon Tax
Effects of a Carbon Tax on the Economy and the Environment
Environmental Fiscal Reform to promote Green Economy in countries in transition - Progress on sustainable development and poverty eradication in Vietnam
China Carbon Pricing Survey 2013
Energy Subsidies in Bangladesh: A profile of groups vulnerable to reform
A Citizens' Guide to Energy Subsidies in Thailand
Environmental Fiscal Reform – case studie
Evaluation of Environmental Tax Reforms: International Experiences
Why Carbon Pricing? Comparing design rationales for carbon taxes
Mapping Carbon Pricing Initiatives - developments and prospects 2013
Effective Carbon Prices
Can border carbon taxes fit into the global trade regime?
Time to change the game - Fossil fuel subsidies and climate
Energy Subsidies Reform: Lessons and implications
A Guidebook to Fossil-Fuel Subsidy Reform for Policy-Makers in Southeast Asia
Prioritizing Fossil-Fuel Subsidy Reform in the UNFCCC Process: Recommendations for Short-Term Actions
World Energy Outlook 2013
Environment at a Glance 2013
International Fuel Prices Database
Green Growth Knowledge Platform launches web platform to accelerate Green Economy Transition

UPCOMING EVENTS
GBE Annual Conference 2014
International Workshop: Green and social: Managing synergies and trade-offs
ENVECON Conference 2014
3rd International Climate Change Adaptation Conference: Adaptation Futures 2014
5th World Congress of Environmental and Resource Economists
EAERE-FEEM-VIU European Summer School in Resource and Environmental Economics: The Economics of Adaptation to Climate Change
International Conference on Degrowth for Ecological Sustainability and Social Equity 15th Global Conference on Environmental Taxation

 
 

GBE ACTIVITIES

GBE Annual Conference 2013: "Environmental Taxation and Emissions Trading - Making Market-based Instruments work"

GBE's Annual Conference 2013 took place from 24-25 October 2013 in Winterthur at the School of Management and Law ZHAW. The focus was on environmental tax reform and emissions trading. More than 40 key experts and another 100 participants were invited to discuss and analyse the ongoing Swiss initiative of implementing environmental taxation as part of the 2050 energy strategy (day 1). The second day set out to explore tangible ways of overcoming existing barriers for the effective functioning of the European Union Emissions Trading System (EU ETS) in the context of the discussion on the EU 2030 climate and energy targets.


CEPRiE “Carbon and Energy Pricing Reform in Europe”

The CEPRiE project engages in an ongoing dialogue with policy makers at the highest level, including Finance Ministers, stakeholders from industry and civil society, research institutes and the media, supplying them with evidence-based policy recommendations and strong arguments in favour of carbon pricing and smart taxation.
The aim of the project is to contribute to a change in the current course of fiscal policy in selected European countries and at EU level, and towards more ambitious carbon pricing mechanisms across Europe, bringing about significant reductions in greenhouse gas emissions and a shift towards sustainable fiscal consolidation within a low-carbon economy.
As a follow-up of the CETRiE project (Carbon Energy and Tax Reform in Europe), this project will build on 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 – to bring about real and substantial reform in carbon-energy taxation in selected EU Member States and at EU level.


FRE-COMMUNICATE! - Communicating and realising the benefits and potential of Environmental Fiscal Reform in Europe

One of the most fundamental barriers to the implementation of Environmental Fiscal Reform (EFR) is a widespread lack of understanding about what EFR is, and what it can do. This is evident amongst policy-makers, the business sector, the media and the general public as well. In response, the FRE-COMMUNICATE project sets out to raise awareness and improve understanding of the way EFR works, by developing different communication strategies for different target groups to communicate the advantages and benefits of EFR in a clear and accessible way. The project is funded by the Velux foundations.


GBE’s work on the European Semester

As the Semester is becoming more and more important, GBE is intensifying its focus on the process. We aim to ensure that macroeconomic objectives contribute to the delivery of the social, equality and environmental/climate objectives, rather than undermine them.
Europe 2020 and the European Semester are now in their third year, and continue to have an increasing role in shaping socio-economic and environmental policies at national level. Supplying the Commission with high-quality information on possible national EFR measures constitutes a real window of opportunity to influence national policy. The GBE members and partners can play a key role, proposing targeted EFR proposals for Country Specific Recommendations (CSRs) in order to strengthen the resource-efficiency targets and legitimacy of the European Semester.
GBE joined a “Civil Society ad-hoc coalition” co-hosting the Public Hearing "Strengthening the democratic legitimacy of the European Semester - Civil Society proposals for smart, sustainable and inclusive recovery" at the European Parliament on 14 May 2013. We will continue this fruitful cooperation with other like-minded key stakeholders at EU and national level which is very welcomed by the EU institutions.
In November 2013, GBE was invited by the European Commission to present our policy proposals at a meeting of representatives from the 28 Ministries of Environment in Brussels.
In 2014, we will broaden our Country-Specific Recommendations and will assess the National Reform Programmes and the Annual Growth Survey more intensively.
You are more than welcome to join our work and contribute with your expertise. We would be delighted to get more countries on board.
Please contact Constanze Adolf for questions or suggestions.


GBE as expert for the EECS option to improve the use of MBIs 

The EU does not fully exploit the cost-efficient opportunities for the transition to a low-carbon economy and risks losing competitive advantage. The Economic and Social Committee, a consultative body to the EU institutions, asked GBE to become their expert for a report on “Market-Based Instruments towards a resource efficient and low carbon economy in the EU”. The aim of the report is to strengthen and enhance MBIs in a way that sends a strong and coherent signal to the markets. Two working group meetings and a hearing took place between October and December 2013.


The 14th GCET – Global Conference on Environmental Taxation

This conference was hosted by the Graduate School of Economics and Faculty of Economics of Kyoto University, and conference co-convenors were Prof. Kazuhiro Ueta, Kyoto University, Prof. Soocheol Lee, from Meijo University and Prof. Larry Kreiser, Cleveland State University.
The conference included keynote speeches from Daigee Shaw, President of the East Asian Association of Environmental and Resource Economists and Paul Ekins, Green Budget Europe Vice President, and many more. Jacqueline Cottrell, senior policy advisor at GBE, gave a presentation on the political economy of environmentally harmful subsidies and explored possible drivers of change for reform.
Green Budget Europe was one of the conference sponsors and also hosted a brainstorming workshop to discuss, with high-level participants, the creation of an expert platform on EFR in Asia similar to Green Budget Europe.
The 15th GCET will be hosted by Århus University, Denmark and will take place from 24-26 September 2014.


Brainstorming meeting on creating a network for knowledge exchange and peer-to-peer learning on economic instruments for the environment

In the context of the Global Conference on Environmental Taxation 2013 in Kyoto, Green Budget Europe hosted a brainstorming workshop to discuss the creation of a network in Asia for the exchange of good practice, networking, peer-to-peer learning and awareness-raising. The objective of the workshop was to compare and align expectations, define goals, and develop a strategy for the creation of such a network in the Asian context.
In the medium-term, we hope that Green Budget Europe’s experience of creating a similar network in the European context can feed into efforts to create such a network in Asia, and that we can provide support to regional organisations interested in creating or participating in such a platform. Watch this space for more news and progress!
If you are interested in being part of Green Budget Asia, please get in touch with Jacqueline Cottrell.


Green Revenues for Green Energy: Environmental Fiscal Reform for Renewable Energy Technology Deployment in China

IISD and CNREC worked together with Green Budget Europe staff to produce this report, featuring lessons on EFR measures which have raised revenues for renewable energy in eight different countries.
The report will serve as a starting point for identifying policy options in China to fund renewable energy technology deployment and was published in October 2013.


Turning public budgets towards sustainability - Expert workshop on linking environmental, social and human rights budgeting

The Global Policy Forum and the GIZ hosted this event in Berlin in November 2013 to explore how to bring environmental, social and human rights budgeting together in one toolkit.
Contributors from all over the world contributed their very different experiences with environmental and social budgeting, including Jacqueline Cottrell from GBE. GBE will contribute to the ongoing development of the toolkit by providing overviews of GBE approaches and strategy.
In the future, we hope to be able to apply the lessons learned from participants: the majority develop alternative budgets each year to lobby government in the run-up to the publication of its spending decisions – either for all spending, or with a focus on e.g. poverty alleviation or green issues.
In Europe, a similar approach could boost media attention for poor spending policy and highlight the need for politicians to take environmental and social issues into account while developing budgets. If you are interested in working with GBE on budgeting in Europe, please get in touch!
For more information on alternative budgets see:
The Canadian Centre for Policy Alternatives
The Green Budget Coalition
The International Budget Partnership and its newsletter on environmental and social budgeting - including GBE contributions
.

 
 

GREEN BUDGET REFORM IN EU MEMBER STATES


Portuguese government sets up inter-ministerial Environmental Tax Reform commission

The Portuguese government set up an inter-ministerial commission on Environmental Tax Reform last month, which has been received as a sign of the high political commitment to get ETR moving. The commission, which was appointed by the Minister of Environment and the Minister of Finance, includes lawyers (António Brigas Afonso, Afonso Arnaldo, Carlos Baptista Lobo, Cláudia Dias Soares, Fernando Araújo, João Silva Lopes and Mafalda Alves) and economists (Catarina Roseta Palma and Rui Ferreira dos Santos) and is headed by an engineer (Jorge Vasconcelos). The first report is due by the end of March, and will be followed by a second report which will already contain specific legislative proposals by the end of June. Final results shall be presented by the end of September after a period of public consultation. The Commission is mandated to assess how a broader and better use of market-based instruments (and not only tax instruments) can help to improve the environmental performance of the country.
The move to set up the Commission certainly benefits from the cultural-scientific and policy work developed at the Tenth Annual Global Conference on Environmental Taxation "Water Management and Climate Change" in Lisbon (September 2009), the work of NGOs such as GEOTA, GBE and the EEB to organise regular meetings in the country, and at the recent conference on “Green Taxation: A contribution to sustainability” organised in April 2013 by the Ministries of Finance and Agriculture & Environment with the technical support of the European Environment Agency. The EEA note on the illustrative potential of environmental tax reform for Portugal is available online.


UK government rolls back green taxes in populist move

The UK coalition government has reduced green taxation on household energy, announcing the changes in its autumn statement in December 2013. The announcement followed several months of highly politicised debate about energy prices and a pledge by the Labour Party to freeze household energy bills, should they win the 2015 election, for 20 months.
Adjustments to the Energy Company Obligation Scheme – including reducing the Carbon Emissions Reduction Obligation by one third to 2015 – and the decision to fund the warm home discount from general taxation in future, reduced average household energy bills by about 50 GBP annually. The move has been widely criticised by social and environmental organisations, as a slow-down in the current programme to improve on the UK’s poorly insulated housing stock will result in poorer energy efficiency, higher energy bills and more GHG emissions. Delaying the transition to renewable energy and the introduction of energy-efficient technologies is clearly a retrograde step.
The move has also been criticised by consumer groups outraged that energy companies have failed to adjust energy prices in line with the tax reductions. Indeed, an astonishing four of the UK’s ‘big six’ power generators will not pass on all of the government’s intended energy price reductions resulting from the tax reduction to consumers on fixed-price tariffs. This caused the normally conservative Telegraph  newspaper to ask its readers in January: “Did your energy firm pocket the £50 'green tax' rebate?”
A fuel duty rise of 1.6 pence per litre (about 2 Euro cents), due to come into force on 1st September 2014 was also cancelled and new tax breaks and additional measures to encourage shale gas extraction (fracking) were also announced.


British retail council proposes new energy tax to replace business rates

The British Retail Consortium (BRC) has published a report calling for a new energy tax in the UK to replace the business rates system, which disproportionately effects retailers on the street.
Director General of the BRC Helen Dickinson said: "We have a once in a generation chance to fundamentally change the business rates system and the time is right to think creatively and in the best long term economic interests of the UK.”
The BRC believes its proposal could help create jobs, boost GDP, and encourage greater investment in property. It would also incentivise energy efficiency investments and energy savings measures in business properties. The group proposes broadening the scope of the Climate Change Levy to implement the new tax. More information are available online.


The Netherlands: Fiscal Plan 2014 and its “greening the fiscal system” implications

After the publication of the Fiscal Plan 2014 at the opening of the parliamentary year in September 2013, it soon became clear that the Dutch government would not be able to find enough support for its major policy intentions in the First Chamber. A series of renegotiations including opposition parties followed. Some seized the opportunity to force on some of their ideas on greening the economy . The renegotiated Fiscal Plan 2014 explicitly includes a further greening of the budget by shifting some of the tax burden on labour to the environment. A detailed summary and overview are available online.  
By Hans Vos



The Dutch Energy Accord for Sustainable Growth


The share of renewable energy in total energy consumption in the Netherlands is with 4.4% (2012) one of the lowest in the EU. Biomass contributes 70%, wind about 20%, other sources are minor.
Renewable energy capacity is growing too slowly. Implementation of all intended measures would realise a share of 12% maximum by 2020, too low to achieve the EU-wide agreed 14%-target.
Presently the Netherlands is facing one of the worst economic recessions in recent history. The multiple political tasks of getting the economy going and of observing the Brussels budget rules, in combination with a weak collation government demands a broad consensus in society on how to operate. It has generated a revival of the “polder model”, whereby government, employers and trade unions work out agreements on solutions to pressing societal problems.
In September 2013 a wide range of parties including green NGO’s concluded the Energy Accord for Sustainable Growth. Its main objectives are to save on energy, to increase the share of renewable in energy consumption and to create jobs.
The Energy Accord for Sustainable Growth aims at:
• Reducing energy consumption by 1.5% per year
• Reducing final energy consumption by 2020 with 100PJ
• Achieving a 14% share of renewable by 2010 and of 16% by 2023
• Creating 15,000 fulltime jobs in the early years of the Accord period.
Realising these goals will be supported by a large package of measures that vary in detail from sector to sector. These include:
• Improving energy conservation in the built environment, the production sector and in mobility and transport
• Scaling up renewable energy generation and restricting the use of fossil fuels
By Hans Vos


Spain: New tax on greenhouse fluorinated gases

At the end of October last year, the Spanish Parliament passed a law regulating several measures on environmental taxation and other tax and financial measures.
Despite what the title may suggest, only one significant measure on environmental taxation has been adopted (in art. 5): A new tax on the emission of greenhouse fluorinated gases, which entered into force on 1 January 2014.
Although this new measure should be welcomed, due to the relevant contribution of these gases to climate change, its configuration could certainly be improved. Despite the fact that the tax rates are rightly conceived in relation to the global warming potential of each gas, a maximum tax rate (of 100 €/kg) is also established, which will in practice affect almost half of the gases under the tax and which distorts the market in favour of the most contaminating ones.
During its discussion in the Parliament, several new exemptions where included in the law, which will also erode the scope and effectiveness of the new tax, such as an exemption for fluorinated gases included in new appliances.
Spain has thus failed to enact to the European Council’s Country Specific Recommendations of 2013, which suggested Spain “take additional steps in environmental taxation, notably as regards excise duties and fuel taxes”.
Apart from energy taxes (recently reformed quite erratically), at the national level Spain only has two other measures in place in the area of environmental taxation: the Vehicle Registration Tax (tax rates are dependent on actual CO2 emissions) and a deduction on environmental investments in the Corporate Income Tax. There is still a long way to go.
Probably, the main reason why this new tax has been proposed is not only environmental, but to occupy one of the few areas of environmental taxation that still had not been occupied by any of the 17th Spanish regions (Autonomous Communities).
The traditional and almost absolute paralysis of the Spanish Governments in relation to environmental taxation, along with the need of the Autonomous Communities to secure new sources of income, has led most of them – particularly during the last decade – to create new environmental taxes in very different areas: water consumption, nuclear waste, landfill and incineration taxes, taxes on atmospheric pollutants, etc., with very uneven success.
Now it is difficult for the Spanish Government to harmonise existing measures or to establish national environmental taxes in areas already covered by the Autonomous Communities, as this entails complex discussions and likely compensations. Therefore, they have gone for the easiest option: create a tax in an entirely new area, despite the fact that this may not be the most relevant one.
In summary: an interesting step forward, although maybe not the most sensible one. And, certainly, many others should follow.
By Dr. Ignasi Puig Ventosa; Fundació ENT


Third time lucky: France implements carbon element in 2014 budget law and discusses an outline for its energy transition

France has the second lowest share of environmental taxation in the EU in total tax revenues. In the past, however, France has faced difficulties in implementing carbon taxation.
In December 2012, the French government formed a working group on EFR which proposed to align diesel and gasoline taxes and the implementation of a carbon tax. While lining up diesel and petrol prices will only be politically feasible if the adverse attitude in Parliament changes, the budget law proposal from September 2013 includes a carbon tax element of 7 €/t CO2 in 2014. In the first year, the tax is designed to be revenue neutral. In 2015 the carbon element will be increased to 14 €/t CO2, generating €2 bn in tax income. In 2016, €4 bn could fuel the budget, when the tax is raised to 22 €/t CO2. The carbon tax would be implemented within the framework of the existing energy tax, meaning that all current exceptions are likely to persist. A package of tax cuts for the industry of about 20 bn EUR is foreseen. Electricity remains exempted, but gas for household use will be included. The revenue is supposed to be used for financing of the energy transition and social compensations.
Company cars will not only be charged according to the CO2 emissions produced and the value but also according the different emission level between diesel and gasoline cars and the age of the car.
In 2014, a draft law on an energy transition is expected, aiming at reducing the French share of nuclear power from 75% to 50% by 2020. This would mean a huge step as the French power system relies for 75% on nuclear power and only for 12,8% (in 2012) on renewables.
Furthermore, the French Prime Minister François Hollande announced a broad fiscal reform in November 2013 and opened the consultation process. GBE partners stressed the importance of integrating green taxation as part of a broader reform, sending a letter to the Prime Ministry to formally make this demand.


ECOTAX - French Road Tax for lorries has been suspended indefinitely

The previously postponed heavy goods vehicle “Ecotaxe”, planned to be introduced from 1 January 2014, is to be delayed yet again. No new date has so far been confirmed. According to the proposal, lorries will have to pay the levy when travelling on non-toll highways and bypasses in France, amounting to approximately 15,000km of roads. The charge will be between 5 and 10 euro cents per KM.


New Security of Supply Tax in Denmark

Denmark is introducing a new Security of Supply Tax on fossil fuels, district heating and heat waste used for space heating both in private households and in companies. It is part of the implementation of the 2012 Energy Agreement.
The Security of Supply Tax is justified mainly by fiscal needs. The main objective is to cover the loss of tax revenues in the future due to the reduced consumption of fossil fuels in a green development and due to the reduced taxation of energy used in commercial processes to the EU minimum excise duties (Act 903). Act 903 was proposed and adopted in July 2013 after a detailed analysis of the Danish competitiveness.
The tax will also finance a few subsidies for the development of new green technologies. The PSO tariff, which is a tariff and not a tax, will continue to fund the subsidies to wind turbines, biomass plants and solar cells, etc.  
It will lead to increased costs of space, e.g. 2000 DKK (270 euro) in a typically single-family house in 2020. Thus the tax provides a further incentive to insulate and seal houses and commercial and public buildings, which is also a part of the government policy.
The Security of Supply tax operates in two steps. As a first step the Security of Supply tax was implemented as part of the existing energy taxes on fuels, district heating and heat waste. Act no. 70 from January 2013 increased the existing taxes on fuels, district heating and heat waste by 10.1 DKK/GJ (1.4 euro/GJ). As a second step, the Ministry of Treasury has asked for comments on a new bill suggesting that existing energy taxes on district heating, heat waste and fossil fuels used for space heating is slowly increased over the years up to 2020. The increase will be 21.8 DKK/GJ in 2020 (2.9 euro/GJ) compared to the level before the 2013 legislation. In addition, the legislative proposal imposes a separate Security of Supply tax on biomass, biogas and renewable fuels, which increases over the years up to 29.7 DKK/GJ in 2020.
The increased revenue from the increased taxation of heating will be 4.3 billion DKK (0.6 billion euro) in 2020. Around half the revenue is from the taxation of the biomass and renewable fuels. The additional revenue will be 2.6 billion DKK (0.4 euro), when the effects of changed behaviour and the loss of revenue due to the lower taxation of energy in commercial processes are deducted.
The Ecological Council in Denmark has criticized the reduction of the taxes on energy used in commercial processes to the EU minimum levels and the Council has proposed other solutions, because it is of importance to maintain the incentives to energy savings. In relation to the taxation of biomass the Ecological Council in Denmark is worried of the widespread and ineffective use of firewood in individual wood stoves and has proposed a tax on the stoves, creating an incentive to buy more energy effective stoves.
By Vibeke Andersen; Danish Ecological Council


Elections in Germany – improvements on the social agenda but no ambitions on EFR

In the 2013 German elections, the final result did not deliver - neither on a law on climate protection with mandatory climate targets, nor any progress on the reduction of environmental harmful subsidies.
Last September the members of the 18th Bundestag of Germany were elected. On December 16th, the new government, a coalition between the Christian Democratic Union / Christian Social Union (CDU/CSU) and Social Democrats (SPD), finally signed the coalition agreement and Chancellor Angela Merkel was re-elected by the parliament.
During the coalition negotiations, the parties agreed on appreciable social improvements towards a statutory minimum wage, higher pensions and quotas for women. Even the declared intention for a financial transaction tax (FTT) on the European level has found its way in. But in case of environmental fiscal reform, ambitions are low: The coalition wants to extend the lorry toll on all Bundesstraßen (federal highways) and the air passenger tax will remain, even though the aviation lobby was pressuring for its abolition. Regrettably, however, neither a law on climate protection with mandatory climate targets, nor any progress on the reduction of environmental harmful subsidies was achieved. Furthermore, the promotion of renewable energy will be slowed down - a detailed reform will be developed by Easter 2014. An interesting issue might be the car toll for foreigners, which was favoured by the CSU. Even experts don’t know if the tax has a chance to become law, as must be in line with European law – and the original announcement declared that German car owners would not pay more than before. Nonetheless, current political concepts showed already that the favourite vignette concept will be orientated towards ecological targets.
Proposals outlined in the coalition agreement were not in sufficient detail to evaluate upcoming environmental fiscal policy in Germany. Nonetheless, the selection of government ministers were encouraging. And finally: Even during the former coalition of conservatives and liberals, unexpected moves to introduce air passenger tax and nuclear tax were implemented and no elements of the environmental tax reform were reduced or cancelled.
By Martin Ruck; Green Budget Germany


Greece: proposal for an Environmental Fiscal Reform

Yannis Palaiokrassas, wise patron of GBE, former Minister of Finance in Greece and former European Commissioner for the Environment and Fisheries, has developed a very interesting and extensive proposal for Environmental Fiscal Reform in Greece. Successive versions of the proposal have been submitted to Greek Ministers of National Economy and/or Finance over the last 10 years, but have never been taken up. A short version of the proposal is available online.


Drastic energy price cut in Hungary

In 2013, the Hungarian government implemented a 20 % cut in household utility prices (energy, water and sewage service, communal waste collection, chimney sweeping). The Clean Air Action Group strongly criticised this measure, pointing out that it cannot be sustainable in the long run. Lower prices encourage higher energy use (which results also in higher environmental pollution). As Hungary’s energy use extensively relies on imports, this ‘energy price cut’ increases Hungary’s energy dependency and the outflow of income from the country – the very phenomenon which the government claims it is preventing.
Statements by the Clean Air Action Group are available online.
By András Lukács; President, Clean Air Action Group


Hungary: Road Toll for Trucks

In Hungary, an electronic road toll collecting system for heavy vehicles on 6513 kilometres of motorways and main roads started its operation on 1st July 2013. The toll on motorways is the second highest in Europe. The government’s revenue from the toll is impressive: already about EUR 270 million in the first six months. The implementation of the electronic road toll in Hungary is a great breakthrough and has been called for by environmental NGO’s for a very long time.
Nevertheless, problems remain. The on-board units are not state-of-the art products, therefore the system is not flexible enough, so it would be very difficult to include substantially more roads in the system, and, for example, it is impossible to use it for road pricing in Budapest. There are no DSRC transponders in the on-board units either, so enforcement is quite complicated and expensive. The level of the toll on main roads is half of that on motorways, and this leads to diversion of many trucks to main roads, which often pass through towns and villages. Some trucks are also diverted to toll-free roads. This means that in several populated areas there is an increase of air pollution, noise, traffic safety problems and damages to the roads and buildings.
By Márton Vargha; Transport Campaign Manager, Clear Air Action Group



Hungary: The Putin-Orbán nuclear deal

The Hungarian government has signed an agreement in Moscow on the construction of a new nuclear power plant in Paks. In the opinion of Hungarian environmental NGOs, this treaty forces the country into a foreign currency loan transaction of a questionable outcome. If implemented, Hungarian energy policy will be forced on a nuclear path determined by the government until the end of the century. A decision which will seal the fate of future generations has been presented to Parliament without any public participation.
See the open letter of Hungarian environmental NGOs to Members of the Hungarian Parliament and an assessment representing the views of environmental NGOs
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Hungary: Corruption in government enables enormous VAT fraud

A growing body of evidence is coming to light which indicates that corruption at governmental level makes large scale VAT (value added tax) fraud possible in Hungary. A whistle-blower, former employee of Hungary’s National Tax and Customs Administration (NAV) András Horváth first disclosed the details at a press conference on 8 November 2013. Horváth has submitted a report to Hungary’s Chief Prosecutor, backing his statement with documentary proof.
According to official estimates, the sum of the illegally evaded VAT and illegally reimbursed VAT in Hungary is equivalent to between 5% and 6 % of GDP. Horváth’s investigations show that main actors of VAT fraud in Hungary are not private persons or small enterprises, but highly organised criminal groups which established close relations with the state administration. These criminal groups have been carrying out illegal activities for many years already and they are assisted by officials within the tax authority. The main beneficiaries of the VAT fraud are several retail chains and big exporting companies. Further information are available online
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New Hungarian laws help organised crime

While most European governments are struggling with their enormous budget deficit, tax fraud and related corruption is flourishing. According to DG TAXUD, the revenue lost by governments because of tax fraud equals to about EUR 1 trillion yearly, twice as much as the EU27 government deficit in 2012 .  Moreover, tax fraud often enhances environmentally harmful activities (e.g. tax evasion and tax avoidance related to company cars). Therefore it is of utmost importance for environment protection to combat tax fraud and the corruption related to it. In Hungary just the opposite is happening. Since the Fidesz Party came to power after the national elections in 2010, more and more legislation are accepted by the Hungarian government and Parliament which help criminals, especially organised crime. The complete article is available online.
By András Lukács; President, Clean Air Action Group



Progress on Environmental Fiscal Reform in Switzerland

Environmental Fiscal Reform in Switzerland has received a boost by the “Energiestrategien 2050”. The Swiss Federal Council intends to change from a promotion to an incentive system in medium term. But according to Öbu- the Swiss Sustainable Business Network – the suggestions are not far-reaching, as they are not ambitious enough to accomplish the aimed targets. More information are available online (in German).

 
 

GREEN BUDGET REFORM AT EU LEVEL

HOW WELL WILL WE LIVE WITHIN THE LIMITS OF OUR PLANET?
GBE reactions to the Council decision on a General Union Environment Action Programme to 2020 (7UAP)

The Council and the European Parliament reached a deal on a Seventh Environmental Action Programme (7UAP) on 20 November 2013. The 7UAP will run until 2020 and was supposed to guide EU policy action on environment and climate policy by mainstreaming urgent environmental issues through the whole set of EU policy areas. It includes first and promising steps to resolve environmental challenges, enhance public health and support the transition to a greener economy.
However, GBE regrets that the promising EFR proposals of the European Parliament´s Committee on the environment were not fully taken into account. “While some new targets for climate and energy, resource use and production are a good signal, the EU has missed some huge opportunities by a rather weak chapter on EFR”, Constanze Adolf, Director of GBE´s Brussels office concluded.
The proposal lacks a clear commitment and timeframe to shift the tax burden towards environment / resource use of 10 per cent by 2020 and to phase out environmentally harmful subsidies by this time. “On the one hand, environmental taxation is recognised as a cost-efficient instrument to put the polluter-pays principle into practice. On the other hand, action stops here as a clear statement to implement environmental taxation as a fundamental tool to consolidate national budgets in the ongoing crisis is missing”, Constanze Adolf continues.
As for phasing out environmentally harmful subsidies, a concrete definition is not included in the text, which encourages Member States to shy away from presenting a plan to stop financing actions that harm the environment, public health and thus the national economy. Given the fact that the annual global fossil fuel subsidies amount to 1,42 trillion Euros worldwide and that the European Commission itself presented a methodology for the definition, identification and elimination of Environmentally Harmful Subsidies as well as good practices of phasing them out, the 7 UAP seems to have got stuck half-way.
Download the position paper GBE published last year.
Memo of the European Commission.


EU efforts to reform failing Emissions Trading System - failed
European Commission proposals on backloading and a market stability reserve

Since 2009 the EU Emissions Trading System (ETS) has experienced a growing surplus of allowances and international credits compared to emissions which has significantly weakened the carbon price signal and is therefore undermining innovation and investment in new low-carbon technologies. At the start of phase 3 in 2013, the surplus mounted to almost 2 billion allowances, double its level in 2012. The surplus is expected to persist for most of phase 3 until 2020, and the European Commission has decided to take action on two fronts.

Firstly, as a short-term measure, there will be a so-called ‘backloading’ of auctions in phase 3, meaning that the auctioning of 900 million allowances will be postponed for several years in order to allow demand to pick up. This measure does not reduce the overall number of allowances to be auctioned, only the distribution of auctions over the period. This measure was approved by the European Parliament early February, and will now await approval from the Council of Ministers.

Secondly, as a more sustainable solution, earlier this month the Commission put forward a legislative proposal to establish a market stability reserve. The reserve, which was proposed together with the framework for climate and energy policies up to 2013, would be established at the beginning of the next trading period in 2021. According to the Commission, it would both address the surplus of emission allowances that has built up and improve the system’s resilience to major shocks by automatically adjusting the supply of allowances to be auctioned. However, the fact that the reserve would only take effect after 2020 will severely weaken the proposed 40% GHG target for 2030, which is already quite low. The legislative proposal requires approval by the Council and the European Parliament to become law.


European Commission White Paper on the EU’s climate and energy policy framework until 2030 – a black day for Europe?
40% - 27 % - and NOTHING on energy efficiency: is that the way to Paris in 2015?

On 22 January 2014, the European Commission released its white paper on the new EU policy framework on climate and energy for 2030. It proposes a domestic greenhouse gas (GHG) reduction target of 40%, and a binding EU-level target of a disappointing 27% for renewable energy, which fails to set targets for Member States. An earlier Commission study dating from December last year indicated that renewables would grow to a share of 24.4% without any policies in place.
A target for energy efficiency is left out altogether, postponing the discussion to the review of the Energy Efficiency Directive due to be concluded later this year.
Lastly, the Commission announces in its white paper that after 2020, it will discontinue the Fuel Quality Directive, its flagship policy to decarbonise transport fuels. The policy has been the subject of fierce lobbying by Canada with whom the EU is about to sign a free trade agreement.
“The proposal clearly falls short of the EU’s international commitment to play its part in halting global warming to below 2°C, and undermines the prospect of the EU playing a lead role in negotiations towards the adoption of a new international climate agreement in Paris in 2015” said Constanze Adolf from GBE.
The white paper will now move onto the agenda of the European Council meeting on 20-21 March.


More for less: Multi-Annual Financial Framework and Annual Budget 2014
Unambitious agreement for the budgetary framework of the EU until 2020 and the Annual Budget 2014


At the end of last year, the European Parliament (EP) gave in to demands of EU governments to make severe budget cuts to the European budget by voting in favour of the EU’s Multi-Annual Financial Framework (MFF) (2014-2020). The disappointing vote, which represented the first time the EP had co-decision power on the EU’s budgetary framework, came after months of lengthy negotiations.
The agreement means that there will be a reduction of €85 billion (around 9%) to the original proposal of the European Commission, and thus diminished resources for the EU. This is particularly counterproductive given the fact that the EU would need more resources as it gained significant competences and thus responsibility to tackle the crisis.
The priorities of the framework are also backward-looking, with cuts in future-oriented spending in areas such as education, research and innovation, and youth policy. This is combined with the fact that spending in unsustainable areas, such as direct payments to farmers, climate and energy damaging infrastructure projects and a disproportionate EU contribution to the ITER nuclear fusion project, is continued. Finally, the new framework will not provide for any changes that will allow for an increase in the EU’s ability to finance its own budget.
GBE is concerned about the decision: “The European Union will have the same budget in 2020 as in 2008 while a lot of voices are calling for more action, coordination and responsibility. Unfortunately, the new Multi-Annual Financial Framework will not provide an answer to the economic, social and environmental challenges faced by Europe today” Constanze Adolf, Director of GBE’s Brussels office criticised
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EU Annual Budget 2014

At the same plenary session in Strasbourg, MEPs also voted in favour of the EU budget for 2014, which is equally disappointing. The budget will be reduced by a historical 6 % compared to 2013, with commitments of €142.6 billion in 2014, compared to €150.9 billion in 2013. The agreement will continue the perpetual cycle of EU under-budgeting, leading again to a situation where the EU is facing budget shortfalls compared with programmed spending.
The European Parliament had strong demands during the negotiations, however, the big political groups finally caved in to the demands of EU governments and accepted compromises on key issues like own resources, a review clause and budgetary flexibility
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Financial Transaction Tax: The long way to make “the polluter pays”

GBE welcomed the FTT which makes banks, high frequency traders and intermediary financial players and not the real economy pay their share towards the costs of the financial crisis.
After a hard-fought battle, an important first step towards a financial transactions tax has been made. The tax would impact financial transactions between financial institutions charging 0.1% against the exchange of shares and bonds and 0.01% across derivative trades. Only one of the financial institutions needs to reside in a Member State of the EU FTT participating countries for the FTT to apply.
On 3rd July 2013, the European Parliament adopted by large majority a report on the Financial Transaction Tax (FTT) and thus confirmed its support for the decision of 11 EU Member States who agreed to set firm limits on the exceptions that the financial industry and some Member States were seeking. Spain, France, Germany, Italy, Belgium, Austria, Estonia, Greece, Portugal, Slovakia and Slovenia are making use of “enhanced cooperation”, which allows a number of at least nine EU countries to move forward on matters of common interest. Other Member States still have the opportunity to join later.
Member States expressed concerns in September. According to a legal opinion of the Council, the FTT infringes upon the taxing competences of non-participating Member States, leading to a distortion of competition to the detriment of non-participating Member States. Legal advisors of the EU Commission dismissed these concerns stating that “the proposed FTT Directive is in conformity both with customary international law and EU primary law,” and “does not lead to any inadmissible extraterritorial effects of the FTT.”
Next steps: The 11 Member States participating in the “enhanced cooperation” will take steps by implementing purposive measures at national level. While all 28 Member States participate in the discussions on this proposal, only the 11 participating states will have a vote which requires unanimity. The Greek EU Council Presidency has put the FTT on the agenda of two Ecofin Councils, on 18 February (policy debate) and 6 May (political debate)
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Proposals to green new Common Agricultural Policy watered down 

In 2013, negotiations relating to the Multi-Annual Financial Framework encompassed negotiations for the long-awaited reform of the Common Agricultural Policy (CAP). Worth almost half of the EU budget, the CAP includes a number of harmful subsidies which have a negative impact on climate change, resource use, biodiversity and soil and water quality.
Negotiations in 2013 took place in a series of 30 “trialogues” between Parliament, Commission and Council. Some improvements survived these negotiations – greening has become much more central to pillar 1 of the CAP (direct payments and price support), and 30% of direct payments to farmers are now intended to be focused on the environment. However, the final result diluted Commission proposals to ‘green’ EU spending as a whole within the agricultural sector and exempted more than half of all farms from any greening requirements at all. The EEB  referred to the CAP as a "complete failure for people, farming and the environment", while IEEP  criticised the extent to which the final document had been watered down, saying: "there have been too many deals at the expense of the environment".


Reform of fisheries subsidies secured 

2013 ended on a high note for fisheries policy, with Europe moving towards ending overfishing and destructive fishing practices, and significantly reducing environmentally harmful subsidies to the sector.
While negotiations for the new European Maritime and Fisheries Fund (EMFF) 2014-2020 unexpectedly broke down at the end of 2013, a new basic regulation for the Common Fisheries Policy (CFP) came into force on 1st January 2014. This included a commitment to rebuild fish stocks, set a legally binding target to end overfishing, reduce by-catch and discarding, and use transparent access criteria when allocating fishing quota.
The new basic regulation for the CFP was backed up by an agreement in December 2013 at the Council of European Fisheries Ministers that Total Allowable Catch (TAC) for 30 fish stocks in the North Atlantic will be set at scientifically-advised maximum sustainable yields by 2015, giving hope that an end to overfishing is in sight.
In October 2013 the European Parliament voted to cap funds available to fishermen to compensate for restrictions on catches and to scrap allowances for new and upgraded vessels. MEPS also crucially overturned a bid to reinstate subsidies for the building of new fishing vessels – a major victory for campaign group OCEAN 2012, of which GBE is a member, and allied organisations.
Some harmful subsidies do remain, however, for example for the replacement of boat engines, and to support young fishermen in purchasing their boats.
In the future, the European Maritime and Fisheries Fund will focus on a sustainable fisheries industry and money will be spent helping take boats out of service, rather than for the purchase of oversized vessels – a policy which has, in the past, made a significant contribution to overfishing.
Further information are available online.


Priorities of the Greek Presidency: Finally an ETD decision? 

The Greek Presidency of the Council of the European Union, which started on 1st January 2014, has a full agenda working on Economic and Monetary Union, growth, employment, promoting social cohesion and the direct elections of the European Parliament in May, after which a new Commission will be selected.
The priorities for the coming 6 months are: growth, jobs and coherence; economic governance in the Eurozone and the next stage of the banking union; migration, mobility and maritime policies. 
In March, at a meeting of Environment Ministers, how to enhance the resource efficiency priorities as to “’green’ the European Semester” will be discussed. 
Taxation
In June, Ministers might discuss once again the long-delayed revision of the Energy Tax Directive (ETD) but little speaks for Governments to agree on it.
Other dossiers will be the Directive of Administrative Cooperation to reinforce the fight against tax fraud and tax evasion and avoid harmful tax, work on the Financial Transaction Tax (FTT), and the adoption of the revised Savings Taxation Directive by March 2014.
Energy
The availability of affordable energy for households and competitive prices for businesses are prioritised. Thus, competitiveness, rather than promoting renewables or energy efficiency, is likely to be a major focus of the new climate and energy proposals.
Climate and environment
The Presidency will pursue an international agreement on applying a single global market-based measure to international aviation emissions by 2020. The 2030 climate and energy package, biofuels reform, shale gas extraction, maritime emissions and plastic bags are among the topics ministers will debate over the next six months.
Regarding the 2015 International Climate Change Agreement: “the Presidency’s approach will be pragmatic in determining the type, nature and level of the 2030 targets, (…) taking into account the on-going economic crisis, the varying capacities of the Member States and the concerns of households regarding the affordability of energy, as well as business competitiveness” (p. 45).
Website of the Presidency and the full programme.
Next Presidencies: The next trio will be made up of Italy, Latvia and Luxembourg.

 

GREEN BUDGET REFORM WORLDWIDE

Post-election update from Australia; Abbott Government switching from carbon pricing to ‘direct action’

At the Federal election held in September 2013 environmental fiscal reform in Australia received a significant setback when the Liberal-National Coalition led by Tony Abbott convincingly won power in the House of Representatives, winning 90 of the 150 seats and also a stronger position in the Senate with 33 out of the total 76 seats, compared to the Labour Party with 25 Senate seats, the Greens with 10 seats and various others holding 8 seats.  Mr Abbott had made a strong pre-election commitment to abolish the carbon price mechanism established by the former Labour Government under the ‘Clean Energy Future’ legislation which commenced operation on 1 July 2012.  The Abbott government has recently introduced a bill to repeal the carbon price (as well as Labour’s mining tax) however this is not expected to be passed into legislation until after the new Senate members take their places from 1 July 2014.
The ostensible reason given by Mr Abbott for removing the carbon price is ‘to lower costs for Australian businesses and ease cost of living pressures for households.’ Interestingly, the Australian Bureau of Statistics data for the first full year of the carbon price show that the cost of living index was historically low. Electricity prices did jump by about 17% but this was attributable to capital investment on network infrastructure as much as it was to the carbon price. However, part of the carbon price package included income tax cuts which over-compensated households for the expected increase in electricity from the carbon price! This highlights one of the major benefits of the carbon price arrangements – a revenue neutral green tax shift away from income taxes to consumption/energy taxes. In doing so it created a significant price signal which stimulated voluntary abatement and investment in energy efficiency –Mr Abbott fails to mention that greenhouse emissions from the electricity sector are down 7.6% since the carbon price was introduced.  By contrast, emissions from sectors not covered by the carbon price have escalated significantly.
The Abbott Government’s response to climate change and emission reductions is called the Direct Action Plan. This is described as an incentive based approach including:
(1) an Emissions Reduction Fund to purchase ‘lowest cost abatement’ from approved projects that reduce or avoid greenhouse gas emissions (based upon an expanded version of the existing Carbon Farming Initiative), and
(2) financial penalties to be imposed upon businesses which exceed their “business as usual” emissions baselines.
Much of the detail of the Direct Action Plan is yet to be developed. It will be administered by the Department of Environment whilst transitional arrangements under the former carbon price mechanism are to be handled by the Green Energy Regulator
The Abbott Government has also taken steps to disband several key climate change agencies set up by Labour, such as the Climate Change Authority, Clean Energy Finance Corporation, and the Climate Commission. Strangely, there is no Minister for Science for the first time since the 1931, nor any Ministry with the word science in its title, and only one woman in the Cabinet, the Foreign Minister, Julie Bishop (who presumably will be often overseas on diplomatic duties).
The loss of the Clean Energy Finance Corporation is expected to be a significant setback for investment in renewables in Australia, as it had been allocated $10 billion to invest in renewable energy projects over the next five years. The new Minister for Environment, Greg Hunt, has stated the government is committed to the current Renewable Energy Target (RET) of 20 per cent of electricity from renewables by 2020. However Prime Minister Abbott has recently vowed to look closely at the RET, as the government believes it is pushing up costs to industry. This also appears to be a very selective response; whilst the RET has been estimated to add about 7% to the cost of electricity, far more substantial increase have been caused by network infrastructure costs, and strong upward pressure on natural gas prices due to competition from new export markets. By contrast the fossil fuel generating sector has much larger subsidies than renewables and far less accountability for external costs like greenhouse emissions. Businesses will presumably also face new costs in complying with the Direct Action Plan.
By Wayne Gumley, Faculty of Business and Economics, Monash University, February 2014


Mexico launches first carbon exchange to cut CO2 emissions
 
Mexico's stock exchange launched its first platform to trade carbon credits, a voluntary initiative that allows polluters to offset their emissions with tradable certificates.
The original article is available online.


Oman: OMR 740m fuel subsidies under review
 
The extent to which Oman relies on highly subsidised energy prices is being recognised as financially unsustainable and authorities are exploring various ways to get over this problem.
The original article is available online.


China expands partnership with California to combat climate change
 
In September 2013 China's National Development and Reform Commission (NDRC) Vice Chairman Xie Zhenhua signed an agreement with California Governor Edmund G. Brown Jr. in San Francisco to expand bilateral cooperation on climate change.
The original article is available online.


China could overtake the U.S. market-based climate protection efforts
 
Seven pilot projects on emissions trading are supposed to be launched in China until 2015. Experts expect a uniform price level to be achieved by 2020. The combined carbon price (market price plus carbon tax) then could reach a level of 8,34 EUR, with a significant increase thereafter. In 2025 the Chinese market for emissions trading might be linked to at least one or even several other international trading systems. On the other hand, experts believe that nothing like this is to be happening in the U.S. by that time.
The original article (in German) and the report (in English) are available online.


Saudi Arabia: Energy subsidies need deft handling
 
Awareness of the need to reform fossil fuel subsidies in Saudi Arabia is growing. For a long time, the energy rich Middle East has been referred to as the major region responsible for high consumer subsidies. Criticisms are growing with each passing day.
The original article is available online.


Egypt: Fuel subsidies to be cut ‘gradually over five to seven years’
 
Interim Prime Minister Hazem El-Beblawi announced that the cutting of fuel subsidies will be implemented gradually over a period of five to seven years, according to the cabinet’s official page.
The original article is available online.


Libya: Fuel subsidies removed over 30 months in three stages
 
Lybia has one of the world’s highest subsidies as a proportion of GDP. As Economy Minister Mustafa Abufanas in December announced at the Tripoli Chamber of Commerce, the Lybian Government is working on reform laws.
The original article is available online.


Malawi: tax on second-hand vehicles cuts emissions
 
Officials in Malawi’s ministry of environment and climate change management say hiking excise duty levied on imported second-hand vehicles is helping the country to curb planet-warming emissions.
The original article is available online.


Release: New Global Commission Aims to Identify Pathways to Economic Prosperity and a Safe Climate
 
As evidence of human-induced climate change mounts, a new Global Commission on the Economy and Climate was launched in September 2013 to analyse the economic costs and benefits of acting on climate change. The commission comprises leaders from government, finance and business from 14 countries, chaired by former President of Mexico Felipe Calderón.
Further informations are available online.


Costa Rica is considering Environmental Fiscal Reform to consolidate its budget

The government of Costa Rica has launched a reform process to get its increasing fiscal deficits under control. In a discussion paper published by the Ministry of Finance to initiate a series of public consultations, an entire chapter is dedicated to the possible contribution of EFR. Concretely, the MoF is considering new taxes on inputs in agriculture and a reform of the vehicle circulation tax. Parliamentary elections will be held in Costa Rica in February. As all parties give fiscal consolidation a high priority on their agenda, the reform process is expected to carry on under the new government.

 

GBE/GBG PUBLICATIONS

Green Revenues for Green Energy: Environmental Fiscal Reform for Renewable Energy Technology Deployment in China
Jacqueline Cottrell et al, October 2013
 
China’s economy continues to grow rapidly with corresponding increases in both energy consumption and environmental pollution. Renewable energy is a key part of China’s response to this challenge. The current costs of measures to facilitate the large-scale deployment of renewable energy are primarily met through an electricity surcharge—effectively a tax on electricity consumption. However, concerns have been raised that continuing to rely on the surcharge alone places a disproportionate burden on electricity consumers. In response, the need for further debate on how best to fund renewable energy and reduce environmental pollution was identified by the IISD and the CNREC, leading to the establishment of a research project to examine the international experience of similar schemes and their relevance to China. This report presents a summary for policy-makers of the findings of that research.


Less pain more gain: The potential of carbon pricing to reduce Europe’s fiscal deficits
Jacqueline Cottrell, 2013

 
GBE’s Jacqueline Cottrell is co-author, with John Ward, Robin Smale and Max Krahé, of the first chapter of the latest volume in the Critical Issues in Environmental Taxation series – Market-Based Instruments: National Experiences in Sustainability, edited by Larry Kreiser, David Duff, Janet Milne, Hope Ashiabor (Edward Elgar, 2013). The chapter summarises the results of the CETRiE report.


The financing of the Energy Transition in Switzerland – survey, measures and investment opportunities
Tobias Reichmuth, Kai Schlegelmilch et al, December 2013

The energy transition is a set thing in Switzerland – the Swiss Federal Council agreed upon the target defining pillars. In this book investors, scientists and consultants from Switzerland, Germany and England point out possibilities on how the transition could be financed by the public hand and to a great extent without subsidies and what part institutional investors, banks, the industry as well as energy suppliers could take in this.


Environmental policy as a crisis policy
Constanze Adolf, 2013
 
Environmental Fiscal Reform relies on economic incentives – but the politics do not make use of it. The longer the European finance, economic and monetary crisis goes on, the bigger gets the loss of trust of the public in the crisis management of the EU and its member states. And this though the solution is obviously lying in front of us: instead of demanding even more austerity measures, the European heads of state and government should generate some incentives with the right tax policy.  It would serve the economy as well as the environment.
Please read the original article (in German) here.

 

OTHER RELEVANT PUBLICATIONS

Harmful subsidies under fire
Finnish Association for Nature Conservation, 2014

The Finnish Association for Nature Conservation has produced an extensive report  on environmentally harmful subsidies. The report refers to recent government studies, according to which there are currently some 4,5 billion euros worth of subsidies, which can be considered as harmful to the environment in Finland. Apart from local subsidies in Finland, the report gives an overview of harmful subsidies in Europe and the rest of the world, covering different sectors, such as energy production. As an example, in the case of biofuels, the European Union provided 8,4 billion euros worth of subsidies in 2011 according to the Global Subsidies Initiative (GSI) operating under the International Institute for Sustainable Development (IISD).
An executive summary in English is available online.


Aviation in the Emissions Trading Scheme: What happened in 2012 under “Stop the Clock”
Sandbag Climate Campaign, December 2013

In-depth analysis of what happened under the first year of the EU Emissions Trading Scheme incorporating aviation's carbon pollution. Under 'Stop the Clock', a reduced scope from the original proposals, all intra-EU flights had to account for their emissions from 2012 onwards. Was it a success? Who complied and who didn't? What should the EU do next?


Energy use policies and carbon pricing in the UK
IFS (Institute for Fiscal Studies), November 2013


This report, funded by the Esmée Fairbairn Foundation and the Economic and Social Research Council (ESRC), examines the effect of UK government policies on energy use and carbon pricing.
The press release is available online.


Ireland's Carbon Tax and the Fiscal Crisis
OECD, October 2013

This paper describes the features of the Irish carbon tax, recounts the story of its interplay between fiscal adjustment and helping meet the obligations to raise taxes, and implications for competitiveness and carbon leakage, environmental effectiveness and equity issues, and draws some conclusions regarding why it happened, and provides some tentative insights for other countries in a similar situation.


Report on energy taxes in Spain
Economics for Energy, 2013

This report (in Spanish), was written by academics, analyses energy taxation policies in Spain.


Subsidies with an impact on the environment - methodology, inventory and case studies 
IEEP (Institute of European Environmental Policy), August 2013

The study screens potential environmentally harmful subsidies as well as subsidies with a neutral or positive impact across different policy areas of the Flemish Government. A particular focus of the study has been on subsidies with an impact on urban sprawl. Detailed case studies were developed on combined heat and power certificates, green certificates for the energetic valorisation of biomass, private road transport, public road transport and property tax.


GHG Mitigation in Australia: An Overview of the Current Policy Landscape
World Resources Institute and The Climate Institute, August 2013

This report outlines Australia’s policy framework for greenhouse gas emissions reduction, identifies areas of potential change in the near term, and attempts to evaluate the impact of current policies on Australia’s emissions trajectory to 2020. It assesses Australia’s international commitments, and the major policies of federal and state institutions to reduce emissions. It also assesses the likely success of these policies in achieving Australia’s emissions reduction goals.


Green Budget Reform in Slovenia: responding to the crisis with a sustainable vision
Umanotera (Slovenian Foundation for Sustainable Development), July 2013

The report explains the concept and discusses four different strategies in the context of GBR and fiscal consolidation and it includes the first register of environmental harmful subsidies for Slovenia.


Economic and environmental implications of automobile feebates: A Simulation Analysis
Dr. Theodoros Zachariadis, Adamos Adamou, Sofronis Clerides (University of Cyprus), May 2013

Vehicle taxation based on CO2 emissions is increasingly being adopted worldwide in order to shift consumer purchases to low-carbon cars, yet evidence on its effectiveness and economic impact is limited. Therefore researchers in Cyprus recently completed a work on feebate schemes, which are flexible market-based alternatives to fuel economy standards, imposing a fee on high-carbon vehicles and giving a rebate to low-carbon automobiles. The authors estimate econometrically demand for automobiles in Germany and simulate the impact of alternative feebate schemes on emissions, consumer welfare, public revenues and firm profits.


Tax reforms in EU Member States 2013 – Tax policy challenges for economic growth and fiscal sustainability
DG Taxation and Customs Union and DG Economic and Financial Affairs of the European Commission, 2013

The study is part of the European Economy series and contains important reports and communications from the Commission to the Council and the European Parliament on the economic situation and developments, such as the European economic forecasts and the Public finances in EMU report.


The Political Economy of British Columbia's Carbon Tax
OECD, October 2013

In July 2008, the Canadian province of British Columbia (BC) launched North America’s first revenue-neutral carbon tax reform. This paper reviews the political economy of the BC tax in three distinct periods – its origins, its survival in the face of political backlash, and its longer-term prospects.


Effects of a Carbon Tax on the Economy and the Environment
Congressional Budget Office of the United States, May 2013

This report examines how a carbon tax, combined with further alternative uses of the revenues, might affect the economy and the environment in USA. Options include using the revenues to reduce budget deficits, to decrease existing marginal tax rates (the rates on an additional dollar of income), or to offset the costs that a carbon tax would impose on certain groups of people. This shows that the effects of a carbon tax on the U.S. economy would depend on how the revenues from the tax were used.


Environmental Fiscal Reform to promote Green Economy in countries in transition - Progress on sustainable development and poverty eradication in Vietnam
Petra Sieber

This bachelor thesis, written by Petra Sieber, former intern for GBE, uses a comprehensive perspective to explore particular benefits and challenges of EFR for transition economies in pursuit of sustainable development and poverty eradication. A case study of Vietnam gives insights into lessons learned from practical implementation.


China Carbon Pricing Survey 2013
China Carbon Forum, October 2013

This paper summarises results from the inaugural China Carbon Pricing Survey. The survey elicited
expectations about the future of China’s carbon price from China – based experts on carbon pricing and carbon markets during July to September 2013. The results indicate confidence that all seven of China’s pilot schemes will be under way by 2015, with prices rising over time and having an effect on investment decisions; however there is significant uncertainty about price levels. Still, a large majority of respondents expect that China’s 2020 emissions intensity target will be achieved or surpassed, and almost all expect further targets to be adopted in 2025 and 2030, possibly in the form of absolute limits on emissions.


Subsidies in Bangladesh: A profile of groups vulnerable to reform
IISD, September 2013

This report provides detailed analysis deriving new estimates of the full cost of Bangladesh’s energy subsidies and maps the stakeholders, particularly low-income groups, most likely to be affected by reforms. This paper forms part of an on-going programme of work to analyse energy subsidies in Bangladesh and develop practical policy advice to support the Government’s reform efforts.


A Citizens' Guide to Energy Subsidies in Thailand
IISD, April 2013

A Citizens’ Guide to Energy Subsidies in Thailand, produced with the assistance of the Thailand Development Research Institute (TDRI), gathers the best available information on the costs and benefits of energy subsidies. The Guide is intended as a resource for civil society groups and journalists to use in their efforts to engage the public on energy subsidies and their reform.


Environmental Fiscal Reform – case studies
GIZ, May 2013

Following a request for country examples on Environmental Fiscal Reform, GIZ Project “Rioplus- Environmental Policy and Sustainable Development” assembled cases of different approaches of Environmental Fiscal Reforms in several countries. The publication clusters the approaches by country and by instrument applied and allows the reader to make a choice on country experience description and a brief definition and analysis of the instruments. It is meant to act as an initial point of reference for professionals at government level or development co-operation practitioners interested in applying Environmental fiscal reform instruments. It can be further used to support the elaboration of green Economy strategies or innovative finance mechanisms for environmental policies.


Evaluation of Environmental Tax Reforms: International Experiences
IEEP, June 2013

Switzerland is considering the introduction of an ETR – Environmental Tax Reform - as a possible instrument to contribute to the objectives of the 2050 Energy Strategy which include a commitment to phase-out nuclear energy as well as objectives relating to climate change, energy security, energy efficiency, investments in power plants and the electricity grid. This study seeks to inform these preparations in Switzerland by providing an overview of experiences with carbon and energy taxes in Australia, British Columbia in Canada, Denmark, Finland, Germany, Ireland, Netherlands, Norway, Sweden and United Kingdom. The study also briefly discusses plans to introduce carbon taxes in the Czech Republic, France, Italy, Japan, United Kingdom and United States.


Why Carbon Pricing? Comparing design rationales for carbon taxes
Johanna Arlinghaus

This master thesis explores what effective and efficient carbon taxes are and examines why countries do not introduce such taxes. It compares the cases of Ireland and Australia, two countries which have recently introduced a carbon tax.


Mapping Carbon Pricing Initiatives - developments and prospects 2013
The World Bank, May 2013

This report replaces the State and Trends of the Carbon Market series. Unlike in previous years, the report does not provide a quantitative, transaction-based analysis of the international carbon market as current market conditions invalidate any attempt and interest to undertake such analysis. The development of national and sub-national carbon pricing initiatives in an increasing number of countries calls for a different focus. Thus, this report maps existing and emerging carbon pricing initiatives around the world, hence its new title.


Effective Carbon Prices
OECD, November 2013

This book shows, like economic textbooks already predict, that taxes and emissions trading systems are the cheapest way for societies to reduce emissions of CO2. It estimates the costs to society of reducing CO2 emissions in 15 countries using a broad range of policy instruments in 5 of the sectors that generate most emissions: electricity generation, road transport, pulp & paper and cement, as well as households’ domestic energy use. It finds wide variations in the costs of abating each tonne of CO2 within and among countries, as well as in the sectors examined and across different types of policy instruments.


Can border carbon taxes fit into the global trade regime?
Bruegel, December 2013

This Policy Brief high-lights some weaknesses in the standard argumentation for Border Carbon Adjustments (BCAs) and brings up an alternative argument for border carbon measures that bases on the fact that countries expose each other to climate externalities.
level (and, in the case of federal countries, for selected sub-national units of government) relating to fossil-fuel production or consumption.


Time to change the game - Fossil fuel subsidies and climate
ODI (Overseas Development Institute), November 2013

This report documents the scale of fossil fuel subsidies and sets out a practical agenda for their elimination in the context of the global goal of tackling climate change. It spells out the real costs of fossil fuel subsidies within the top developed-country emitters, the G20, and more broadly across developing countries, and outlines ways to achieve their global phase-out by 2025.


Energy Subsidies Reform: Lessons and implications
IMF, October 2013

This book provides comprehensive estimates of energy subsidies currently available for 176 countries and an analysis of “how to do” energy subsidy reform, drawing on insights from 22 country case studies undertaken by the IMF staff and analyses carried out by other institutions.


A Guidebook to Fossil-Fuel Subsidy Reform for Policy-Makers in Southeast Asia
IISD, (International Institute for Sustainable Development), May 2013


The guidebook draws together the experience that countries around the world have developed to prepare for fossil-fuel subsidy reform. It provides guidance on the pacing of reform as well as identifying good practice across three core elements: getting the prices right, managing the impacts and building support.


Prioritizing Fossil-Fuel Subsidy Reform in the UNFCCC Process: Recommendations for Short-Term Actions
IISD, August 2013

Though many Parties to the UNFCCC have noted the climate change mitigation benefits of fossil-fuel subsidy reform, it is time for Parties to take engagement on this issue to the next level. In this paper IISD therefore give recommendations to the UNFCCC Parties for a fossil fuel subsidy reform.


World Energy Outlook 2013
IEA (International Energy Agency), November 2013

The IEA, within the framework of the World Energy Outlook, has been measuring fossil-fuel subsidies in a systematic and regular fashion for more than a decade. Its analysis is aimed at demonstrating the impact of fossil-fuel subsidy removal for energy markets, climate change and government budgets. The IEA’s latest estimates indicate that fossil-fuel consumption subsidies worldwide amounted to $544 billion in 2012, slightly up from 2011 as moderately higher international prices and increased consumption offset some notable progress that is being made to rein in subsidies. Subsidies to oil products represented over half of the total.


Environment at a Glance 2013
OECD, December 2013

This book includes key environmental indicators endorsed by OECD Environment Ministers and major environmental indicators from the OECD Core Set. These indicators reflect environmental progress made since the early 1990s and thus contribute to measuring environmental performance. Organised by issues such as climate change, air pollution, biodiversity, waste or water resources, they provide essential information for all those interested in the environment and in sustainable development.


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 comparing global fuel prices, taxes, price policies, etc. of almost all countries in the world. Please consult the “International fuel price database” for regular updates.


Green Growth Knowledge Platform launches web platform to accelerate Green Economy Transition
GGKP, 2014

A robust, state-of-the-art knowledge-sharing platform was launched by the Green Growth Knowledge Platform (GGKP). The website aims to respond to increasing demand from both policy makers and the public for information on ways to achieve sustainable economic growth. Like the GGKP itself, the website - which features a searchable e-library with over 600 technical and policy resources, as well as dashboards with data and policies for 193 countries - transcends the traditional divide between economy and the environment. It mobilizes knowledge, experience and support from its partners, all of which share the common goal of accelerating green growth.

 
 

UPCOMING EVENTS

Save the date: 

GBE Annual Conference 2014
Brussels, BELGIUM, 5-7 November 2014
Details will be published on our website


International Workshop: "Green and social: Managing synergies and trade-offs"
Bonn, GERMANY, 12-14 March 2014
PEGNET and DIE. Details.


ENVECON Conference 2014
14 March 2014
Valuing Nature Network. Details.

 

3rd International Climate Change Adaptation Conference: Adaptation Futures 2014
Fortaleza, BRAZIL, 12-16 May 2014
UNEP and National Institute for Space Studies, Brazil. Details.


5th World Congress of Environmental and Resource Economists
Istanbul, TURKEY, 18 June-2 July 2014
AERE and EAERE. Details.


EAERE-FEEM-VIU European Summer School in Resource and Environmental Economics: The Economics of Adaptation to Climate Change
Venice, ITALY, 6-12 July 2014
EAERE, FEEM and VIU. Details.


International Conference on Degrowth for Ecological Sustainability and Social Equity
Leipzig, Germany, 2-6 September 2014
University of Leipzig, DFG-Research Group Postwachsumsgesellschaften, Förderverein Wachstumswende e.V., Konzeptwerk Neue Ökonomie and Research & Degrowth Network. Details.


15th Global Conference on Environmental Taxation
Copenhagen, Denmark, 24-25 September 2014
Details.

 
 

EDITORS AND FOUNDERS OF GREEN BUDGET NEWS

 

Green Budget Europe
Rue du Trône 4
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info@green-budget.eu

www.green-budget.eu

Forum Ökologisch-Soziale Marktwirtschaft
Green Budget Germany
Schwedenstraße 15a
D-13357 Berlin
T: +49 30 76 23 991 30
F: +49 30 76 23 991 59
foes@foes.de
www.foes.de
www.eco-tax.info
 

Levego Munkacsoport
Clean Air Action Group
Pf. 1676
H-1465 Budapest
T: +36 1 41 10 509/-10
F: +36 1 26 60 150
levego@levego.hu
www.levego.hu
     
     

European Environmental Bureau
Boulevard de Waterloo 34
B-1000 Brussels
T: +32 2 289 10 90
F: +32 2 289 10 99
secretariat@eeb.org
www.eeb.org

The Ecological Council
Blegdamsvej 4B
DK - 2200 Copenhagen N
T: +45 33 15 09 77
F: +45 33 15 09 71
info@ecocouncil.dk
www.ecocouncil.dk

ÖGUT – Österreichische Gesellschaft für Umwelt und Technik
Austrian Society for Environment and Technology
Hollandstraße 10/46
A – 1020 Vienna
T: +43 1 315 63 93
F: +43 1 315 63 93-22
office@oegut.at
http://www.oegut.at/




CONTENTS

Editorial
GBE Activities
Green Budget Reform in EU Member States
Green Budget Reform at EU level
Green Budget Reform Worldwide
GBE/GBG Publications
Other relevant Publications
Upcoming Events
Job Offers
Editors and Founders of Green Budget News

Steering Committee
Dr Anselm Görres (President)
Prof Paul Ekins, UK
David Gee, UK
Miroslav Hájek, CZ
Dr Ion Karagounis, CH
Valdur Lahtvee, EE
*András Lukács, HU
*Magnus Nilsson, SV
*Pieter de Pous, NE
*Aldo Ravazzi Douvan, IT
Klemens Riegler-Picker, AT
*Kai Schlegelmilch, DE
Prof Thomas Sterner, SE
Prof Jon Strand, US
*Eero Yrjö-Koskinen, FI
*= GBE Vice Presidents

GBE Team
Dr Constanze Adolf, BE
Jacqueline Cottrell, UK
Eike Meyer, DE/BE
Rozan Consten, BE 

Wise Patrons
Prof Jean-Philippe Barde, FR
Dr Martin Bursík, CZ
Rae Kwon Chung, KR
Prof Frank Convery, IE
Hans Eichel, DE
Dr Franz Fischler, AT
Gabi Hildesheimer, CH
Dr Peter Liese, MEP, DE
Prof Alberto Majocchi, IT
Prof Jacqueline McGlade, DK
Dr Paul Metz, NL
Prof Janet Milne, US
Yannis Palaiokrassas, GR
Dr Rathin Roy, (UNDP)
Prof Ernst-U. v. Weizsäcker, DE
Jeremy Wates, (EEB)
Anders Wijkman, SE