Carbon Taxes EU

Germany: Environmental Tax Reform: Carbon

German ETR: Five modest steps - first-time inclusion ofelectricity - road fuel tax increase biggest item

• Gasoline and diesel tax (already 50 cents per liter before the new laws): Annual increase of 3 Eurocents per Liter (for consumers, 3,5 cents incl. VAT, or 16 Eurocents per Gallon).• Electricity tax (first time in history): Annual increase of 2,6 Eurocents per

kWh (3,2 Eurocents incl. VAT).• For electricity, gas and diesel: five price hikes from 1999 to 2003.• For light heating oil and natural gas, small tax increase only for 1999.• Industrial users pay only 60% of the normal rates for electricity, heating oil

and natural gas. Similar exemptions for agriculture and rail traffic.• Additional exemption for energy-intensive industries ( was recently put in

question by European Commission but finally accepted for next tenyears).

• Revenue from ecotaxes will add up to about 17 billion Euro in 2003www.eco-tax.info Green Budget Reform: Lessons from Germany and Western Europe

To prevent German industry from competitive disadvantages and for ecological and social reasons there

are some exemptions. Here are the most important: 

- Reduced rate of 20% (since 2003: 60%) for the manufacturing sector and forestry and agriculture, on condition that the basic amount of €511 per energy source (based on electricity and heating fuels) is exeeded.

• Tax cap for manufacturing industry: as long as burden from increased tax rates is 1.2 times greater than the tax relief from the reduction in pension contributions, companies will be refunded 95% of the differential amount.

• Public Transport enjoys a 50% reduced tax rate. • Combined heat and power plants with a utilisation rate of 70% or

more are fully exempt from the existing mineral oil tax. • Highly efficient gas-steam power plants will have full exemption from

the mineral oil tax as long as the fulfill certain conditions. • Electricity from renewable sources intended for the producer's own

use is exempt from the electricity tax.

German eco-tax creates jobs in renewable energy sector Förderverein Ökologische Steuerreform

(FÖS)

Environmental Effects of Ecotax Reform in Germany

• Petrol consumption in first half of 2001 decreased by 12% compared to1999, by 8% compared to 2000. Diesel consumption decreased by2% in first half of 2001 compared to 1999.

• Car-pool agencies reported a 25% growth in first half of 2000.• Environmentally sound gas-powered cars, three-litre consuming cars

(90 miles per gallon), and renewable energies are booming.• Development of one-litre car (=280 miles per gallon) is near.• Number of rail passengers increased by 2% in 2000.• Germany world leader in wind energy, also in export of technology.• German Economics Research Institute (DIW) predicts 2-3% reduction

in CO2 by 2005 as result of ecotax reform.• GERMANY'S ECOLOGICAL TAX REFORM (B)• Source: German Federal Ministry of the Environment,

/www.bmu.de/english/fset1024.php

• www.eco-tax.info Green Budet Reform : Lessos from Germany and Westonern Europe

UK: Climate Change Levy

• Started April 1, 2002• Only for industry and public sector• Taxes electricity, gas, and coal• Expected to reduce the carbon dioxide emission

from the UK by 10% in 2010 for those sectors included in the reform.

• First post-assessment showed that British industry cut carbon dioxide releases into the atmosphere by 13.5 million tons in 2002, almost three times above target

• Environmental Fiscal Reform:Perspectives for Progress in the European Union• AUTHOR: Christian Ege Jørgensen for the European Environmental Bureau

The Netherlands

• Cost of domestic electric and gas up 50%-70% due to new taxes.

• Consumers use 15% less electric and 5%-10% less fuel.

• High demand for renewable sources of energy as they are expempt from tax.

• Environmental Fiscal Reform:Perspectives for Progress in the European Union• AUTHOR: Christian Ege Jørgensen for the European Environmental Bureau

Denmark's Carbon Dioxide Tax.

• Introduced in 1992• The charges are twice as high for households

as for businesses: $14.30 per ton of CO2 vs. $7.15.

• Denmark offers refunds to energy intensive businesses. *For industries where the tax amounts to more than 3 percent of the value added, a total tax refund is possible. – permits such refunds only if "reasonable" energy

efficiency investments are undertaken. –

David Morris 1994

Emissions credits for Industry

• Emissions that exceed the emitter’s quota incurs a penalty of 40 Euro per ton CO2, rising to 100 Euro from 2007.

• Allocation of emission credits will be free of charge

• Size will be according to historical emissions• Could lose its ability to reduce emissions if EU

Member States buy large amounts of emission rights from Russia and Ukraine

• Environmental Fiscal Reform:Perspectives for Progress in the European Union• AUTHOR: Christian Ege Jørgensen for the European Environmental Bureau