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					      GREENBUDGETNEWS NO. 10 –12/2004

                        EUROPEAN NEWSLETTER ON
                      ENVIRONMENTAL FISCAL REFORM
Editors:




 www.eco-tax.info            www.eeb.org                www.ecocouncil.dk                     www.levego.hu                     www.oegut.at




             Contents
             1.    EDITORIAL ............................................................................................................... 1
             2.    GREEN BUDGET REFORM ON EU-LEVEL .............................................................. 2
             3.    GREEN BUDGET REFORM IN SINGLE EUROPEAN COUNTRIES ............................. 3
             4.    GREEN BUDGET REFORM WORLDWIDE............................................................... 12
             5.    EVENTS ................................................................................................................... 21
             6.    LINKS AND PUBLICATIONS.................................................................................... 21
             7.    READERS’ GUIDE AND IMPRINT ........................................................................... 24




1. E DITORIAL
Our first piece of good news is that, as from this                           http://www.eco-tax.info/4fakten/index.html.
issue, we have a new cooperation partner for                                 This was not all, however: Green Budget Ger-
Green Budget News – the European Environ-                                    many released its Scholar’s Declaration in favour
mental Bureau (EEB). We are looking forward to                               of the further development of the ecological tax
a more varied selection of articles than ever before                         reform to the press in Berlin on 16th November
and are of course delighted to welcome them on                               and received significant media coverage, as you
board. Our second piece of good news is that we                              can see below in the selection of articles we have
are pleased to report our considerable presence in                           translated for our English readers. As well, the
the German press over the past two months. This                              Federal Environment Agency commissioned a
was due to a number of combined factors, not                                 study from the German Institute of Economic Re-
least the publishing of Green Budget Germany’s                               search, which revealed what we at Green Budget
second edition of the 2004 memorandum on the                                 Germany have long suspected: many sectors of
further development of ecotaxes in Germany, of                               German economy were and continue to be net
which an English version is now available online                             winners from the ecological tax reform.
and can be downloaded from our website at:                                   As always, the newsletter also takes a look at de-
GREENBUDGETNEWS NO. 10                                                                          PAGE 2 OF 25


velopments from around the world, the most posi-            transport-commissioner-designate Jacques Barrot
tive development being, of course, that Russia has          has suggested that a tax on aircraft fuel for EU-
finally ratified the Kyoto Protocol, which will             internal flights be introduced. We await further
now come into force on 16 February 2005. On a               developments in this respect with great interest!
less positive note, this has not moved the Austra-          We hope you enjoy this issue of GreenBudget-
lian government, which maintains that it under-             News – and don’t forget that contributions for the
takes more than Kyoto on a unilateral basis – a             next issue and comments from our readers are al-
poor excuse not to engage in multilateral action,           ways welcome.
or so it would seem. Within the European Union,
                                                            Your editors.
kerosene tax is once again on the agenda, as EU


2. G REEN B UDGET R EFORM                      ON       EU-L EVEL
                                                            clearly set out and the possible economic impact
 New EU transport chief suggests kero-                      identified," secretary-general Ulrich Schulte-
              sene levy                                     Strathaus said. Turning to other issues Mr Barrot
                                                            said stricter measures were needed on ship source
[Environment Daily 1739, 04/10/04] EU transport
                                                            pollution, currently exempt from the EU's envi-
commissioner-designate Jacques Barrot has sug-
                                                            ronmental liability directive: "the borderlines of
gested that the bloc introduce a tax on aircraft fuel
                                                            civil and criminal responsibility are not that clear
for internal flights. The Frenchman's remarks at a
                                                            [...] we have to sort out the ethos of responsibil-
hearing before MEPs last week have put back on
                                                            ity," he said.
the EU agenda an idea rejected by the current
European Commission five years ago. "Would it               Meanwhile,       energy     commissioner-designate
not be possible to introduce a low rate of tax on           László Kovács put in a lacklustre first perform-
intra-community flights which are not exposed to            ance before MEPs on Thursday, several times
international      competition?"      Mr      Barrot        admitting that he did not know enough about his
said. However, the tax could only be introduced             portfolio. The Greens called his hearing "an of-
"when fuel prices have settled down" and would              fence to the parliament." The Hungarian candidate
have to take account of both competitive and envi-          commissioner expressed interest in a European
ronmental effects, he added.                                green certificate trading scheme for companies in-
                                                            vesting in renewable energy. But he said it was
Mr Barrot's comments revive the kerosene tax de-
                                                            not for the Commission to impose legally binding
bate as governments meet in Montreal, Canada, to
                                                            targets for renewable energy on member states.
discuss international guidelines on using eco-
                                                            He made several comments supportive of nuclear
nomic instruments to combat aviation's environ-
                                                            power, drawing a welcome from European atomic
mental effects. The EU is fighting US proposals to
                                                            industry association Foratom.
outlaw all instruments except emission trading.
Kerosene taxes were ruled out as a policy option            Links:              European            parliament
by the Prodi commission in 1999. In a policy                http://www.europarl.eu.int/
document it said different permutations of the tax          Press         releases          from          AEA
would either hit domestic airlines' profits too hard        http://www.aea.be/aeawebsite/datafiles/jbarrot
or produce negligible environmental benefits.               1004.htm and the Greens-EFA
"What [Mr Barrot is] saying is very encouraging,"           http://www.greens-
Jos Dings of campaign group Transport & Envi-               efa.org/en/press/detail.php?id=2046&lg=en
ronment told Environment Daily. "It's finally a
recognition of the arguments that many people                 EU's Kyoto "linking" law enters into
wanting an economically and environmentally                                  force
sound transport policy have been favouring." Air-
line association AEA was also "encouraged" by               [Environment Daily 1769, 16/11/04] Legislation
Mr Barrot's hearing, but hedged on the kerosene             allowing firms involved in the EU emissions trad-
tax. "The environmental objectives should be                ing scheme to gain extra carbon credits by funding
                                                            abatement projects outside the bloc entered force
GREENBUDGETNEWS NO. 10                                                                     PAGE 3 OF 25


in early November as it was published in the EU        Berlin on international cooperation on global cli-
official journal.                                      mate change while on a state visit to Germany in
Member states must now transpose the so-called         early November. "This conference is evidence of
"linking directive" by 13 November 2005. The           British and German leadership in the field of cli-
law will apply to EU plants with emission caps         mate change which has its roots in the close co-
under the emissions trading scheme. They will be       operation already existing between the Potsdam
able to reap extra allowances through the Kyoto        Institute for Climate Impact Research and the
protocol's flexible mechanisms. Combined with          Tyndall Centre in Britain," she said in her speech,
Russia's recent decision to ratify the protocol, the   delivered at the British-German Climate Change
directive significantly alters the market landscape.   Conference in Berlin during the state visit to her
Its intended effect is to "increase the diversity of   grandfather’s ancestral homeland.
low-cost compliance options" and "improve mar-
ket liquidity", according to the law's preamble.       Coming on the day that President Bush’s victory
The content was settled politically in April and the   in US elections was announced, soon after the
text finalised in September.                           Russian decision to ratify the Kyoto Protocol and
                                                       just weeks after the UK Government’s changes to
Starting in 2005, firms will have direct access
                                                       its targets for the EU emissions trading scheme –
through the Clean Development Mechanism to
                                                       seen by many as backsliding – the speech on cli-
credits from countries not subject to Kyoto emis-
                                                       mate change marks a rare incursion by the Queen
sion reduction targets. From 2008 joint implemen-
                                                       into domestic and international politics. UK and
tation credits will be available from those coun-
                                                       German politicians spoke of their intended coope-
tries that do have targets (principally Russia).
                                                       ration in climate change action at the conference.
Firms cannot gain credits by funding nuclear or        "Climate change has the capacity to reshape our
sinks projects, though a review in 2006 might          lives dramatically... (which) shows how important
open the door to robust sinks schemes. The same        cooperation is between nations and the need for
review might also allow extra allowances from          leadership," UK Environment Secretary Margaret
funding projects at home. Investments in hydro-        Beckett said at the British-German Climate Chan-
power plants bigger than 20 megawatts must             ge Conference in Berlin. Beckett promised again
comply with guidelines from the World Commis-          that the U.K. would strongly advance the climate
sion on Dams.                                          change agenda during its chairmanship of the
There is no EU-wide limit on the number of extra       Group of Eight leading nations in 2005 and also
credits firms can gain, but authorities must set na-   presidency of the EU in the second half of 2005.
tional limits, in the form of a percentage of the      She highlighted the common approaches to envi-
number of allowances allocated centrally by gov-       ronmental issues shared by the U.K. and Germany
ernments. The Commission may later propose a           and pledged further bonds between the two count-
harmonised limit if it thinks too many external        ries in the fields of climate change, climate scien-
credits are being sucked into the market and pre-      ce and technology. Beckett said the drive to redu-
venting efforts to abate emissions inside the EU.      ce carbon dioxide emissions by 60 percent by
                                                       2050 could be lucrative, especially as more and
British Queen wades into climate change                newer technologies lower the costs of being green.
                                                       The conference will present proposals to the UK
                debate                                 prime minister Tony Blair and German Chancellor
[Point Carbon, 04/11/04] The British Queen Eli-        Gerhard Schroeder on future cooperation to com-
zabeth II has thrown her weight behind efforts to      bat and adapt to climate change.
slow greenhouse gases by opening a conference in


3. G REEN B UDGET R EFORM                     IN SINGLE   E UROPEAN C OUNTRIES
 Germany:More than 130 scholars an-                    [Translation by Berivan Pont, Green Budget
nounce green budget reform must be fur-                Germany Press Release, Berlin, 16/11/04] More
                                                       than 130 scholars came out in support of the pur-
             ther pursued.                             suit of ecological tax reform in Germany in an
GREENBUDGETNEWS NO. 10                                                                       PAGE 4 OF 25


open declaration in Berlin on 16 November 2004.          able criticism from the first five years of the eco-
The declaration, presented by Green Budget Ger-          logical tax reform in Germany, research has
many, called for concrete steps to allow the re-         shown that the reform has had a positive impact
form to progress. Prof. Claudia Kemfert, signatory       on both the environment and the economy. This is
of the declaration and departmental head at the          the conclusion reached by a new report published
German Institute for Economic Research said,             by the German Institute for Economic Research.
“Research shows that ecological tax reform takes         The Institute’s research confirms that the reform,
pressure off the environment and creates jobs. Our       which set out to protect the environment and cre-
economy depends too heavily on crude oil price           ate or secure employment, has been broadly suc-
variations. Ecological taxes help Germany free it-       cessful in achieving its aims and steering eco-
self from its oil addiction. Regrettably, the nu-        nomic development in the right direction. More
merous winners from the ecological tax reform            than half of the people interviewed for the report
tend to maintain dignified silence, while those          stated that they have been more careful about en-
who lose out polemize against it. We seek to in-         ergy use and energy saving since the introduction
troduce a more factual aspect to the debate with         of the reform. The introduction of innovative en-
our research results.”                                   ergy-saving methods is subsidised for businesses,
Prof. Martin Jänicke, signatory of the declaration       which also benefit from the reduction of pension
and member of the Parliamentary Environmental            payments. Social insurance payments could be re-
Audit Committee in Germany, said; “Due to high           duced by approximately 8 million Euros annually
crude oil prices, a rational decision has been made      as a result of the reform. The main winners from
not to raise fuel taxes up for the time being. But       the ecological tax reform included the manufac-
the Federal Government must abolish tax privi-           turing and service industries.
leges for diesel, air traffic and industry. Employ-      The principle of the reform - to make energy more
ees from Karstadt to Opel are under a great deal of      and labour less expensive - thus had a dual im-
pressure because of high social insurance. Reduc-        pact:
tions in social insurance by means of an ecologi-
                                                              • more expensive energy creates incentives
cal and social financial reform, including the abo-
                                                                  to save energy, which in turn results in
lition of subsidies, is a preferable alternative to an
                                                                  protection of limited resources and the
increase in value-added tax.”
                                                                  climate, and
By the end of the year, according to the coalition            • 90 percent of thus funds raised by the tax
agreement between the SPD and the Green party,                    was paid into the pensions fund to reduce
the parties will have made a decision on the future               pension payments, which makes labour
development of ecological tax reform in Ger-                      cheaper and stimulates employment.
many.                                                    In 1999 when the ecological reform tax reform
Green Budget Germany is an organisation whose            was introduced, it was agreed that the reform
members include scholars, entrepreneurs and rep-         should continue in five stages until 2003. In addi-
resentatives from environmental organisations and        tion, the law on the further development of the
NGOs; it has lobbied for a comprehensive eco-            ecological tax reform came into force in 2003, and
logical financial reform for the past ten years.         work on an ecological finance reform was begun
The declaration (in German) and its signatories          and continued in 2004. The reform introduced a
can be viewed at:                                        tax on fuels and electricity, which was gradually
http://www.foes.de/3aktuelles/pressemit0411              increased in five stages over five years, and on
                                                         light heating oil and gas (although the former was
16.html
                                                         only included in the first stage, the latter only in
                                                         the fifth and final stage). At the same time, pen-
German Institute for Economic Research                   sion contributions were reduced by 0.8 percent –
 gives Ecological Taxation the Thumbs                    from 20.3 percent in 1998 to 19.5 percent in 2004
                   Up                                    – for both employers and employees. Thus, em-
                                                         ployment became cheaper for employers, and em-
[translation by Jacqueline Cottrell, Green Budget
                                                         ployees took more money home in their purse.
Germany, from the FRG Government homepage,
                                                         Without the ecological tax reform these contribu-
link below, 18/11/04] In the face of the consider-
                                                         tions would have reached levels 1.7 percent higher
GREENBUDGETNEWS NO. 10                                                                       PAGE 5 OF 25


than their actual percentage value in 2004 – i.e.,          Report Highlights the Advantages of
they would have amounted to 21.2 percent. as a                            Ecotax
result of demographic and cyclical economic de-
velopments.                                              [translated by Jacqueline Cottrell from an article
                                                         in Frankfurter Rundschau, 17.11.2004] Ger-
In the research paper the following effects could        many’s Federal Environment Agency has pub-
be proven:                                               lished a report stating that the ecotax has reached
    • In private households, the ecological tax          its target and demanding the establishment of a
         reform proved to be a strong or very            broader ecological fiscal reform. According to the
         strong motivation to save energy for ap-        Environment Agency, the ecotax has advantages
         proximately half the persons interviewed        for business and employees amounting to billions
         for the report. This included in particular     of Euro – a much better outcome than its reputa-
         electricity consumption, heating (includ-       tion would lead one to expect. The experts defend
         ing home insulation), and mobility, par-        the ecotax as a steering mechanism for business
         ticularly fuel savings.                         and politics in their report.
    • In business, the effects of the ecological         The tax on petrol, diesel and other energy sources
         tax reform were many. Personnel-                introduced in 1999 certainly works as it was in-
         intensive companies benefited directly          tended, argued Andreas Troge, president of the
         from the reduction to pension payments.         Federal Environment Agency (UBA). The aim of
         Energy saving mechanisms in business            the ecotax was to cut energy use and relieve the
         and the availability of energy-efficient        pensions fund – and, according to representative
         products (such as energy-saving build-          surveys and research carried out by the Berlin In-
         ings) also enabled companies to benefit         stitute Ecologic and the German Institute for Eco-
         from the reform. The increased demand           nomic Research (DIW) – precisely this has been
         for new services, such as energy consult-       achieved. A representative survey carried out by
         ing firms, also had a positive impact on        Ecologic in September 2004 revealed that half of
         employment.                                     those asked have been more aware of their energy
    • Up to 2002, businesses gained overall              consumption since the introduction of the ecotax.
         from the reform. Alongside service indus-       The Environment Agency’s report also revealed
         tries, according to the calculations of the     that economy has profited – ecotax benefited in-
         German Institute for Economic Research,         novative, energy-saving companies and clearly
         manufacturing industries can also be re-        reduced ancillary wage costs. Since 2003, there
         garded as one of the biggest winners un-        have been developments in some economic sec-
         der the reform in 2002, benefiting from         tors that make it clear that the tax must be further
         net relief amounting to approximately half      developed for it to continue to be effective.
         a million Euro.                                 Ancillary wage costs fell, according to the study,
This situation changed as a result of the reduction      by approximately 8 million Euros annually. Al-
of tax relief from ecological tax in 2003. Thus,         most 90 percent of all funds raised by the tax were
companies did indeed face a small tax burden as a        paid directly into the pensions fund, to reduce
result of the reform by 2003 – the agricultural and      pension payments. Without the ecotax, pension
haulage industries paid more than they received in       payments in Germany today would be 1.7 percent
pension relief. All other production sectors re-         higher than their present levels – not 19.5 percent,
mained winners under the reform in 2003, as did a        but 21.2 percent.
large portion of the service sector, such as health
insurance and credit card companies.                     Business bore a small burden in 2003
A large number of companies spoke in favour of           The studies also prove that the ecotax has a posi-
continuing and developing the ecological tax re-         tive effect on the environment, argued the Federal
form in the survey, because they can expect larger       Environment Agency; 53 percent of car drivers
gains in the future as a result of continuing reduc-     stated they drove more slowly than before and left
tions to social insurance payments.                      their car at home on occasion as well. Almost
The original text can be accessed at:                    three quarters of those surveyed switched electri-
                                                         cal equipment completely off, rather than leaving
http://www.bundesregierung.de/-
,413.746534/artikel/Oekosteuer-zeigt-positive-Effe.htm
                                                         it in wasteful stand-by mode.
GREENBUDGETNEWS NO. 10                                                                     PAGE 6 OF 25


Up to 2002, business was a net winner from the        have ecotaxes at 2.84 percent of GNP, in Ger-
reform. Alongside service industries, manufactur-     many they amount to only 2.58 percent.
ing industries were the most significant net win-     The Green party in Germany has made an effort to
ners by almost half a billion Euros in 2002. The      draw attention towards these surprising figures. In
situation for these sectors changed in 2003, how-     Green party circles, the Greens have been discuss-
ever, because tax relief was reduced and the extra    ing whether they should call for increases to eco-
monies were used for “general consolidation of        taxes – against the official government line – ever
the budget”. Thus, businesses could not profit di-    since the report was published. Unofficially, in-
rectly from this development, as the funds raised     creases have particularly been discussed in rela-
were not used to reduce pension payments.             tion to ecotaxes on heating oil in Germany, which
As a result, businesses overall bore a “small bur-    is taxed at only 6.2 cents per litre (far below the
den” in 2003 due to the ecotax. Agriculture and       tax rate in Denmark or Italy) – seeming to leave
traffic paid more in ecotax than they received in     considerable room for improvement.
pension relief; all other sectors remained net win-   However, no consensus has been conclusively
ners overall. A large proportion of service indus-    reached within the Greens. Their policy course
tries such as health insurance and credit card        should be defined in consultation with experts, ar-
companies were amongst the net winners from the       gue party leader Reinhard Bütikofer and
ecotax in 2003.                                       Reinhard Loske, leader of the Green group in
The report is based on on representative surveys      parliament. This meeting was unofficially sched-
and research carried out by the Berlin Institute      uled for the beginning of November. Also invited
Ecologic and the German Institute for Economic        were president of the Federal Environment
Research (DIW), whose researchers recommended         Agency, Andreas Troge (CDU), the chief
developing the ecotax as a broader ecological fis-    economist of the Deutsche Bank, Norbert Wal-
cal reform, to dismantle environmentally damag-       ter, and the Regensburger Economics professor
ing and economically questionable subsidies and       Wolfgang Wiegard. Wiegard is not only chair-
tax relief mechanisms, including tax relief for       man of the five chief economic advisers of the
commuters.                                            government but also – as is Walter – a member of
In contrast to Troge, numerous scholars have          the Advisory Board of Green Budget Germany.
called for further increases to ecotax rates. The     Green Budget Germany recently published a new
monies raised from these increases should no          memorandum calling for further increases to eco-
longer flow into the pensions fund, but into the      taxes in Germany, such as an increase in the tax
general budget. “The ecological tax reform is an      on heating oil of 2 cents per litre annually and of 3
essential instrument for environmental protection,    to 5 cents on fuels.
employment and innovation”, stated more than
130 scholars in a Green Budget Germany declara-         German Federal Environment Agency
tion published on 16 November 2004.                                and Professors
LINK:                              http://www.fr-       in favour of further ecological tax re-
ak-                                                                      form
tuell.de/ressorts/wirtschaft_und_boerse/wirtsc        [translated by Jacqueline Cottrell from an article
haft/?cnt=590498&                                     from the German Press Agency, Berlin, 17/11/04]
                                                      According to a survey, the ecological tax reform
         Low Ecotaxes in Germany                      has prompted more than half of all German citi-
[translated by Jacqueline Cottrell from an article    zens to make moves to save energy, while driving
by Fritz Vorholz, Die ZEIT of 28/10/04] An            and at home, in terms of both heating and electric-
OECD report, thus far scarcely noticed in Germa-      ity consumption. This was revealed in a represen-
ny, still has the potential to cause an uproar. Ac-   tative survey published by the environmental in-
cording to the comparative study that examined        stitute Ecologic in Berlin on 16 November 2004.
the tax systems of the 30 member states of the or-    Almost three quarters of the 1002 people inter-
ganisation, ecotaxes put less strain on business in   viewed had taken measures to save motor fuels in
Germany than its most significant neighbouring        response to the reform. One fifth often decided to
countries. While the 15 old EU member states          leave their car at home and to use other alternative
GREENBUDGETNEWS NO. 10                                                                    PAGE 7 OF 25


methods of transport instead to save on fuel.         the necessity for ecological modernisation and in-
The survey was commissioned by the Federal En-        ternational competitiveness for German business.
vironment Agency in Germany. Its president, An-       Both politicians are leaders of the coalition's
dreas Troge emphasised that it is clear that the      working group, which was created to make sug-
ecological tax reform, introduced in 1999, cer-       gestions for further develop of ecological tax re-
tainly influenced behaviour in the right direction.   form next year. The debate does not centre on a
The ecological tax reform, he stressed, must be       possible increase in tax rates. Rather, the debate
developed into a more encompassing ecological         will focus on the tax reductions for energy-
finance reform by dismantling environmentally         intensive businesses currently in place. They cost
damaging subsidies such as tax reductions for         the Federal Ministry of Finance 5.6 billion Euros
commuters.                                            per year and correspondingly benefit the indus-
In contrast to Troge, numerous academics have         tries that consume large amounts of electricity,
published a declaration in favour of increasing the   such as steel and aluminium manufacturers.
rate of the current ecological tax reform. The        While the coalition wishes to tackle the project,
monies raised, they argued, should no longer be       there is some resistance within the government.
earmarked for pension reductions, but should flow     Federal Minister of Economics and Labour Wolf-
into the general budget. The ecological tax re-       gang Clement (SPD) has already spoken out
form, they argued, is an essential and indispensa-    against the removal of such subsidies, as he fears
ble instrument for environmental protection, em-      energy-intensive industries will relocate abroad.
ployment and innovation. The declaration, in-         The two groups recently received support from
spired by Green Budget Germany, was signed by         the German Environmental Agency and leading
more than 130 scientists and leading academics.       German academics. The ecological tax reform is,
Links:                                                according to Andreas Troge, president of the
http://www.bundesregierung.de/-                       Agency, "better than its reputation". Troge re-
,413.746534/artikel/Oekosteuer-zeigt-positive-        ferred to a new report published by the German
Effe.htm                                              Insitute for Economic Research. According to the
http://www.umweltdaten.de/uba-info-                   institute, social insurance payments could be re-
presse/hintergrund/oekosteuer.pdf                     duced by 8 billion Euros annually by means of the
                                                      taxes on petrol, diesel and electricity. According
      Coalition has its Eye on Ecotax                 to Troge, without the ecotax, which flows largely
                                                      into pensions, pension payments would be at 21.2
[translated by Jacqueline Cottrell from an article    percent and not their current rate of 19.5 percent.
by Jörg Michel, Berliner Zeitung, 16/11/04] The       The German Institute for Economic Research re-
coalition partners in the German government have      ported that business has been relieved as a result
decided to examine the ecological tax reform and,     by approximately half a billion Euros and noted
more specifically, the subsidies for energy-          that the manufacturing industry and services in
intensive industries. "We should dismantle these      particular have profited from the tax. Troge too
special provisions", vice-president of the Green      spoke out in favour of reducing the environmen-
group in parliament, Reinhard Loske, told Ber-        tally damaging and economically questionable tax
liner Zeitung. He also spoke out in favour of using   relief for business.
the monies thus raised to finance environmental
policy programs – for example, for better heat in-    A broadly-based alliance of more than 130 aca-
sulation or to promote electricity-saving technolo-   demics also published a statement in favour of in-
gies.                                                 creasing the ecotax. “The ecotax is an essential in-
                                                      strument for environmental protection, employ-
Michael Müller, vice-president of the SPD in par-     ment and innovation”, states Green Budget Ger-
liament, agreed. "We should promote environ-          many’s academic declaration published on 16th
mentally friendly innovations with the extra taxes    November in Berlin. The additional monies raised
raised". The special provisions of the ecological     should flow into the general budget. The research-
tax reform were only accepted by the EU on con-       ers called for the dismantling of tax relief within
dition they were temporary, he pointed out, saying    the ecotax system.
that they would have to be "re-examined" soon in
any case. We need to find a fair balance between      http://www.berlinonline.de/berliner-
                                                      zeitung/politik/395731.html
GREENBUDGETNEWS NO. 10                                                                    PAGE 8 OF 25



    German government to attack ecotax                    Hungarian NGOs Demonstrate for
              exemptions                                          Green Budget
[Environment Daily 1770, 17/11/04] Germany's          [András Lukás, EFR, 21/10/04] Seventy-two en-
SPD and Green governing parties are considering       vironmental NGO’s demonstrated before the
a dramatic reduction of energy tax exemptions for     Hungarian Parliament on 21October,2004. They
energy-intensive firms as part of their current re-   demanded the greening of the state budget. They
view of country's ecological tax reform (or eco-      handed over a petition to a representative of the
tax) programme.                                       Prime Minister (see the text below). On 3 No-
A source at the Greens told Environment Daily         vember 2004, representatives of five environ-
that officials from the SPD-Green coalition have      mental NGOs handed over a complaint to the
agreed that the tax breaks, which are worth €3bn,     chairman of the Parliamentary Committee on
had to be scaled back. More than two years ago,       Constitution and Justice. They pointed out that the
the government decided to spare several energy-       state budget bill contradicts several paragraphs of
intensive sectors the full brunt of the ecotax.       the Hungarian Constitution and other laws.
                                                      Among other things, no information was given
The source acknowledged that rolling back the
                                                      about indirect subsidies, although this is required
exemptions might face opposition from Wolfgang
                                                      by the law on the state budget. On 5 November
Clement, the pro-business SPD economics minis-
                                                      2004, the Environmental Committee of the Hun-
ter. Mr Clement has already locked horns with the
                                                      garian Parliament held a consultation on next
Greens over the ecotax programme and renew-
                                                      year’s state budget plans. More than 20 environ-
ables support, arguing that the former may be un-
                                                      mental NGOs were represented at the event. An-
necessary due to emissions trading and that the
                                                      drás Lukács, president of the Clean Air Action
latter was too high.
                                                      Group held a presentation about the possibilities
But the source said that as Hans Eichel, SPD fi-      of a green budget reform with concrete proposals
nance minister, backed the idea of reducing ex-       for the 2005 state budget. This was followed by a
emptions, there was a good chance of it going         discussion among the NGO representatives and
ahead. He ruled out any additional hikes in the       members of the Parliament.
ecotax, saying that, instead, coalition officials
were looking into extending the scope of carbon       Petition to Prime Minister Ferenc Gyurcsány
emissions trading to include more German firms.       concerning Hungary’s State Budget for 2005
In a related development, pro-ecotax lobby Green      Mr. Prime Minister,
Budget Germany said 130 scientists had signed a       We, the undersigned Hungarian non-government
petition urging the government to further develop     organizations, hereby express our grave concern
the ecotax programme. Martin Jänicke, who             about the 2005 state budget and tax bills. We be-
serves on the government's panel of environ-          lieve that passing these bills in their present form
mental experts (SRU), said that although the eco-     may seriously jeopardize several achievements
tax should not, amid high oil prices, be raised for   reached through general consensus of the Hungar-
the time being, the government should "end tax        ian society, may infringe upon the constitutional
breaks for diesel users, airlines and other indus-    right of citizens for a healthy environment, and
tries."                                               may severely disturb the operation of the coun-
                                                      try’s non-governmental sector.
LINKS to other recent articles on ecological
tax reform in Germany:                                We are fully convinced that the 2005 Hungarian
                                                      state budget should better support environmental
1)          Die        Tageszeitung         (taz):
                                                      and nature protection, education, culture, health-
http://www.taz.de/pt/2004/11/17/a0154.nf/text
                                                      care, scientific research and development, build-
2) AP, 16.11.2004; German Federal Environment         ing renovation, energy efficiency, public trans-
Agency praises the advantages of the ecological       port, railway transport, and ecological forestry and
tax                  reform:                  see:    farming. We think that it is also indispensable to
http://de.news.yahoo.com/041116/12/4apol.html         grant increased subsidies to state agencies which
3)        Financial      Times      Deutschland:      have the primary function of ensuring an unspoilt,
http://www.ftd.de/pw/de/1100336578996.html?nv         safe environment and the purity of public life in
=se                                                   Hungary: in other words, it is necessary to
GREENBUDGETNEWS NO. 10                                                                        PAGE 9 OF 25


strengthen the environmental and nature protec-          ion.
tion authorities, the National Public Health and         With a view to cutting back the squandering of ar-
Medical Officer’s Service, and the National Board        able land, one of Hungary’s most valuable and ir-
of Customs and Finance Guard, among others. In           replaceable assets (by covering it with concrete or
our opinion, it is essential to safeguard, utilize and   asphalt, and building it up virtually without any
further develop the results that the Hungarian civil     limits), and to curbing the related massive real
sector has already attained.                             property speculations and corruption, it is neces-
We find it particularly alarming that the budgetary      sary to set true prices for arable Hungarian land
subsidies of the Ministry of Environment and Wa-         (for instance by significantly raising the amount
ter are scheduled to be cut. Serious environmental       and extending the scope of the land protection
accidents of the past few months have demon-             fee).
strated that the failure to strengthen the work of       The Hungarian housing subsidization system
Hungarian environmental and nature protection            should be transformed so that the construction of a
authorities puts at risk the health and life of citi-    new home should only receive support if it meets
zens. Additionally, at the time of the EU acces-         strict environmental protection preconditions. In
sion, Hungary was undertaking a series of envi-          the long run, this may result in annual savings of
ronmental protection obligations that make it in-        several hundreds of billions of HUF for the state
dispensable to extend the staff of the regional          and for local governments.
agencies – as promised by each one of the succes-
                                                         Hungary should start removing the preferences,
sive Hungarian governments to both the European
                                                         worth hundreds of billions of HUF a year, given
Union and domestic electors.
                                                         to heavy truck transport (those operating heavy
A shockingly short-sighted approach is mani-             trucks should pay for the damage that can be
fested in the fact that the present draft budget con-    proved to have been caused by them).
tains virtually no estimate at all for a domestic
                                                         The huge subsidies granted to car transport in
competition system making funds available for
                                                         Hungary should be gradually withdrawn. (Among
public purposes and for environmental protection
                                                         other measures, the Hungarian state should put an
developments; only for the amounts of the Hun-
                                                         end to the possibility of writing off private car use
garian contribution to large investment projects
                                                         as a company expense item. This unlawful method
subsidized by the EU. Consequently, local gov-
                                                         has become widely used in Hungary, taking away
ernments, the media, enterprises, schools, NGOs
                                                         revenues of hundreds of billions of HUF from the
and scientific institutions are currently only to re-
                                                         state budget year after year.)
ceive insignificant subsidies, if any, for activities
such as environmental education, social awareness        The forced-rate programme of extending the Hun-
raising, scientific research and development, the        garian high-speed road network should be aban-
protection of endangered species of animals and          doned.
plants, the establishment and maintenance of             Fuel smuggling and fuel tourism should be cut
waste prevention and utilization systems, the            back by imposing strict measures.
elimination of illegal waste dumping sites, or the       In the system of bearing the costs of waste dis-
elaboration and implementation of local govern-          posal, the “polluter pays” principle should be con-
ments’ environmental programmes.                         sistently applied and the responsibility of indus-
Moreover, the Hungarian state budget includes            tries and commerce should be enforced. The prior-
harmful and unnecessary subsidies worth hun-             ity of prevention should also be ensured through
dreds of billions of HUF; the withdrawal of such         legal and economic instruments (e.g. through the
subsidies would allow support to be granted to the       decree on deposit charges, already in preparation
above goals. In order to raise the required funds,       for a decade, and by developing the system of
we make the following proposals:                         product charges).
Subsidization of intensive and highly chemical-          The black market should be forced back in Hun-
ized agricultural production should be considera-        gary (e.g. by increasing the subsidies granted to
bly reduced. This is also important because by           the afore-mentioned state authorities and agencies
giving preference to the agrarian environmental          and by making them more interested in attaining
protection programme Hungary may obtain sig-             this goal).
nificantly more subsidies from the European Un-          The prices of exploited Hungarian mineral re-
GREENBUDGETNEWS NO. 10                                                                     PAGE 10 OF 25


sources should reflect the costs of the environ-        Nation-wide road pricing back on Dutch
mental damage caused by their production and the                       agenda
fact that these raw materials are non-renewable
(this can be achieved by raising the payable rate       [Van Anaar Beter, nota mobiliteit, 19/11/04] The
of mining tax).                                         policy document 'Nota Mobiliteit' defines the key
                                                        elements of the Dutch transport policy for the next
Through issuing appropriate implementing de-            decade. The starting point is that mobility is a pre-
crees it should be made possible to collect, at long    requisite for economic and social development. A
last, the 25 percent cultural contribution imposed      properly functioning system for passengers and
by the law upon products involving violence and         freight transport and reliable accessibility to our
pornography.                                            national and local networks are essential to
Mr. Prime Minister,                                     strengthen the economy and the international
Hungarian environment and nature protection             competitiveness of the Netherlands.
NGOs are interested in creating an up-to-date           The government believes that an alternative
knowledge-based economy, and so they represent          method of paying for road use is necessary to im-
a key driving force of social development. We re-       prove reliability, reduce journey times, and thus
quest you to endorse our proposals and to initiate      strengthen the economy. The government is there-
the modification of the 2005 state budget and tax       fore making all the necessary preparations to pave
bills.                                                  the way for the introduction of road pricing by the
Pictures of the demonstration can be seen at:           next government, without already committing it-
http://www.indymedia.hu/kepgaleria.shtml?x=187          self to a specific type of road pricing. The system
61                                                      must be effective, efficient, robust and socially vi-
                                                        able. This demands widespread support within so-
                                                        ciety at large. Not only for road pricing in general,
  Norway ups the stakes on natural gas
                                                        but also for the actual method used, which is pre-
[Environment Daily 1742, 07/10/04] The Norwe-           cisely where the ideas diverge. To achieve this
gian government on Monday submitted budget              consensus, the Paying for Mobility Platform was
proposals for 2005 featuring heavy investment in        set up. This Platform is to come up with a
CO2-free natural gas power generation. Tax in-          broadly-supported road pricing proposal in the
centives to encourage the introduction of sulphur-      early spring of 2005. This proposal, the outcomes
free petrol and diesel are to be introduced.            of the consultation with other authorities, the re-
Norway's "energy fund" to promote energy sav-           sults of the interdepartmental policy study on
ing, renewables and natural gas will receive an         “Gebruiksvergoedingen Goederenvervoer” (Road
additional NKr95m (EUR11m), up 17%. Its target          Pricing for the Road Haulage Sector) and the reac-
for increased environment-friendly energy pro-          tions to consultation will be incorporated in PKB-
duction and saving is being increased to 12 TWh         3 (Core Planning Decision) of the Mobility Policy
per year by 2010, a 2 TWh increase over the pre-        Document.
vious target set in 2002. NKr150m will be made          To read more about the Dutch transport policy go
available for R&D on CO2 sequestration. A               to: http://www.vananaarbeter.nl/NotaMobiliteit/
NKr2bn fund for environmentally friendly gas
technology set up earlier this year is expected to
return about NKr46m as part of a proposed "na-            Environmentally harmful subsidies in
tional gas technology programme". Total alloca-                  Poland – Case Studies
tion for the environment ministry rises 3.5% to         [Wojciech Stodulski, Institute for Sustainable De-
NKr2.7bn. Priorities are identified as outdoor rec-     velopment, Poland] Coal plays an important role
reation, cultural heritage and forest conservation.     in the Polish energy sector. Since the early 1990s,
An extra NKr14m is earmarked for cleaning up            the government has been introducing successive
polluted ground, water and sediments in order to        restructuring programmes for the sector aimed at
complete work on 100 priority sites, and inspec-        decreasing production capacity and employment,
tions of 500 more, next year.                           and hence the achievement of profitability for Pol-
Follow-up:      Norwegian        finance     ministry   ish coal mining.
http://odin.dep.no/fin/
GREENBUDGETNEWS NO. 10                                                                   PAGE 11 OF 25


Coal Mining                                           lions USD at the end of the 1990s. The authors
In 2002, hard coal made up 73.85 percent and lig-     also indicate other specific forms of subsidising
nite 15.15 percent of total primary energy produc-    the hard coal production, which are related to the
tion in the country (in 1992: 80.77 percent and       organisational structure of hard coal branch. Be-
14.53 percent, respectively). Although domestic       cause the mines have been merged into the coal
extraction has declined by 24 percent since 1995      companies consisting of a few up to approx. 15
(see table 1), Poland is still ranked high (7th)      plants, the most effective and profitable mines are
among the world’s hard coal producers.                granting subsidies from their revenue to the weak-
                                                      est ones. However, a calculation of cross-
Table 1. Production of hard coal (in millions         subsidisation within particular coal companies is
tonnes).                                              practically impossible because no official statisti-
                                                      cal data are available on the subject. Furthermore,
   1995        2000         2001          2002
                                                      coal companies have an interest in hiding such
    137        103          104           104
                                                      data because revealing it would lead to increased
                                                      corporate taxes.
A slight decrease in the above-mentioned figures
is also reflected in the total employment in the      The recent favourable situation on the world coal
branch (see table 2), yet coal mining remains one     market has improved the economic situation of
of the biggest burdens on the Polish state budget.    some coal mines, raising questions about the ra-
                                                      tionale for maintenance of state support for profit-
Table 2. Mining of coal and lignite - jobs (in        able companies. The Ministry of Economy and
thousands).                                           Labour is considering a withdrawal of financial
  1995         2000         2001         2002         support for selected mines but faces strong resis-
  294.5        174.3        171.5        166.9        tance. According to the Ministry, profits from the
                                                      market boom should be earmarked to finance nec-
The most popular forms of state aid have been in      essary reforms, and state support could not be
the form of direct grants and debt relief, which      consumed by the increase of wages of miners.
amounted to 15 billion PLN for this sector in         This aim is underlined in a governmental plan of
nominal prices in the 1990s, i.e. 34 billion PLN at   access to the deposits, while the plan contains a
2001 prices (in comparison, total state aid has re-   statement that companies exceeding a threshold of
mained steady at approx. 11 billion annually in       3 percent of wages increase (annually) would lose
recent years). The latest restructuring programme     their right to state support. Nevertheless, certain
sets up subsidies of 9.6 billion PLN, of which 4.8    mines under the pressure of labour unions have
billion PLN constitutes direct grants, to be paid     found ways of fulfilling miners’ financial requests
within the period 2004-2010. Subsidies are usu-       without breaking the above-mentioned obligations
ally earmarked for social purposes (severances for    (e.g. premiums, trade vouchers).
laid-off miners), for write-offs of financial com-    The plan indicates that Polish mines are to “oper-
mitments (e.g. environmental fees), and to coun-      ate in an economically effective manner”, whereas
teract the environmental problems caused by           employment would be adjusted to the extraction
closed mines.                                         capabilities, and those in turn to the market situa-
Nonetheless, reported state aid constitutes just a    tion. Therefore, two scenarios of branch develop-
share of subsidization existing in the sector. Coal   ment are included into the plan: first, where due to
quotas for foreign coal enable domestic mines to      the high demand for domestic coal, the extraction
expand their own extraction, as does the subsidi-     would be limited only in the least effective mines
sation of coal exports. Thanks to these export sub-   (by 7.8 million tonnes with employment for 20
sidies, Polish mines were able to sell the energy     thousand people); and second, presuming an end
carrier on foreign markets at a price below the       to favourable market conditions, the decline of
cost of extraction. According to the evaluation of    production by 14.5 million tonnes and employ-
B.Fiedor and A.Graczyk (see Removing/ Restruc-        ment of 25 thousand miners.
turing Distortional Energy Subsidies in Poland,       The intensity of the current discussion on the ef-
www.env.cz/www/zamest.nsf/0/2c7b3bfbe711ffbfc125      fectiveness of the sector has supported the ques-
68f00026ae88?OpenDocument) the annual value of        tioning of the rationality of earmarking consider-
export subsidies to hard coal was at 350-450 mil-
GREENBUDGETNEWS NO. 10                                                                       PAGE 12 OF 25


able public funds into the mining sector for the          harmful in addition if they benefit producers of
first time for years. However, environmental con-         energy based on fossil fuels (in Poland, more than
siderations are still underestimated.                     97 percent of electricity has been produced from
                                                          thermal plants since the beginning of the 1990s).
Energy
                                                          The long-term contracts served as a security for
One of the main areas of concern in the energy            loans taken by the energy companies. Loans of to-
sector nowadays are long-term contracts. In the           tal 17 billion PLN have been earmarked not only
period of 1994-2001, the Polish Power Grid Com-           for expanding production capacity or social pur-
pany (PSE – a monopolist on the energy distribu-          poses, but for modernisation and restructuring
tion market and a stock company wholly owned              programmes, including environmentally friendly
by the State Treasury) underwrote an agreement            investment projects (pollution abatement, com-
(long-term contracts – KDT) with energy compa-            bustion efficiency, waste management) as well.
nies on energy sales at high, fixed (non-market)          These financial efforts have brought certain posi-
prices. Price regulations, which guarantee that           tive results for the environment, which is reflected
producers receive extra revenue, are a clear exam-        in the table below.
ple of subsidisation, and are environmentally
Table 3. Emissions from power generating plants (in thousand tones).
                1992      1993     1994      1995      1996    1997      1998      1999      2000      2001
SO2
                1310      1290     1270      1223      1195    1107      1034       915      805       769
NO2
                370       380       380       377      360      310       264       247      237       242
particulates
                420       345       260       193      157      117       94        72        64        58

Currently about 40 percent of energy sold on the          secondary significance for the power plants
domestic market remains under KDTs. However,              should be emphasised. Due to excessive capacity
the European Commission has ruled that the con-           of the electricity sector, most investments have
tracts as inconsistent with the EU state aid regula-      been directed for fulfilling even more stringent
tions, recommending their removal. The first pro-         emission standards. There have been subsidies,
posal of state compensation for the energy pro-           however, for energy consumers within the lump
ducers for the renouncement of contracts has been         sum system for gas and heat. The system gener-
also questioned by the EC. Based on EC recom-             ates cross-subsidisation between thrifty consumers
mendations, the Energy Regulatory Authority of            financing households with higher consumption of
Poland proposed payment of compensation in two            gas and heat. The scale of cross-subsidisation has
stages: base payment of 10.6 billion PLN and              been steadily decreasing because of the introduc-
then, depending from the situation on the market,         tion of an individual measuring system.
payments of up to 14.2 billion PLN.
                                                          For more information on ecotax reforms in Po-
Analysing the other supply-oriented energy sub-           land: http://www.ine-isd.org.pl/en/publi.htm
sidy policies (soft loans, state guarantees), their


4. G REEN B UDGET R EFORM                     WORLDWIDE

                                                          the economy is less vulnerable to oil shocks than
                 Oil Fantasies                            before. This is because new industries (software,
[Berivan Pont, Green Budget Germany,                      theme parks) need less energy than the old (steel,
18/11/2004] The recent surge in oil prices (around        chemicals). And last but not least, Americans still
50$ per barrel) has taught us some useful lessons.        can’t get themselves to think realistically about
First, surprises may happen. Less than a year ago,        oil; cheap oil is considered a birthright, and noth-
specialists predicted today’s price at 25$. Second,       ing in America is done to revisit this assumption.
GREENBUDGETNEWS NO. 10                                                                      PAGE 13 OF 25


When oil gets expensive, we tend to blame oils           A recent study from the consulting company PFC
companies or OPEC. But the reality is more               Energy discovered the world already uses 12 bil-
complex. For energy economist Philip Verleger            lion more barrels a year than it finds. This has
Jr., massive miscalculation is the cause of present      been going on for 20 years, but it can’t go on in-
day prices. Oil companies and OPEC have simply           definitely. PFC´s Mike Rodgers says future disco-
underestimated global demand, in particular in re-       very and recovery rates could be better or worse
lation to China. Since 2001, China’s oil demand          than assumed. He reckons global oil supply will
has gone up by 36 percent. Moreover, unexpected          peak around 2020 at about 100 million barrels a
supply interruptions, such as sabotage in Iraq or        day. Others argue oil has already peaked. But
civil war in Nigeria naturally entail higher prices.     whatever prediction turns out to be the right one,
The future of oil prices remains undetermined.           the world will rely more heavily on the Persian
Verleger thinks prices can fly higher still, up to       Gulf and former Soviet Union in the coming
$60 or $80. But analyst Adam Sieminski of Deut-          years.
sche Bank believes prices may go down to $30 by          Even though future is uncertain, America must
2005. But these uncertainties should not prevent         take steps towards reducing its vulnerability to
us from acknowledging two simple facts: first,           global prices surges. One good thing to do is to
world oil production cannot rise forever. Second,        curb gasoline use, which represents about 45 per-
we will rely more and more heavily on oil produc-        cent of America’s oil demand. This could be done
tion in the Middle East and other unstable regions.      by promoting fuel-efficient vehicles, such as the
Although this is the reality we must live with,          “hybrids”, which combine gasoline and electric
neither Bush nor Kerry have taken it into account        power. But these vehicles cost $3000 to $4000
in their energy plans. Kerry plans to make Ameri-        more than conventional cars, says David Greene
ca independent from Middle East oil by develo-           of the Oak Ridge National Laboratory. This cost
ping renewable energy sources, such as solar or          gap could shrink as production expands. Producti-
wind energy. But Kerry forgets America imports           on expansion could be achieved by adopting a ga-
60 percent of its oil, a fifth of which comes from       soline tax of $1 to $2 a gallon. This way, Ameri-
the Persian Gulf. Unfortunately, the global eco-         cans would understand that gasoline prices would
nomy remains largely dependent on Persian Gulf           stay high and they would thus economize. But
oil – and America depends on the global econo-           such a tax is not popular, which explains why
my. It seems Kerry misses the point: solar and           hybrid car are not in Bush´s or Kerry´s plans.
wind produce electricity (and heat in the case of        Both prefer talking about hydrogen-powered cars.
solar). In contrast, cars do not covert oil into e-      But such cars will probably not be marketed for
lectricity. In other words, cars run on oil, not e-      years, given the technical obstacles to their pro-
lectricity. Thus, in lieu of a major shift to electric   duction. As says Robert J. Samuelson from the
cars, solar and wind cannot replace oil as cars are      Washington Post, “This captures our choice: ta-
the most common consumers of oil. And the                king modestly unpleasant preventive steps, or
dream of using solar or wind energy to make              running greater future risks by clinging to our fan-
hydrogen via electrolysis will probably never co-        tasies. History favours our fantasies.”
me true: the conversion losses are so great (75          LINK: http://www.washingtonpost.com/ac2/wp-
percent from "water to wheel") that the installed        dyn/A10004-2004Oct5?
capacity would have to be increased fourfold!
                                                         With its vast reserves of oil, OPEC has a
Bush believes America can disentangle itself from
oil dependency by producing what it needs itself.
                                                                     promising future
But even drilling in the Arctic National Wildlife        [Jad Mouawad, New York Times for Süddeutsche
Refuge would meet a mere 5 percent of America’s          Zeitung, 11/10/04] The signs of OPEC´s supposed
demand. America reached its oil output peak in           decline into irrelevance are everywhere. Its share
1970 and has been in decline ever since.                 of world output, once 50 percent, is down to about
                                                         one third. It was caught unprepared by a huge in-
Neither want to acknowledge the real problem:
                                                         crease in demand this year. Nearly all its members
America´s oil consumption is too high - what
                                                         are ignoring their production quotas and pumping
must change first are mentalities. Then realistic
                                                         all the oil they can. OPEC is lagging behind non-
solutions will come by themselves.
                                                         OPEC oil producers in exploration and oilfield
GREENBUDGETNEWS NO. 10                                                                     PAGE 14 OF 25


development. And it has seemed helpless in con-        Naimi described it recently as an “onslaught”
trolling prices that soared to record highs.           against Aramco and other states´ monopolies. “Oil
But all that may not be important. OPEC still has      companies are in a very difficult position”, said
control of the world energy market, and Ali al-        Ann-Louise Hittle, the head of macro oil research
Naimi, the oil minister of Saudi Arabia and the        at Wood Mackenzie, and Edinburgh-based con-
principal figure in the cartel, intends to keep it.    sultant. “The best they can do is to push into non-
The key is oil reserves. OPEC has plenty, while        OPEC countries and be poised for when OPEC
the rest of the world is quickly pumping itself dry.   invites them in. It’s apparent there’s a logjam to
                                                       access now reserves.” This explains Western
Far from waning, then, OPEC´s hold on the oil
                                                       companies´ push to invest in Russia, despite
market, and thus on the world economy, looks set
                                                       President Vladimir Putin’s moves to return control
to grow sharply in the coming decades. As alter-
                                                       of the energy sector to the government. So the oil
native sources of oil dwindle, so, too, will the
                                                       industry must inevitably turn to OPEC, according
United States´ room to manoeuvre in dealing with
                                                       to Robert Ebel, the head of the energy program at
OPEC, and especially with the five states around
                                                       the Center for Strategic and International Studies.
the Persian Gulf that are richest in reserves: Saudi
                                                       “Access to reserves, that’s the name of the game,
Arabia, Kuwait, the Unites Arab Emirates, Iraq
                                                       “, M. Ebel said. “ You want to go where the re-
and Iran. The United States will find it increas-
                                                       serves are. So you go to Russia, for example, but
ingly more difficult and complex to either engage
                                                       you always come back to the Persian Gulf, be-
or disengage in the Middle East in pursuit of en-
                                                       cause that’s where the reserves are.”
ergy independence or political stability or the war
on terrorism, because oil from the gulf will be-       Certainly, not all OPEC members keep out foreign
come increasingly more indispensable to the            investors; some, like Nigeria and Algeria, actively
American economy, barring a wholesale change           seek them. Even Saudi Arabia has tentatively
in the way the nation uses energy.                     opened one door, granting Royal Dutch/Shell and
                                                       the French company Total permission to prospect
Those five gulf countries possess 61 percent of the
                                                       for natural gas. But so far, Saudi oil is still out of
world’s proven oil reserves, according to the latest
                                                       bounds, and the energy giants say there aren’t
statistics compiled by BP. Add the other six
                                                       many other good places left to look. “The time for
members of OPEC and the cartel controls three-
                                                       large and easy discoveries is clearly behind us, “
quarters of the world’s 1.15 trillion barrels of re-
                                                       said Thierry Desmarest, the chairman and chief
serves. As the rest of the world has increased oil
                                                       executive of Total. “By far the largest share of
production to meet soaring demand this year, it
                                                       undeveloped reserves remain under state control,
has been exhausting reserves much faster than
                                                       and in large part open only to national oil compa-
OPEC has. At present rates of production, the
                                                       nies. The opening of these reserves is urgent.”
crude oil that has already been found outside
OPEC will be consumed by 2030 or so, when the
five gulf countries will still have billions of bar-    Global Warming: Britain and Germany
rels. Multinational companies are already worried.              chart the way forward
“As the absolute amount of energy provided by          [Press Release, British Embassy Berlin, 4/11/04]
OPEC countries has grown, as well as OPEC´s            Britain and Germany are to take forward the fight
share of the total, voices of concern over security    against global warming under a bold new partner-
of supply have increased”, said Lee R. Raymond,        ship backed by leading industrial businessmen and
the chief executive of ExxonMobil. “It will be dif-    scientists.
ficult to calm these concerns.” The oil companies
                                                       The two countries, whose greenhouse gas reduc-
want desperately to regain access to the gulf’s re-
                                                       tions are among the biggest in the world, are well
serves, but they have been locked out for decades.
                                                       placed to spearhead new initiatives in areas such
Many OPEC countries have state oil monopolies,
                                                       as environmentally-friendly energy, climate
most notably Aramco in Saudi Arabia, which the
                                                       friendly financial markets, greener cities and Arc-
country nationalized in 1980, and the five reserve-
                                                       tic science. In an unprecedented show of leader-
rich gulf nations all sharply restrict foreign in-
                                                       ship between the two nations, a range of innova-
vestment and influence over their oil industries.
                                                       tive recommendations are to be presented to Tony
The Persian Gulf nations are under mounting            Blair, the British Prime Minister, aimed at deliver-
pressure to let the Western oil giants back in; Mr.    ing a low carbon, less energy intensive world.
GREENBUDGETNEWS NO. 10                                                                      PAGE 15 OF 25


The importance of the conference, coming just          Tickell, the former British ambassador to the
days after the Russian parliament's decision to rat-   United Nations and a key participant in the con-
ify the Kyoto Protocol, was further underlined by      ference, said: "It is clear that the costs of defeating
being opened in the British Embassy by Her Maj-        climate change are far less than some critics have
esty Queen Elisabeth II during her State Visit to      claimed and that the cost of inaction is likely to be
Germany. Speakers included Margaret Beckett,           far higher. There is no silver bullet for this issue,
the UK Secretary of State for Environment, Food        but the conference has delivered some innovative
and Rural Affairs, Jürgen Tritten, the German          and thought provoking ideas that can inform our
Federal Minister for Environment, Nature Protec-       next, crucial steps forward beyond the Kyoto Pro-
tion and Nuclear Safety and Edelgard Bulmahn,          tocol and into the middle of the new century".
German Federal Minister for Education and Re-          "The importance of leadership, providing the
search. The recommendations will inform both the       framework and stability needed for business and
G8 and European Union presidencies which the           industry to make sound, climate friendly invest-
United Kingdom assumes next year. Mr Blair,            ment decisions was a key outcome of our talks,"
who addressed the conference via a video mes-          he added.
sage, has stated that climate change, along with       Aviation Fuel
Africa, is the UK's top priority. Sir David King,
                                                       Among the key findings and recommendations
UK Chief Scientific Advisor, said: "his historic
                                                       was a call for an end to the "anomaly" surround-
conference has been made possible through the
                                                       ing fuel for ships and planes. The conference ad-
close cooperation between British scientists and
                                                       vised Mr Blair that an emissions trading scheme
German researchers. I must congratulate John
                                                       or a carbon tax for aircraft and ships might bring
Schellnhuber, Research Director at the Tyndall
                                                       these two transport sectors in line with road, rail
Centre and Director of the Potsdam Institute for
                                                       and other forms of transport.
Climate Impact Research, on his vital role in set-
ting up this conference". He added: "2004 has          Window of Opportunity
been an extraordinary year. We have had some of        Some 16 trillion US dollars worth of investment
the worst weather-related natural disasters on re-     in new power plants and energy systems are likely
cord, and we have also had the positive outcome        to be made in the coming years. It is vital that this
of the Kyoto Protocol with the Russians ratifying.     substantial sum is directed to more energy effi-
This conference takes these issues forward and         cient forms of generation including cleaner coal,
forges a new agenda for climate action that will       combined heat and power plants and renewables
help lead us to a more stable and secure future in     such as wind, wave and solar power. The dele-
both the developed and developing world". Klaus        gates agreed that Britain and Germany should
Toepfer, the Executive Director of the United Na-      work to exploit this current 'window of opportu-
tions Environment Programme (UNEP) and chair           nity" to lead a cost effective fight against climate
of the conference Climate Change: Meeting the          change. Germany and Britain, with a strong tradi-
Challenge Together, said today: "We have had an        tion in research, development and deployment of
astounding meeting of minds between some of the        new energy technologies, are well placed
leading scientific, financial and industrial experts   Climate-Friendly Finance
of both countries. Support has come from the           The conference recognized that the investment
highest level with the Queen opening the confer-       decisions of the finance sector could play a vital
ence and Mr Blair requesting concrete outcomes         role in putting the planet on a more climate
upon which the UK government can act". "There          friendly path but that "city institutions were not
is now no question that human-made climate             yet fully on board". Germany and Britain, both
change is a reality and that leadership is urgently    with key financial centres such as the City of
needed to take the fight against its devastating im-   London and Frankfurt, could play a pivotal role in
pacts forward. This leadership is now here under       bringing European and global pension funds, ac-
the two industrialised countries whose emission        tuaries and insurers on board. The two countries,
reductions are so far amongst the highest and          whose greenhouse gas reductions are scheduled to
deepest in the world. I sincerely believe this An-     be below those agreed under the Kyoto Protocol,
glo-German partnership is the trigger needed to        are well placed to champion new and deeper cuts
put Europe and the world onto a more stable, less      in industrialised nations' emissions.
carbon dependent, path," he said. Sir Crispin
GREENBUDGETNEWS NO. 10                                                                    PAGE 16 OF 25


Targets and Green Cities                               duce green house gas emissions will legally bind
The UK's proposal of a 60 percent reduction by         all industrial countries who have ratified the pro-
2050 and Germany's of a 40 percent reduction in        tocol to do the same. Here is something new for
emissions by 2020, are in line with scientific con-    the international climate debate, after years of
sensus on what is needed, delegates are advising       stagnation.
Mr Blair.                                              The adoption of the Kyoto protocol will have
London and Berlin will also share experiences and      positive effects not only on the environment but
plans to fight global warming which may become         also on the economy. Increases in temperature and
blue prints for cities and local authorities else-     green house gas emissions have caused economi-
where. The German capital has reduced its green-       cal damage - global damage due to extreme
house gas emissions by 15 percent since 1990 and       weather conditions cost 55 billion US dollars in
plans to cut back by a further 40 percent. London,     2002 alone. A few days before the Duma ratifica-
which has a new Climate Change Agency, plans           tion, the German Institute for Economic Research
to reduce by 20 percent its emissions by 2010.         in Berlin (DIW) showed in its weekly report 42/04
Under the agreement, the two capitals will share       that a 1°C increase in global temperature could
expertise and hold high level meetings on issues       cause yearly damage to amount to 2000 billion US
ranging from transport to energy efficient build-      dollars in 2050, 137 billion of which in Germany
ings in order to both meet their respective targets.   alone. In a 50-year period, economical damage
                                                       could amount to 214 trillion US dollars.
Scientific Research
                                                       No region will be spared the economical cost of
Delegates also recommended strengthening and
                                                       climate change; the frequency and violence of
broadening the two countries' world-beating sci-
                                                       natural catastrophes will increase in every part of
entific ties in areas such as climate change impact
                                                       the world. Besides the direct economic effects on
in the Arctic. Under a new agreement German and
                                                       the energy, agriculture and industry sectors, the
British scientists are likely to share research ves-
                                                       underlying simulation model takes into account
sels and high-latitude, long range, aircraft. Scien-
                                                       climate change effects on nature (for example for-
tific studies into how to manage densely popu-
                                                       est fires increases) and health aspects (sicknesses,
lated areas in a warming world, with London and
                                                       death rates, etc).
Berlin as the first subjects, are also being consid-
ered.                                                  Climate policy measures, such as emissions trad-
                                                       ing schemes, can decisively lower costs by de-
Awareness Campaigns
                                                       creasing green house gas emissions. For an online
Europe-wide awareness campaigns are also part of       version of the DIW report “die ökonomischen
the recommendations. Delegates called for witty        Kosten des Klimawandels” by Claudia Kemfert,
and thought provoking advertisements similar to        visit
those already launched in parts of Scandinavia to      http://www.diw.de/deutsch/produkte/publikationen/wo
raise public interest and action in combating          chenberichte/docs/04-42-1.html.
global warming.
Further information about the conference is avail-        Russia considers setting up EU-style
able             on           our           website:
www.britischebotschaft.de/statevisit
                                                              Emissions Trading Scheme
                                                       [Lisbeth Kirk, EU Observer, 04/11/04] Less than
                                                       two months before the official kick-off of the EU
 German Economics Research Institute                   emissions trading scheme, the market is already
 reports on the cost of climate change.                heating up. Financial Times Deutschland reports
[Translated by Berivan Pont, Green Budget Ger-         that trading in emissions quotas has gone up five
many, KlimaKompakt Spezial Nr. 27, 27/10/04]           fold in recent weeks - from 150,000 tonnes traded
Russia’s Federal Council approved the Kyoto Pro-       per week in August to the current 750,000 tonnes
tocol on 27 October 2004 after the positive vote in    a week.
the Duma on 22 October 2004. The protocol will         The EU scheme will be the first multi-national
take effect 90 days after the transmission to the      emissions trading scheme in the world and will
UNO of the ratification document, which Russian        cover all 25 member states. The new rules aim at
President Putin still has to sign. His pledge to re-   creating an EU market in greenhouse gas emis-
GREENBUDGETNEWS NO. 10                                                                     PAGE 17 OF 25


sions to protect the environment. Companies that        greenhouse gases will be required in the years
exceed their CO2 quotas may buy emissions per-          ahead.
mits from companies not meeting their targets, or       President Bush has refused to ratify the treaty
pay a fine for each tonne they emit above their         claiming it would harm the US economy. The US
targets. Russia to set up domestic scheme The           is the world's biggest polluter – despite having
idea is spreading rapidly throughout the world,         around only four percent of the global population,
with Russia now considering setting up a domes-         it is responsible for around 25 percent of the
tic emissions trading scheme that could link to the     world's carbon dioxide emissions.
EU scheme, and a potential scheme in Canada,
                                                        Working with corporate contributors to his cam-
from 2008. "Russia cannot integrate as a full
                                                        paign, President Bush is expected to try once
member of the EU system because it is not a
                                                        again to pass at home an energy bill that favours
member of the EU, but our system could be de-
                                                        coal, oil and nuclear power over cleaner sources
veloped so it is complementary", said Vsevolod
                                                        such as solar and wind power. The bill might al-
Gavrilov, the Economic Development and Trade
                                                        low for drilling in the Arctic National Wildlife
Ministry official charged with drawing up Russia's
                                                        Refuge.
mechanisms for implementing Kyoto, according
to Reuters. Russia should be able to earn billions      Friends of the Earth International's vice-chair,
of dollars from trading its spare quotas, he said. In   Tony Juniper, said:
Canada and Switzerland, concrete plans for emis-        "Despite the best efforts of the USA and some of
sions trading systems are being worked on, while        its major corporations, the Kyoto Protocol lives.
in Japan the process has not come as far, accord-       This is an historic moment for life on Earth and
ing to Point Carbon, a company analysing the            must pave the way for new agreements to reduce
greenhouse gas market. Japanese companies               climate changing emissions. But intense interna-
strongly oppose the idea of an emissions trading        tional pressure must also be placed on President
scheme, as it would mean mandatory caps on their        Bush and the United States to finally acknowledge
greenhouse gas emissions. 12,000 businesses in-         the scale of the threat we now face and to take ac-
cluded in the European system for emissions trad-       tion to deal with it."
ing will be launched in 2005, covering two peri-        "The USA is the world's biggest polluter and has a
ods (2005-2008 and 2008-2012). It will include          moral responsibility to reduce the pollution that is
some 12,000 European businesses in the energy           rapidly warming up the world. If it does not, its
sector (combustion, refineries, coke furnaces) and      own economy and society will pay a heavy price,"
industry (ferrous metals, paper and minerals),          he added.
which account for more than 46 percent of all
European carbon dioxide emissions.
                                                          Australian Government unswayed by
                                                                  Russia´s Kyoto lead
 Russia ratifies climate change treaty; it
                                                        [Berivan Pont,Green Budget Germany, 19/11/04]
will enter into force on 16 February 2005               The Russian vote to sign the Kyoto protocol on 22
[Friends of the Earth, press release, 05/11/04] US      October 2004 did not make the Australian gov-
President George Bush became further isolated on        ernment change its position, as it does not see why
the issue of global climate change today following      it should ratify the protocol, since (the govern-
Russian ratification of the climate change treaty       ment claims) it already does a lot to reduce GHG
known as the 'Kyoto protocol'. Under the treaty         emissions. Moreover, Environment Minister Ian
industrialised nations responsible for 55 percent of    Campbell says the protocol does not do enough to
greenhouse gas emissions must ratify the protocol       reduce emissions: even with Russia ratifying, it
before it can come into effect. Now that Russia         will only achieve a 1 percent reduction, and Aus-
has ratified the treaty this key threshold has been     tralia will not accept the protocol until it reduces
reached.                                                emissions by 60 percent. Instead, Australia seeks
The treaty should now become legally binding            to engage the major emitters in a comprehensive
within 90 days of Russia notifying the United Na-       agreement. Campbell says Australia should be
tions.                                                  proud of what it has already achieved in reducing
The Kyoto protocol is only the first step towards       greenhouse gases.
tackling climate change. Much bigger cuts in
GREENBUDGETNEWS NO. 10                                                                     PAGE 18 OF 25


Environmental group Greenpeace believes that           percent for the United States, according to UN es-
Australia is in fact lagging behind other countries    timates. China, along with India and other devel-
in reducing emissions, and criticizes it for lacking   oping countries, argue that the developed coun-
leadership on policy approaches to greenhouse gas      tries should take the lead as they generate more
reduction.                                             greenhouse gas per capita. With a population of
The United States also has no intention of signing     1.3 billion people, China's per capita emission rate
the protocol even though the European Union            is much lower than that of the United States,
called on them to follow Russia’s lead. The Proto-     Europe or other developed countries, but it is ex-
col was negotiated under Clinton’s administration,     pected to catch up as its GDP per capita increases.
but President Bush turned away from it in 2001         China is experiencing nearly double-digit annual
because of the supposed cost to the US industry.       economic growth. Its goal is to quadruple its gross
                                                       domestic product (GDP) by 2020. As the country
Ratification met with considerable criticism
                                                       industrializes, its energy consumption - and pollu-
within Russia. Opponents fear the protocol might
                                                       tion levels - are expected to soar. The developing
damage Russia’s tottering economy still further.
                                                       nations have so far resisted calls for restrictions on
But Putin seems to have won support by negotiat-
                                                       their emissions on the grounds that they would
ing with the European Union Russia’s entry into
                                                       hamper growth.
the World Trade Organisation. For Yuri Safonov,
environmental economist at Moscow's Higher             As Gao Guangsheng, deputy director-general of
School of Economics, Putin has used the Protocol       the National Development and Reform Commis-
as a bargaining chip to win international support      sion, put it: "China doesn't want its emission vol-
for his country's economy.                             ume to be higher than the United States, but you
                                                       have to look at our population size. You must look
Links:
                                                       at how much per person. The priority is to satisfy
http://www.abc.net.au/news/newsitems/200410/s1
                                                       our basic demand. The economy must develop.
226418.htm
                                                       China has 1.3 billion people and we have to live.
http://www.abc.net.au/news/newsitems/200410/s1
                                                       "The scope for reducing China’s carbon intensity
226304.htm
                                                       is huge. China still relies on coal for about 75 per-
                                                       cent of its energy and renewable sources account
China faces pressure ahead of post 2012                for less then one percent. Greenpeace believes
                 talks                                 China can make better use of renewable energy
[Point Carbon, 12/11/04] China's share of green-       sources such as small hydroelectric plants; bio-
house gas emissions is expected to exceed the          mass and wind power. But instead of moving to-
world's biggest polluter, the United States, by        wards those energy sources, China is building
around 2020 and pressure is mounting for Beijing       hundreds more polluting coal-fired power plants
to do more to limit global warming. Next year, the     and has plans to build nuclear power plants, ac-
international community is expected to launch          cording to Lo Sze Ping, campaign director for
talks on a regime to combat climate change for the     Greenpeace in China.
period starting in 2013, when Kyoto expires. Until     "Many people want to invest in wind farms, but
now only OECD countries and those with econo-          they can't get loans," Lo said, blaming the prob-
mies in transition from Communism face caps on         lem on "bureaucratic inertia. Government officials
their greenhouse gas emissions up to 2012. Pres-       are not confident in new technology, unwilling to
sure is building for the developing world to com-      change policies."To reduce greenhouse gas emis-
mit to capping their emissions as their contribu-      sions, China must also increase energy efficiency,
tion to global climate change grows.                   said Dan Millison, an environment and energy
"China is the second biggest energy consumer in        specialist at the Asian Development Bank's Ma-
the world, accounting for 10 percent of global         nila office. "China uses at least three times as
consumption ... China's active participation in        much energy per unit of GDP than OECD (the
combating climate change is of crucial impor-          Organisation for Economic Cooperation and
tance," said Khalid Malik, the United Nations          Development) countries," Millison said. "As of
resident coordinator in Beijing, Channel News          2000-2001, China's economy was eight times
Asia reported. China's emissions now account for       more energy intensive than Japan and three times
13 percent of the global total, compared with 26       more energy intensive than the US; also three to
GREENBUDGETNEWS NO. 10                                                                      PAGE 19 OF 25


four times more than Malaysia, Indonesia, Thai-          supporting the new tax bill. Business circles and
land, and South Korea."                                  the Ministry of Economy, Trade and Industry op-
                                                         pose the bill. However, there is an important sen-
 Japan: Environment tax may be headed                    tence concerning what the revenue from the envi-
                                                         ronmental tax will be used for in an internal
         toward pension fund                             document of the MOE. It says, "A part of the
[Japan Today, 22/,11/04] The government's new            revenue from the environmental tax will be used
tax for environmental protection, the so-called          to create more employment opportunities, main-
"environmental tax," will be put into effect as of       taining and enhancing strength of business corpo-
January, 2006. The government is claiming offici-        rations such as reduction of premium payment of
ally that the new tax is to provide funding for          business corporations. This implies a relation be-
measures aimed at preventing global warming.             tween the environmental tax and the National
However, a confidential document of the Ministry         Pension. The internal MOE documents detail the
of Environment (MOE) indicates that the new tax          system of the new environmental tax. According
revenue will be used to make up the shortfall in         to the documents, the environmental tax is to be
the National Pension fund. Without knowing this,         imposed on all chemical fuels such as oil, coal and
the major Japanese news outlets are reporting in         natural gas. Oil refinery companies pay tax on
favor of the new tax. The Ministry of Environ-           gasoline, light oil and propane gas, which will
ment (MOE) announced a new tax bill for envi-            force them to raise prices of those products. Con-
ronmental protection on 5 November 2005.                 sumers also have to pay an environmental tax
                                                         added to their utility bills.
The MOE claimed that global warming was caus-
ing more abnormal weather, which would bring             Families will have to pay 3,000 yen a year
about more damage to the people of the world.            In total, one family will have to pay a 3,000 yen
The advanced countries singed the Kyoto Protocol         environmental tax a year, which will create 490
which limited the emission of green house gases          billion yen in tax revenue for the government. The
(GHG) which included carbon dioxide. In line             MOE documents say that 340 billion yen of that
with the Kyoto Protocol, the Japanese government         will be used for implementing policies for reduc-
promised to decrease the GHG by 6% in 2008 to            ing the GHG and 150 billion yen will be allocated
2012 than the level of 1990. In reality, this means      for maintaining and enhancing the strength of
a 13% reduction since the level of 1990 increased        business corporations, which means to reduce the
significantly today. The MOE will increase the tax       burden of business corporations to pay premium
on oil products such as gasoline and home oil in         for social insurance. One source on the LDP Envi-
order to decrease the GHG. From January 2006,            ronmental Committee told Shukan Post: "Business
the Japanese people will have to pay a higher tax        circles will never accept the plan for introducing
on gasoline, light oil, home oil, electricity and gas.   an environmental tax. The statement for reducing
The major newspapers are supporting the new tax.         their premium payment for social insurance is a
The Asahi said in its editorial, "The Kyoto Proto-       tactic to get businesses to accept the new tax. In
col will be put into effect soon, which will accele-     reality, however, the government gives tax relief
rate the debate on the issue of environmental ta-        to business corporations and the 150 billion yen is
xes. Many European countries already have envi-          used for helping the nation's ailing social security
ronmental taxes but the Japanese government has          system. The government promised to increase the
been delaying the debate. The government has to          government's share of payments for the National
consider more seriously the introduction of an en-       Pension, however, due to a shortage of resources,
vironmental tax." The Mainichi stated in its edito-      the government's plan now looks impossible. To
rial, "The government has to limit GHG emis-             solve the problem, the government is discussing
sions. To accomplish this, the introduction of an        an increase in the income tax as well as the con-
environmental tax is extremely important. Many           sumption tax. Now, the environmental tax is be-
Japanese corporations are opposing the introduc-         coming a part of them to cover the shortage in the
tion of the environmental tax but they should be         National Pension fund. Yoshio Tamura, director
positive about it." The ruling Liberal Democratic        of Environmental Bureau of the MOE, is leading
Party (LDP), the New Komeito and even the op-            the movement for an environmental tax. Tamura
position Democratic Party of Japan (DPJ) are             is from the Ministry of Finance (MOF). On 12
GREENBUDGETNEWS NO. 10                                                                     PAGE 20 OF 25


November 2004, a meeting of the Tax System Re-          The sociologists Fritz Reusswig and Julia
search Committee was held attended by the MOF           Schwarzkopf from the Potsdam Institute for Cli-
Tax Bureau Director and other tax executives. At        mate Impact Research (PIK) and Philipp Pohlenz
a news conference, Hiromitsu Ishi, the Tax Sys-         from Potsdam University carried out the socio-
tem Research Committee chairman, dwelt upon             logical impact study on the film; the study was
the idea of using a part of the environmental tax       supported by the European Climate Forum (ECF)
revenue for ailing social security. For soliciting an   and the German Federal Ministry for the Envi-
agreement, the MOE invited the chairman of the          ronment, Nature Conservation and Nuclear Safety
LDP Environmental Issue Research Committee              (BMU).
and eight committee members and one New Ko-             The results show that, thanks to the accompanying
meito member to Norway, the Netherlands and             publicity, interviews and media reports, the film
Germany for five days from 13 September 2004.           triggered a small boom on the climate issue and
Using the German system as model                        reached people who otherwise were not or not
                                                        very interested in the subject. The film also man-
Such lobbying is unusual. Those three European          aged to impart a greater awareness of the com-
countries already introduced an environmental tax       plexity and vulnerability of the global climate to
system in the 1990s and the Japanese government         cinema-goers. The role played by the oceans, for
is going to use the German system as its model          instance, was not known to most of those inter-
since the German government is using a portion of       viewed before the film. The special effects ac-
the environmental tax revenue to pay for social         companying the descent into a climate catastrophe
security. However, businesses have not changed          by no means led to feelings of fatalism or escap-
their opposition to the environmental tax. Tetsuji      ism, as might have been expected. On the con-
Kitta, director of Environmental Technology of          trary, less than ten percent of interviewees went
the Japan Federation of Economic Organizations          home with the message "There's nothing we can
said, "The level of energy effectiveness of Japane-     do anyway", while 82 percent after watching the
se corporations is one of the highest in the world.     film preferred the slogan "We have to stop climate
If an environmental tax is introduced, Japanese         change". Most people also thought that it is still
corporations will be encouraged to move their i-        possible and economically feasible to pursue a
neffective production plants overseas, which will       policy of climate protection. German climate pol-
make the global warming problem worse. Also,            icy, which was not especially popular before the
the government has not explained the 150 billion        film particularly because of the "eco-tax", was af-
yen use for social security. We have no idea how        terwards significantly more accepted - not surpris-
the money will be used for business corporations."      ing, in view of the film's critical attitude towards
                                                        the climate policy of the US government. Inter-
                                                        viewees thought Germany should increase its ef-
Climate change à la Hollywood: Study on                 forts, both at home and on the international level.
         the impact of the film
                                                        Together with PIK, four other research teams
      "The Day After Tomorrow"                          from the US, the United Kingdom and Japan were
[The Potsdam Institute for Climate Impact Re-           involved in assessing the impact of the film on the
search (PIK), 29/10/04] At the end of May 2004          public. These teams met on the 21st and 22nd of
the climate thriller "The Day after Tomorrow" by        October at PIK to exchange results. It became
the Hollywood star director Roland Emmerich ap-         clear that the different cultural and political back-
peared in the cinemas in around 80 countries.           grounds in these countries caused one and the
Would this film re-kindle the climate debate and        same film to have a very different impact on cin-
promote protection of the climate? Or would it          ema-goers. In the US, for instance, where climate
damage the climate issue with its depiction of a        and climate protection play a much smaller role in
new, man-made ice age in the northern hemi-             the public arena than in Europe, the film clearly
sphere being based more upon fiction than sci-          contributed to sensitizing the public to the issue
ence? Scientists from the Potsdam Institute for         and to the need for a policy on climate. Also,
Climate Impact Research investigated the impact         those who saw the film were much more inclined
of the film. The latest PIK Report publishes the        to vote for John Kerry than for George W. Bush.
results of this study.                                  The results of the study are published as PIK Re-
GREENBUDGETNEWS NO. 10                                                                      PAGE 21 OF 25


port number 92. The study can be accessed on the        internet:
http://www.pik-potsdam.de/publications/pik_reports/reports/pr.92/pr92.pdf



5. E VENTS

   3.4.12.2004 Berlin Conference on                      17.04.2005: Green Budget Germany An-
"Greening of Policies - Interlinkages and                         nual General Meeting
          Policy Integration"                            Green Budget Germany’s Annual General Meet-
The preliminary conference programme can be              ing has been scheduled for 17 April 2005, imme-
downloaded at: www.environmental-policy.de               diately following our conference on 15–16 April.
                                                         It will take place in the Schweisfurth Stiftung in
 31.01 – 02.01. 2005, “Ecological Fiscal                 Munich.
       Reform and Conservation”                          More details will be published in the next issue of
                                                         GBN.
This three-day conference, organised in coopera-
tion with the Academy of Conservation on Vilm
Island, examines possibilities for synergy effects
                                                         14-17.06.2005, Lisbon, ESEE 2005 - the
between EFR and conservation policy and to ana-            6th International Conference of the
lyse ecological fiscal policies and conservation          European Society for Ecological Eco-
abroad, in order to establish what lessons Ger-                          nomics
many can learn from other countries. To register         ESEE 2005 will provide a forum for scientific de-
for the conference contact Ms. Martina Finger:           bate and discussion on theoretical and practical is-
Martina.Finger@bfn-vilm.de                               sues in the field of ecological economics, focusing
                                                         on the links between science, society and policy.
  15-16.04. 2005: “Ecotaxes: Where                       The general theme of ESEE 2005 will be Science
                 next?”                                  and Governance - The Ecological Economics Per-
GBG Conference in cooperation with the                   spective. The forum is open to all those interested
                                                         in sustainability issues, independently of their af-
      Political Academy Tutzing                          filiation with the ecological economics scientific
The conference, “Ecotaxes: Where Next? Eco-              community.
logical Finance Reform and Emissions Trading”            Additional information is available from the Con-
will take place on 15 and 16 April at the Political      ference website: http://www.esee2005.org
Academy Tutzing, near Munich. It aims to ana-
lyse the current status of ecological taxes and
emissions trading, focusing on Germany, Austria,          September 2005, “Sixth Annual Global
Italy and Switzerland, and to examine future pros-       Conference on Environmental Taxation”
pects for ecological steering policies in the con-       The sixth annual global conference on Environ-
text of the European Union and the German eco-           mental Taxation will take place in Leuven, Bel-
logical tax reform.                                      gium in 2005. More information will be published
More information on the conference will be avail-        nearer the time in Green Budget News.
able in the next edition of GBN.



6. L INKS      AND    P UBLICATIONS
      GREENBUDGETNEWS NO. 10 – 11/2004

Spanish Conference on emission trading                 However, Kyoto is only the first step towards ef-
 rights and other flexible mechanisms                  fective international climate protection. The fur-
This Conference was held in Barcelona on the           ther development of the climate regime is now of
13/10/04. Many interesting presentations, includ-      utmost priority. The Wuppertal Institute has dealt
ing one from GBN Board Member Anselm Gör-              with this issue in the project "South-North Dia-
res, can be found in English on the following link:    logue - Equity in the Greenhouse". Together with
                                                       twelve researchers from all world regions a pro-
www.http://mediambient.gencat.net/cat/el_medi/C
                                                       posal on the design of a future international
_climatic/ponencies.jsp?ComponentID=45811&S
                                                       agreement was elaborated. Further information is
ourcePageID=30697#1
                                                       available at
                                                       http://www.wupperinst.org/Sites/Projects/rg2/108
Recently released UNEP publications on                 5.html
           fisheries subsidies
"Analyzing Resource Impact of Fisheries Subsi-                      Reducing emissions
dies: A Matrix Approach" and "Incorporating Re-
                                                       The Climate Group has put together a series of
source Impact into Fisheries Subsidies Disci-
                                                       case studies highlighting the range of positive ac-
plines: Issues and Options". The aim of these pub-
                                                       tions being taken to reduce emissions. These in-
lications is to improve the understanding of the re-
                                                       clude innovative policies, technologies and finan-
source impact of different types of fisheries subsi-
                                                       cial mechanisms being undertaken by leading
dies, and to provide an analytical basis for the re-
                                                       governmental and corporate actors to minimize
form of environmentally harmful subsidies. A
                                                       their carbon footprints. The case studies may be
brief description can be found at:
                                                       found on the following link:
http://www.unep.ch/etu/publications/FisheriesSub
                                                       http://www.theclimategroup.org/index.php?pid=3
Leaflet.pdf
                                                       73
The two publications are also available on the
UNEP website:
                                                        Proceedings of the 2002 Berlin Confer-
http://www.unep.ch/etu/etp/index.htm
                                                          ence on the Human Dimensions of
                                                            Global Environmental Change
  Russian State Duma says “yes” to the
                                                       The Proceedings of the 2002 Berlin Conference
                 Kyoto                                 on the Human Dimensions of Global Environ-
The Wuppertal Institute welcomes the adoption of       mental Change "Knowledge for the Sustainability
the ratification law for the Kyoto Protocol by the     Transition. The Challenge for Social Science" are
Russian Parliament. With this decision of the          now available online. The Proceedings comprise a
Duma the main obstacle for the entry into force of     peer-reviewed selection of the 30 best papers pre-
the protocol has been overcome. Together with          sented at the 2002 Berlin Conference, which was
the Framework Convention on Climate Change             held 6-7 December 2002 and attended by 220 par-
the Kyoto Protocol now builds a functioning in-        ticipants from 29 countries. The conference was
ternational regime for global climate protection.      endorsed by two IHDP core projects, Institutional
Kyoto parties should now intensify their imple-        Dimensions of Global Environmental Change
mentation efforts to comply with the international     (IDGEC) and Industrial Transformation (IT). The
climate commitments. The Wuppertal Institute           complete table of contents and all individual con-
contributes to these efforts by developing con-        tributions are now available at
cepts for innovative climate protection policy -
                                                       http://www.glogov.org/front_content.php?idcat=9
like an energy efficiency funds - and supports the
                                                       2
German government in the implementation of the
instruments introduced by the Kyoto-Protocol.
http://www.wupperinst.org/Sites/Projects/rg2/107
8.html
GREENBUDGETNEWS NO. 10                                                                     PAGE 23 OF 25



New energy link on the Earth Track web-                  pioneering and thought-provoking articles con-
                  site                                   tributed by the world’s leading environmental tax
                                                         scholars representing various jurisdictions world-
As part of Earth Track's continued commitment to         wide. Its insight and analysis will benefit those
improved access to information on energy subsi-          looking to achieve environmental goals through
dies, a detailed energy subsidy links page has           tax policy. Full detail can be found online at:
been created on the website:                             http://www.richmondlawtax.com/environmentalta
http://www.earthtrack.net/.                              x.html

New content and searchable database on
           Fiscallygreen.ca                              Energy Taxes in the Nordic Countries -
                                                         Does the polluter pay?
The one-stop shop for information on "fiscal poli-
cies for environmental objectives" in Canada and         National Statistical Offices in Norway, Sweden,
internationally, http://www.fiscallygreen.ca/. This      Finland & Denmark. Final report March 2003
website now includes a searchable database of            The Nordic countries have some of the highest
ecologically oriented policies around the world.         rates of environmental taxes as a percentage of the
Users can search the database for particular types       total taxes and as a percentage of GDP2. Earlier
of policies, policies in a particular region, or poli-   there has been a focus on energy taxes as a whole,
cies geared towards a specific environmental is-         the relationship between total energy taxes and
sue.                                                     GDP and energy taxes and total taxes. This pro-
                                                         ject, on the other hand, focuses on energy taxes
Newsletter "JIKO Info" now available in                  broken down by industries in the Nordic countries
               English                                   and addresses in particular the connection be-
                                                         tween who uses the energy and who pays the
JIKO Info, a newsletter on the Kyoto mechanisms          taxes. Industry-specific taxes combined with in-
CDM & JI, is now available in an English version.        formation on energy use, air emissions and value
JIKO Info informs about current development of           added give unique possibilities to analyse whether
the policy field "project-based mechanisms in            there is a match between who pollutes and who
Germany and Europe". The newsletter is pub-              pays the energy taxes. Or in other words: Does the
lished by the Wuppertal Institute for Climate, En-       polluter pay?
vironment, Energy as part of the project "JIKO -         LINK:
development phase 2002-2004".                            http://www.scb.se/statistik/MI/MI1202/2004A01/
                                                         MI1202_2004A01_BR_MIFT0404.pdf
If you want to subscribe to JIKO Info in English,
please go to
                                                         2 job openings at the Environmental and
http://www.wupperinst.org/sites/projects/rg2/jiko-                Energy Study Institute
info                                                     Full time Policy Assistant/Analyst. More informa-
                                                         tion on:
  Critical Issues in Environmental Taxa-                 http://www.eesi.org/employment/Admin%20Asst
tion: International and Comparative Per-                 %2010.04%20posting.htm
             spectives, Volume 1                         Full-time Program Administrative Assistant. More
Richmond Law &Tax recently published the pro-            information on:
ceedings of the Third Annual Global Conference           http://www.eesi.org/employment/Policy%20Asso
on Environmental Taxation. The book contains             ciate%2010.04%20posting.htm
GREENBUDGETNEWS NO. 10                                                                                    PAGE 24 OF 25



7. R EADERS ’ G UIDE                  AND I MPRINT


                                                   Readers’ Guide:
Reading our Newsletter is not difficult. Just follow the instructions below:
   • First, you should make certain that you always have sufficient free memory in your E-Mail Account. If
      you don’t have enough free memory in your E-Mail Account, you won’t receive the mailing. Our
      Newsletters will have up to 425 Kilobytes per copy.
   • Do not try to print the HTML-Version in your Mail-Account, because it won’t work! For a printable
      version click on the link at the top http://www.eco-tax.info/downloads/GBN10.pdf
      Then you can download a printable PDF-Version of the Newsletter.
   • You can read all our newsletters in our archive on this page: http://www.eco-tax.info/2newsmit/index.html
      In the Newsletter Archive you can access individual topics by clicking on them in the directory. You
      don't to view the whole document.
Enjoy reading your copy of the GreenBudgetNews

                                 Green Budget Germany’s Team of Editors

You can contact the Green Budget News editors at the following addresses:


Förderverein Ökologische Steuerreform                                     European Environmental Bureau
Green Budget Germany                                                      Boulevard de Waterloo 34,
Landsbergerstr. 191 – D – 80687 München                                   B-1000 Brussels
Tel.: +49 89 520 113- 13 Fax: - 14                                        Tel: +32 2 2891090
foes@foes.de                                                              Fax: +32 2 2891099
www.foes.de                                                               secretariat@eeb.org
www.eco-tax.info                                                          www.eeb.org



                                     Levego Munkacsoport
                                     Clean Air Action Group
                                     H-1465 Budapest, Pf. 1676, Hungary
                                     Phone: +36-1 4110509/-10
                                     Fax: +36-1 2660150
                                     levego@levego.hu
                                     www.levego.hu



ÖGUT – Österreichische Gesellschaft                                       The Ecological Council
für Umwelt und Technik                                                    Blegdamsvej 4B
Austrian Society for Environment and Technology                           DK - 2200 Copenhagen N
Hollandstraße 10/46                                                       Phone: +45 33 15 09 77
A – 1020 Vienna                                                           Fax:   +45 33 15 09 71
Tel.: +43 1 315 63 93 – 13     Fax: - 22                                  info@ecocouncil.dk
office@oegut.at                                                           www.ecocouncil.dk
www.oegut.at
GREENBUDGETNEWS NO. 10                                                   PAGE 25 OF 25


Final corrections were made by:
Craig Morris, Translation Director at Petite Planète
Energy, Technology, Policy, Finances - Translations for a Small Planet
lingua@petiteplanete.org, http://www.petiteplanete.org
Tel. & Fax: +49-761-881-4801
Rehlingstrasse 6c, 79100 Freiburg, Germany

				
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