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									        GREENBUDGETNEWS NO. 24 – 10/2009

                                     EUROPEAN NEWSLETTER ON
                                   ENVIRONMENTAL FISCAL REFORM
Founders:




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

                                      Chief editor: Dr. Anselm Görres
     Editors: Kai Schlegelmilch, Sebastian Schmidt, Damian Ludewig, Jacqueline Cottrell, Lindsay Condit

          Contents

          1.        EDITORIAL ............................................................................................................... 3
          2.        GREEN BUDGET REFORM IN EUROPEAN MEMBER STATES ................................. 4
          French Government Unveils Details of Carbon Tax ........................................................................ 4
          A Budget Designed to Accelerate Environmental Transformation .................................................. 5
          Questions/Answers Regarding the Climate Engergy Contributions in France.................................. 5
          Paris and Berlin to propose EU border tax on CO2 ......................................................................... 7
          Individual Carbon Taxes Take Center Stage.................................................................................... 8
          France: Carbon Tax as an Alternative for Curbing Emissions .......................................................... 8
          Irish carbon tax proposed - Eco-taxes in double benefit; Raising revenue while appearing to save
          the planet ......................................................................................................................................... 10
          GBE calls for nuclear Energy Tax .................................................................................................. 11
          Car-tax in Germany: Two Euros per Gramme of CO2 .................................................................. 12
          Germany: Average Price Falls due to scrapping scheme ............................................................... 12
          Germany: Five Cent Toll Charge per Kilometre ............................................................................ 12
          Britain Extends Temporary Car Scrappage Scheme ....................................................................... 12
          New Vehicle Taxation Measures in Portugal.................................................................................. 13
          Miliband's Manifesto to Make Britain a Low-Carbon Economy ................................................... 13
          3.        GREEN BUDGET REFORM ON EU-LEVEL ............................................................ 15
          EU-De-Briefing ECOFIN 21st October 2009 ................................................................................ 15
          Ministers cautious on EU-wide CO2 tax proposal ......................................................................... 16
          Fiat Made Cleanest Cars Sold in Europe......................................................................................... 17
          Environmentally harmful subsidies in fishery................................................................................ 18
          Environment to Round off GDP as Measure of Europe’s Success ................................................. 19
          Environmental Quality as a Component of GDP ........................................................................... 20
          Europe Produces Realistic Expectations for Climate Funds .......................................................... 21
          Carbon Leakage and the EU............................................................................................................ 22
          Effectiveness of EU Cohesion Spending on the Environment ....................................................... 23
          4.        GREEN BUDGET REFORM WORLDWIDE............................................................... 23
          Achieving the G-20 Call to Phase out Subsidies to Fossil Fuels.................................................... 23
          Resource Governance – Managing Growing Demands for Material on a Finite Planet................. 24
          World forum calls for natural resource tax..................................................................................... 28
          Cold front on climate change .......................................................................................................... 29
GREENBUDGETNEWS NO. 24                                                                                                                            PAGE 2 OF 45


            Taxes that help protect the environment ......................................................................................... 31
            Maldives President Plans Green Tax for Tourists .......................................................................... 32
            Taiwan: Government Proposes Introduction of 'Green Tax' .......................................................... 33
            5.        RENEWABLES: WINDPOWER ................................................................................ 33
            Wind Power-20 Year Plan for Offshore Wind Grid....................................................................... 33
            Europe Wind Power Body Sees Big Offshore Potential ................................................................ 38
            British Wind industry wants feed-in tariff changes – Current proposals discourage smaller scale
            generation........................................................................................................................................ 39
            6.        LINKS AND PUBLICATIONS.................................................................................... 40
            Climate Change and Public Finance .............................................................................................. 40
            Biofuels – New Report Brings Greater Clarity to Burning Issue .................................................... 40
            Socially Sustainable Economic Degrowth ...................................................................................... 41
            Sustainable Growth and Resource Productivity: Economic and Global Policy Issues ................... 42
            Economists’ declaration: The unprofitability of coal ...................................................................... 42
            PIK-Study backs up concerns about coal’s future unprofitability................................................... 42
            Incentives to sustain forest ecosystem services: A review and lessons for REDD ......................... 43
            Fairer flying: an air travel levy for adaptation................................................................................. 43
            7.        EVENTS ................................................................................................................... 43
            The Copenhagen Climate Exchange 2009, Copenhagen, Denmark, 3rd – 6th December 2009 .... 43
            From the Financial Crisis to the Green Economy Bern, CH, November 17th 2009 ....................... 44
            What taxation for a low carbon economy? Brussels, 30th November 2009.................................... 44
            The 11 th Global Conference on Environmental Taxation Bangkok, THAILAND, 3 - 5 November
            2010 44
            EnvEuro MSc programme in Environmental Science - application deadline 1 January 2010 ........ 44
            8.        IMPRINT ................................................................................................................. 45
            Best wishes from the founders and the editors!............................................................................... 45
            Green Budget Germany’s Team of Editors ..................................................................................... 45




                                                            Quotation of the Fall


  “Don’t blow it - good planets are hard to find.”
  Quoted in Time Magazine. www.time.com/time
GREENBUDGETNEWS NO. 24                                                                   PAGE 3 OF 45




                                                        "A GLOBAL CONTRACT BASED
                                                         ON CLIMATE JUSTICE" by Taina
1. E DITORIAL                                            Järä  and   Klemens   Riegler
                                                         http://www.foes.de/pdf/2009-10-GBE-
Dear readers and friends of Green Budget                 ClimateJustice_final.pdf
Germany and Green Budget Europe,                        "GREENING TRANSPORT BY THE
GBE and GBG had quite a busy few months.                 USE     OF    MARKET-BASED
The annual Green Budget Europe conference                INSTRUMENTS" by András Lukács
                                                         http://www.foes.de/pdf/2009-09-GBE-
in 2009 took place in London, King´s Col-
                                                         GreeningTransport-Lukacs-final.pdf
lege. The main topic was the enviromental
policy in times of financial crisis. We had             "GREENING THE ENERGY TAX
many high-ranking speakers from politics,                DIRECTIVE" by Yannis Paleokrassas,
administration and scienence. The discussion
showed again that the intruments we need to              long:     http://www.foes.de/pdf/2009-10-
implement to fight climate change and to get             GBE-
a sustainable economic recovery are well                 GreeningtheEnergyTaxDirective_final.pdf
known, that they work and that only political            ,
obstacles are still strong and inhibit the solu-         short: http://www.foes.de/pdf/2009-09-
                                                         GBE-ETD-Summary_V03.pdf
tions to be applicated. There were about 100
participants. More information about this con-     The Green Budget Europe Steering Commit-
ference and the presentations can be found at:     tee has meetings planned for 26th November
http://www.foes.de/veranstaltungen/dokumentatio
                                                   of 2009 and January of 2010. These meetings
nen/2009/london-17072009/                          aim primarily at supporting the Swedish and
                                                   Spanish EU presidencies with the revision of
Just two days before the conference, on July
                                                   the Energy Taxation Directive. As part of the
15th and 16th, the final conference of the
                                                   revision process the European Commisison
petrE project, co-ordinated by Professor Paul
                                                   (Directorate General for Taxation and Cus-
Ekins, entitled "Environmental Tax Reform in
                                                   toms Union) will host the conference "What
Europe - the Key to a Resource-Efficient,
                                                   taxation for a low carbon economy?" in Brus-
Low-Carbon, Competitive Economy" took
                                                   sels on November 30th 2009:
place. More information to this conference is
                                                   http://ec.europa.eu/taxation_customs/taxation/gen_info
available directly on the project website:         /tax_conferences/low_carbon/index_en.htm
http://www.petre.org.uk/events.htm
                                                   More information on the conference can be
We are proud to announce that GBE has is-          found in section 7.
sued four policy papers on different topics.
                                                   Another Steering Committee meeting is
The papers can be used by everybody for lob-
                                                   planned in Brussels in June 2010 previous to
bying and awareness raising. We are grateful
                                                   the Belgiam EU-presidency. The Annual
for their dissemination and their display on
                                                   Conference of GBE in 2010 will take place in
conferences. The papers can be found here:
                                                   Budapest in Hungary. We will very probably
http://www.foes.de/internationales/green-budget-   hold the conference on July 1st-2nd or 8th-
europe/policy-papers/                              9th. We plan to organize it together with the
Papers in detail:                                  Hungarian Economic Association, which is a
    "GREEN PUBLIC PROCUREMENT"                    very prestigeous organisation. Moreover
     by Catherine Pearce (EEB)                     CEEweb for Biodiversity will cooperate in
      http://www.foes.de/pdf/2009-09-GBE-          the organisation of the event.
      GreenPublicProcurement-Final.pdf
GREENBUDGETNEWS NO. 24                                                              PAGE 4 OF 45



As we did not succeed in getting majour fund-      Moreover GBG has conducted a study on be-
ing from public or private bodies for GBE, we      half of Greenpeace summing up the public
are still dependent on the receipt of member-      subsidies in the German nuclear sector. We
ship contributions from our country delega-        have determined that the subsidies can be
tions. GBG is spending a significant part of its   measured in two different ways, and from
general budget for GBE-purposes since the          1950-2008 have cost Germany more than
work began two years ago. Donations are thus       €165 billion.
always welcomed:                                   In this issues of Green Budget News we have
Account Holder: Forum Ökologisch-Soziale           to highlight the announcement of the French
Marktwirtschaft, Name of the bank: GLS             government to implement a carbon tax, to be
Gemeinschaftsbank, Bochum, IBAN CODE:              found in section two.
DE 87430609678043713000, SWIFT CODE :              Your GBG Editorial Staff
GENODEM1GLS, postal address: Seestraße
116, 13353 Berlin.
Please note that the GBG office will move on       2. G REEN B UDGET R EFORM IN
November 2nd: Schwedenstraße 15a, 13357
Berlin, Tel.: 030/ 510530800                         E UROPEAN M EMBER S TATES
We also had elections here in Germany, and
continuing to work with and advise politicians            French Government Unveils
from all parties, now especially the conserva-
                                                             Details of Carbon Tax
tives with a certain understanding of sustain-
able economic development, on environ-             [ENDS Europe, Friday, October 2, 2009] The
mental issues.                                     agriculture and fisheries sectors in France will
                                                   be partially exempted from a carbon tax that
GBG held a conference on October 9th in Ber-
                                                   will be introduced next year. These sectors
lin to discuss economic instruments in envi-
                                                   would still have to pay the tax, but they would
ronmental policy and social justice. It was
                                                   get most of their money back.
quite successful, with a great turnout and
lively discussions in our three workshops re-      The announcement was made on Wednesday
garding ticket taxes, company car taxes, and       as French economy and finance ministers
nuclear energy taxes.                              Christine Lagarde and Eric Woerth unveiled
                                                   the government's budget proposal for 2010.
The GBG project from the German federal
                                                   The proposal foresees the introduction of a
environment agency is coming along. We are
                                                   CO2 tax in January, confirming a plan out-
speaking with corporate actors, local youth,
                                                   lined earlier this month.
and trade unions to come to a consensus on
environmental fiscal reform.                       As reported before, the tax will apply to oil,
                                                   gas and coal consumption in sectors not cov-
On behalf of the European Climate Founda-
                                                   ered by the EU's emissions trading scheme
tion GBG had a press conference in Septem-
                                                   (ETS), starting at €17 per tonne. An expert
ber, where leading economists stressed, that
                                                   group said the tax should increase to
coal based energy production will not be prof-
                                                   €100/tonne by 2030. Households paying in-
itable in the future anymore. In a joint decla-
                                                   come tax would benefit from tax breaks. Oth-
ration, more than sixty economists caution
                                                   ers will receive a "green cheque".
against the financial and climatic risks of new
coal-fired power plants in Germany. More in-       The agriculture and fisheries sectors should
formation in section 7. and here:                  not pay the full amount straightway to "give
                                                   them time to adopt more energy efficient
www.wiwis-kohle.de
                                                   transport and production modes", the gov-
                                                   ernment says. The existing energy taxation di-
GREENBUDGETNEWS NO. 24                                                                  PAGE 5 OF 45



rective allows member states to give farmers             Improvement of efforts in terms of pre-
tax breaks or exempt them altogether.                     vention of risks: rehabilitation of pol-
Other aspects of the French budget proposal               luted areas, waste plan.
include a tightening of the "bonus-malus" tax            An increasing budget for housing: an
and subsidy scheme for encouraging low-                   increase in the budget for individual as-
carbon emission cars. Buyers of cars emitting             sistance, the continuation of the plan for
more than 160 grams of CO2 per kilometre                  the revival of the construction industry.
currently have to pay a premium of up to                 A Budget Constructed to Accelerate
€2,600. This threshold will be lowered to                 Environmental Transformation
156g/km from 2010.
http://www.endseurope.com/22279?referrer=search
                                                         The 2010 budget will be dedicated to
                                                          advancing France in terms of sustain-
     A Budget Designed to Accelerate                      able development, a major theme in
     Environmental Transformation                         light of the climate negotiations in Co-
                                                          penhagen at the end of the year.
[Translated by Lindsay Condit, from the Min-
istère de l’Écologie, de l’Énergie, du             The Ministry Budget by Center:
Développement durable et de la Mer, Septem-              Ecology Center: again, a budget with a
ber 30, 2009] Jean-Louis Borloo presented                 strong increase (618 M €, +16%), in
the 2010 Ministry of Sustainable Develop-                 particular to finance the actions of the
ment budget on September 30, 2009. After                  Grenelle Government.
2009, a year marked with the launching of
numerous programs, “2010 will be a the year              Transportation Center: budgetary cred-
for the acceleration of our projects,” declared           its of 4,806 M €.
the Minister of State.                                   Energy Center: allocation of 820 M € in
                                                          2010 to be used for the struggle against
The Acceleration of Ministry Projects                     climate change.
The acceleration of greening the budget with             Research Center: an allocation of 1419
the setting up of the carbon tax as of January            M € for AE (+4%) and 1304 M € for CP
1, 2010, and its compensation for low build-              (+1.2%) in 2010 which allows for re-
ing consumption, which will become the                    search in the area of sustainable devel-
norm by 2013, the launch of a debate with                 opment.
parliament about the adaptation of other sec-      http://www.developpement-
tors.                                              durable.gouv.fr/article.php3?id_article=5993
Acceleration of green growth with the rise of
investments in research, the launch of an elec-        Questions/Answers Regarding the Cli-
tric vehicle plan, the doubling of allocation of       mate Engergy Contributions in France
funds for renewable heating, the persuit of a      [Translated by Lindsay Condit, from the
reform regarding ports, which will be taken        Ministère de l’Écologie, de l’Énergie, du
up by the authority of combined transport.         Développement durable et de la Mer,
Acceleration of efforts in terms of protecting     September 15, 2009]
biodiversity with the setting up of a green        Is the climate/energy contribution a tax or an
framework and the pursuit of contractualising      after-tax supplement?
Natura 2000, the creation of six new natural       No, it is not an after-tax supplement since the
parks, and a total of 27 million Euros will be     sum of the contribution will be transferred in
dedicated to the protection of marine biodi-       full to specific projects and enterprises. The
versity in 2010.                                   climate energy contribution is a “price signal”
                                                   that functions based on the same model as the
GREENBUDGETNEWS NO. 24                                                              PAGE 6 OF 45



ecological bonus: if a particular project modi-    In Sweden, the initial level of the contribution
fies its behaviour to consume less energy, it      was fixed at 27 €/tonne of CO2. Today the
will be a beneficiary.                             sum is 100 €/tonne of CO2 and it is accompa-
Why create a climate/energy contribution?          nied by a bonus.
It serves to send a “price signal” to consumers    Who will be subject to the CEC and who will
to encourage them to buy those products that       benefit from the bonus?
require temperate amounts of carbon and en-        The CEC will concern households as well as
ergy. It allows equality of production for our     professional sectors not subject to the com-
companies that favour green technologies and       munity system of exchange of emissions quo-
thereby pollute less.                              tas like transport and industry are. The big
Is it a good deal?                                 companies have already contributed because
Yes! The ecological bonus on cars allowed          they are subject to the European system of
for a reduction of CO2 emissions of new cars       emissions quotas.
sold in France by 1 g/month instead of the 1       Will the CEC be applied to all products?
g/year reduction seen before. Between the end      No. The CEC will apply only to fossil fuel
of the year 2007 and the beginning of the year     pollutants like petrol, diesel, gas, fuel, and
2009 the percentage of clean vehicles on the       coal.
market rose from 15% to 54%.                       The CEC doesn’t concern electricity. Why?
Why now?                                           Electriciy is excluded from the scope of the
Fossil fuels are principally responsible for the   CEC because its production is already subject
concentration of CO2 in the atmosphere and         to the community system of emissions quotas
therefore for climate change. In addition, we      and the public service contribution for elec-
know that the available reserves will not be       tricity.
able to cope with our needs in the long term.      Has the government anticipated measures to
Therefore our industries have to anticipate        help consumers to change their behaviour, for
this evolution and modify their modes of pro-      example in terms of transport?
duction and consumption today.                     The Grenelle government has planned the
Where does this measure come from?                 construction of 1500 kilometres of supple-
The idea of a climate energy contribution was      mentary public transportation lines. The gov-
throught up in the ecological treaty by Nicolas    ernment has already mobilised an initial
Hulot, signed by all the republican candidates     budget of 800 million Euros for the fulfilment
for the presidential election. It was then         of 50 public transportation projects in 36
amended by the participating parties in the fi-    towns. The French can profit equally from an
nal conclusions of the Grenelle government.        ecological bonus for buying clean vehicles or
Parliament validated its assumptions almost        those that don’t emit much. In addition, 6
unanimously at the time of the vote on the         months from now all the big French manufac-
Grenelle Law I. And now several European           turers will be able to advertise an electric ve-
countries have also implemented it.                hicle. The government has also planned a
Is France the only country to put a climate        “super bonus” of 5,000 € for the purchase of a
energy contribution into place?                    vehicle of this type. An “electric vehicle” plan
No. Sweden and Denmark were the first              will be presented on September 23.
countries to create a climate energy contribu-     Has the government planned any measures to
tion at the beginning of the 1990s. As of now      aid the consumer in changing behaviour at
five European countries have arranged a cli-       home?
mate energy contribution and Germany is in         Yes. The state has, in this regard, a number of
the process of arranging one to start in 2012.     fiscal measures to help households reduce
GREENBUDGETNEWS NO. 24                                                                   PAGE 7 OF 45



their energy consumption: extension and pro-       For a single person the compensation will be
longation of sustainable development tax           46 €. For a couple, it will be 92 €. Every child
credit, the creation of an eco-loan at a rate of   adds a premium of 10 €. The system accounts
0% for financing the work necessary for            for a “rural premium” of 15 € per adult. For a
thermal renovations, greening of all devices       household with two children in an urban area
that assist with the attainment of property. We    it would be 112 €, and for a household with
are also working on the expansion of “intelli-     two children in a rural area it would be 142 €.
gent” electricity meters.                          What form will the bonuses for companies
Why have the price of a tonne of carbon fixed      take?
at 17€? Isn’t that too low?                        Companies will benefit from a removal of the
There is an international carbon market. The       professional tax if they bear upon investment.
government has determined the average price        Certain sectors, like agriculture, fishing, and
of a tonne of carbon over the course of the last   transport, depend strongly on fuel: the gov-
few years. It also acts to allow for time for      ernment will propose specific measures for
households and companies to adapt and mod-         this in the coming weeks.
ify their behaviours.                              How can it be assured that the profits from
Will the price of a tonne of carbon always         the CEC will be returned in full to the
remain at 17 €?                                    French?
No. The price of a tonne of carbon will be         The government will create an independent
gradually increased. The transferred bonuses       commission charged with making sure that
to the French will increase in exactly the same    the profits of the CEC will be rightly returned.
rhythm.                                            This commission will consist of representa-
That represents an increase by how much?           tives from companies, consumers, experts,
That represents an increase of:                    heads of ecological associations and elected
                                                   representatives from the majority as well as
      4 cents per litre of petrol (+3%)           from the minority.
      4.5 cents per litre of diesel (+5%)         Do we have an idea of how this sum will be
      3.5 Euros per MWh for gas (+7%)             redistributed?
      and 5.8 Euros per MWh for coal              The climate energy contribution will allow for
       (+28%)                                      4.55 milliard Euros to be collected that will
What form will the bonuses for households          then be redistributed in full. The state pro-
take?                                              poses to redistribute the proceeds of the car-
Those households that pay tax on their in-         bon tax portion of the VAT to households in
come benefit from a tax credit. Those who          the framework of its 2010 finance law.
don’t pay tax on their income receive a green      http://www.developpement-
                                                   durable.gouv.fr/article.php3?id_article=5866
cheque. This compensation will be paid start-
ing in February of 2010. This takes into ac-                Paris and Berlin to propose
count two criteria: the household size and the
                                                              EU border tax on CO2
distance from urban centres. For example, for
a household with children in an urban area,        [ENDS Europe, Monday, September 21,
the compensation would be 112 €. For a             2009] The French and German governments
household with children in a rural area, the       will propose a border adjustment mechanism
compensation would be 142 €. In addition, if       "within days" to protect EU companies' com-
a household changes its behaviour and con-         petitiveness if some countries fail to agree
sumes less energy, it will be a beneficiary.       CO2 reduction measures under a post-2012
                                                   climate policy framework, French president
How will you reach this sum?
                                                   Nicolas Sarkozy said.
GREENBUDGETNEWS NO. 24                                                                    PAGE 8 OF 45



The two governments will call for an EU bor-       To be clear, the proposal will effect those
der tax on CO2 or a different mechanism that       firms (and households) not already included
would achieve the same result, Mr Sarkozy          in the European Union Emissions Trading
said following a meeting of European leaders       System, the world's largest mandatory cap-
in Brussels on Thursday. The idea was ini-         and-trade scheme in the world. And the hope
tially proposed by France in 2006, but it has      is people/companies will switch to cleaner
not received a lot of support.                     energy sources to avoid forking out the cash.
EU governments are now warming up to the           A flat tax also is something individuals al-
idea because it is "more and more understood,      ready understand, and should help avoid con-
not as a protectionist measure," but as a way      fusion about who pays what and where.
of "correcting imbalances", the French presi-      But there still are downsides to the French
dent said. "We cannot tax European compa-          proposal. For one, critics say it’s a govern-
nies and exempt others", he added.                 ment attempt to fill its coffers just when other
The European Commission's preferred option         tax revenues are in a tailspin. Poorer house-
for tackling carbon leakage is to give free car-   holds (often with out-dated – and inefficient –
bon allowances to at-risk sectors. However it      heaters) also could face disproportionately
has also said a carbon tax on EU imports is a      high bills, though French policymakers say
second possibility. The WTO has backed the         they'll get state aid. Politicians may similarly
idea of border tax adjustments.                    lack the market-based incentives provided by
http://www.endseurope.com/22194?referrer=search    cap-and-trade, and could funnel the eco-
                                                   revenue into pet projects or uneconomical
          Individual Carbon Taxes                  technologies.
             Take Center Stage                     Despite the concerns, many countries are
[Business Week, by Mark Scott, September           mulling (or already have passed) carbon taxes
11, 2009] What’s the best way to reduce car-       for individuals. That, combined with a global
bon emissions? When it comes to companies,         push for cap-and-trade schemes, will likely
policymakers have favored (often compli-           mean high energy costs, for everything from
cated) cap-and-trade systems that set limits on    driving your car to paying your monthly en-
CO2 emissions, then let the market figure out      ergy bills. France certainly isn't the first to
the rest. But for Joe Public, that approach is     propose such a tax. And it won't likely be the
unwieldy. Better, so the theory goes, to create    last.
a flat carbon tax that individuals must pay de-    TrackBack        URL       for     this   entry:
pending on their greenhouse gas output.            http://blogs.businessweek.com/mt/mt-
                                                   tb.cgi/15480.1284812849
On Sept. 10, France took a step closer to cre-
ating such a system. Under the proposal legis-
lation (expected to become law next year),           France: Carbon Tax as an Alternative
people will pay an initial tax of €17 ($25) per             for Curbing Emissions
metric ton of CO2 emissions produced. It will      [Lindsay Condit, October 20, 2009] Many in
apply to fuel for cars, houses, and small facto-   the economic world argue that implementing
ries, with people paying less if they use more     a universal carbon tax, whose level is set by
eco-friendly energy sources. Natural gas, for      decree, is a good idea because it’s so simple.
instance, produces less carbon than coal, so       However, many countries in Europe, as well
households fueled by gas will face a smaller       as the United States, are averse to such a tax
CO2 tax bill. French President Nicolas             because individual governments do not often
Sarkozy says the carbon tax will rise over         favour relinquishing control over their sys-
time.                                              tems of taxation. Governments who favour
                                                   autonomy tend to opt instead for market-
GREENBUDGETNEWS NO. 24                                                              PAGE 9 OF 45



based cap and trade systems, where they can        Environmental advocates warn that change
provide input, and in many cases, render prof-     will not occur overnight. Jos Dings, the direc-
its.                                               tor of Transport and Environment in Brussels,
However, in light of the coming deadlines for      states, “Sure, people can drive more slowly or
Copenhagen, and with 2020 goals looming,           skip a journey in the near term, but don’t hold
the progress made through cap and trade sys-       your breath for a huge reduction in fuel use
tems seems modest. Some countries, includ-         the week after this is introduced.”
ing France, are now looking for a different so-    Although some in France doubt the effective-
lution.                                            ness of the tax, those in Scandinavia who
French president Nicolas Sarkozy has recently      have already had such a tax in place for sev-
revealed plans for a French carbon tax that        eral years claim that their carbon taxes have
would directly affect individual consumers,        been very effective in lowering emissions.
not just big businesses. By setting an initial     Sweden, which has had a carbon tax in place
tax of 17 Euros per tonne of carbon dioxide        since 1991, started its tax rate at 28 Euros per
emissions, thereby raising the costs of driving    tonne of carbon dioxide emitted, and has now
or heating, Sarkozy hopes to encourage con-        raised that level to 128 Euros per tonne. Su-
servation among French households.                 sanne Akerfeldt from the Ministry of Finance
Although many in the government and the            in Sweden claims that without the tax, their
environmental lobby are excited about the          emissions would be 20 per cent higher, while
proposed tax, members of the opposition, as        the economy has still grown by 44 per cent
well as French citizens, are not quite as en-      since its implementation. “We have found that
thused. Ifop for Paris Match produced polling      our carbon tax is entirely compatible with
date that claimed that 65 per cent of those        economic growth,” she said. She also said that
polled were not in favour of the tax, 55 per       Denmark, Finland, Norway, Switzerland, and
cent were doubtful as to how useful the tax        parts of Canada have followed suit, and are
would be in offsetting climate change, and 84      using similar programmes.
per cent feared the added tax burden, espe-        Because of the large budget deficits created
cially for those with low income.                  by the recession, some experts believe that
In a country that is just starting to recover      other EU nations will follow France’s exam-
from a recession, such scepticism is unsur-        ple in implementin a carbon tax as a new
prising. Although the tax is supposed to be        source of income. This is helped by the as-
revenue neutral, the details for offsetting the    sumption that such a tax may be less likely to
tax burden have not yet been specified. The        raise the unemployment rate or damage out-
French Socialist Party in particular is worried    put levels when compared to other methods of
about the effect on low-income households.         raising revenue.
Even some members of the ruling party are          It is suggested that, on average, heating costs
fearful of the political backlash come the next    would rise by anywhere from 25 to 75 Euros
election cycle.                                    per year in France, depending on the type of
Still others worry that this is just another tax   building and the method of heating in use.
to symbolise effort without actually accom-        Sweden, currently holding the presidency of
plishin its goals, and worry where the revenue     the EU, has been campaigning for the expan-
will go. Colette Lewiner, the head of the en-      sion of carbon tax policies throught the EU.
ergy practice at Capgemini in Paris questions,     Although this would be very difficult because
“Will it go back to the people or will some of     of varying governmental models, the debate
it be used to pay down the government defi-        in France proves both interesting and useful in
cit?”                                              encouraging such an expansion.
GREENBUDGETNEWS NO. 24                                                              PAGE 10 OF 45



Irish carbon tax proposed - Eco-taxes in           ment, take the "revenue neutral" blather with
 double benefit; Raising revenue while             a pinch of salt.
       appearing to save the planet                Deutsche Bank economist Frank Zipfel, said
[By Finfacts Team, September 7, 2009] An           in a commentary last Friday, that given politi-
Irish carbon tax of about 8 cent per litre on      cians’ lack of discipline with respect to spend-
petrol and diesel is expected to be imposed in     ing, it is possible that they will turn their at-
December’s budget if a key recommendation          tention to “eco-taxes” in their search for ways
of today’s final report by the Commission on       and means of consolidating public finances.
Taxation is adopted by the Government. Eco-        This raises the question of the productivity
taxes have a double benefit for the belea-         and the responsiveness to growth of this
guered administration, in raising revenue          source of funding. Experience shows that
while providing the junior coalition partner,      revenues cannot grow vigorously if ecological
the Green Party, with a "core" fig leaf for its    goals are taken seriously.
declared mission of saving the planet.             Zipfel says the revenue raised from environ-
The report by the 17-member commission,            mental taxes in Germany has been flat since
chaired by former head of the Revenue Com-         2003. Their share of total tax revenue has ac-
missioners Frank Daly, will be published to-       tually been falling continually since then. At
day.                                               last reading (2008) it only came to 9.7 % and
It contains more than 250 recommendations,         was thus even lower than in 1998 (9.8%), the
including the introduction of a "revenue-          year before the ecological tax reform came
neutral" carbon tax; a new property tax; a         into force. The “environmental” taxes include
new higher marginal rate of income tax; new        energy tax (previously called petroleum tax),
rules for tax exiles; and the abolition of the     vehicle tax and electricity tax. From 1999 to
PRSI earnings ceiling and the incorporation        2003 the burden of these taxes was raised in
of various tax levies within the existing in-      five stages as part of the so-called ecological
come tax system.                                   tax reform (electricity tax was not introduced
                                                   until 1999). This explains the continual in-
The commission recommends a carbon tax on
                                                   crease in revenue and the increase in the share
fossil fuels of €20 per tonne and says that this
                                                   between 1999 and 2003. Where tax rates have
measure will raise €480 million for the ex-
                                                   not changed, however, revenues have not in-
chequer in 2010, rising to an estimated €500
                                                   creased.
million by 2012.
                                                   The economist says this data reveals an inter-
However, the increase in tax-take would be
                                                   esting development in the consumption of
compensated by reduction in other areas in
                                                   (taxed) petroleum products. Since 1998 it has
order to fulfill the commission’s terms of ref-
                                                   been on the decline overall. Only diesel con-
erence that the measure be revenue neutral.
                                                   sumption has risen, but this was outweighed
The pricing mechanism for the levy is tied to
                                                   by the decline in petrol and light heating oils.
a number of factors, one of which is the price
                                                   He says it remains unclear how much of the
for which carbon is trading on the European
                                                   decline is due to phenomena such as drivers
Unions Emissions Trading Scheme.
                                                   crossing the border to buy cheaper fuel, but
Revenue-neutral?                                   the decrease is probably the result primarily
The terms of reference for the commission          of more economical vehicles and machinery.
were set out by the then Minister for Finance      Zipfel says an “eco-tax” by name does not
Brian Cowen, in February 2008. So given the        actually exist; it has however become a stan-
tsunami that has hit the economy in the inter-     dard term used in association with the eco-
val, in the absence of a constitutional amend-     logical tax reform. It signifies increasing the
                                                   cost of energy by raising taxes in order to re-
GREENBUDGETNEWS NO. 24                                                                   PAGE 11 OF 45



duce consumption and thus environmentally
damaging behaviour. This effect is also called
the steering function of a tax, since taxes can
also be deployed for this purpose as well as in
order to generate revenue (fiscal objective)
and redistribute income (redistribution objec-
tive).
The steering and fiscal objectives regularly
conflict with one another, as the steering ob-
jective seeks to stop or reduce the frequency
of an action (in this case energy consump-
tion), which ultimately leads to a decrease in
tax revenues, however. In other words, the
more effectively the steering function is per-
formed, the lower the revenue. Taxes of this             Budget Germany”(FÖS) claims: By introduc-
kind are therefore not necessarily suitable as           ing a nuclear energy tax of 2,5 Ct/kWh until
sustainable sources of public revenues that are          2012 and of 3,5 Ct/kWh from 2013 onwards,
responsive to growth. Zipfel says experience             the polluters should bear at least part of these
also shows that the steering objective can also          costs. In Germany, the new conservative
be used as a cover for fiscal objectives. The            Government currently debates about the ex-
signs that this is the case are clearer with the         tension of nuclear power plants’ operational
tobacco tax than with the petroleum tax. To              life-spans.
date, there has still not been a government              By the European Emissions Trading Scheme,
that has come up with the idea of raising the            operators of coal- and gas-fired power plants
tobacco tax high enough to bring about a sig-            are charged (at least to some extent) for the
nificant decrease in consump                             external costs due to CO2-emissions. “Conse-
http://www.finfacts.ie/irishfinancenews/article_101782   quently, also nuclear power generation should
4.shtml                                                  internalise a certain proportion of their envi-
                                                         ronmental harmful costs, in order to compen-
                                                         sate for distortion of competition”, says FÖS-
                                                         executive Sebastian Schmidt. The nuclear ex-
                                                         ternal costs comprise e.g. storage costs of nu-
                                                         clear waste or the risk of radiation and nuclear
                                                         incidents. Concrete occasion for a nuclear tax
                                                         is given by follow-up costs of decommission-
                                                         ing and renaturation of nuclear installations
                                                         and storage, that will burden the federal gov-
                                                         ernment budget with presumably more than
                                                         7,7 billion € (e.g. for disposal zones “Asse II”
                                                         and “Morsle-ben”).
                                                         According to a study of the German LBBW-
                                                         Bank, the generation costs of nuclear power
    GBE calls for nuclear Energy Tax                     amount to about 2,2 Cent per kWh, while it
A considerable proportion of costs that are              can be sold by operators for 5,1 Cent (under
caused by the use of nuclear energy in Ger-              certain scenarios, 8 Cent might also be possi-
many are not borne by the operating compa-               ble). Thus, the possible and reasonable ab-
nies. A recently published study by “Green
GREENBUDGETNEWS NO. 24                                                              PAGE 12 OF 45



sorption of so called “windfall profits” lie be-   to gas guzzlers and rewarding energy effi-
tween 2,9 and 5,8 Ct/kWh.                          ciency, the new car-tax favours diesel vehi-
The rate of taxation should correspond ap-         cles above all.
proximately to the burdening of fossil fuels by
the Emis-sions Trading Scheme, while the re-             Germany: Average Price Falls
sponsible operators of nuclear power plants                due to scrapping scheme
should be charged for the follow-up costs of       [Lindsay Condit, October 2009] As a result of
nuclear power generation. Thus, the proposed       the wrecking premium, for the first time in 30
tax rate of 2,5-3,5 Ct/kWh can be rated as         years the average price of new cars sold in
rather moderate. Under the assumption of           Germany has dropped. According to the
perpetuating the nuclear power phase-out in        analysis of the CAR-Center at the University
Germany, the proposed tax would carry a tax        of Duisberg-Essen, the average list price lay
yield of about 30 billion € until 2020. The        around 21,430 Euros in the first six months of
budget-ary surplus could be spent for the re-      this year – about 3,400 Euros or 13.8 per cent
habilitation of brownfield sites and for subsi-    less than a year ago. The main reason for this
dising renewables’ R&D or the promotion of         was the impetus created by the wreckage
energy efficiency measures.                        premium to buy small and compact cars.
Other countries that have already introduced a
nuclear energy tax are Sweden and Japan.                    Germany: Five Cent Toll
Finland and Belgium are planning its intro-                  Charge per Kilometre
duction during the next two years.
                                                   [Lindsay Condit, October 2009] Prognosis: In
The study is available at                          2004 about 14.4 million tonnes of goods were
http://www.foes.de/pdf/2009-10-                    transported across the border near Frankfurt
Konzept_Atomsteuer_final%20%282%29.pdf             (Oder). It is estimated that in 2025 the amount
                                                   of goods transported will be 44.6 million ton-
     Car-tax in Germany: Two Euros                 nes – an increase of 210%.
           per Gramme of CO2                       The Toll: Until 2037 the corporation in charge of
[Lindsay Condit, October 2009] As of July a        operation of new stretches of the Autobahn is
new basis of calculation for the car-tax in        Austostrada Wielkopolska SA. The toll should
Germany has been implemented. The cylinder         charge five cents per kilometre for cars and 10
capacity no longer determines the amount of        cents per kilometre for trucks.
the tax, but rather the amount of triggered
CO2 emissions. The new rule, however, con-          Britain Extends Temporary Car Scrap-
cerns only newly registered vehicles (as of                     page Scheme
July). The first 120 grams of CO2 emitted are      [ENDS Europe, Tuesday, September 29,
free until 2011. Every further gram emitted        2009] The British government is going to ex-
will cost two Euros per year. In 2012 the          tend its temporary car scrappage scheme to an
amount permitted free of cost will be lowered      estimated 100,000 vehicles with an additional
to 110 grams, as of 2014 to 95 grams – still       €108.6m funding (£100m) to help owners of
only regarding newly registered vehicles. As a     older cars and vans buy new vehicles, it said
consequence, automakers will have an incen-        on Monday.
tive to offer vehicles that pollute less.          The scheme will now cover cars purchased
The Ecological Transportation Club of Ger-         before 28 February 2000 and vans bought be-
many (VCD) has disputed this. They claim           fore 28 February 2002. So far 227,750 new
that the new car-tax will in no way act to steer   vehicles have been bought through the
automakers and buyers in favour of more            scheme. On average, emissions from new cars
sparing vehicles. Instead of adding high costs     are 25% lower than those sent to scrap yards.
GREENBUDGETNEWS NO. 24                                                             PAGE 13 OF 45



The government said the scheme was still            purchase of electric vehicles, which already
scheduled to end in February 2010 despite its       benefit from a total exemption of both Vehi-
extension. Total funding for the programme          cle Tax and Circulation Tax. Such tax incen-
now amounts to €434m. The government of-            tives will be available to all plug-in models
fers a €2,172 discount for each scrappage or-       coming into the market in the next few years.
der.                                                In a different initiative, the Portuguese Par-
http://www.endseurope.com/22253                     liament has also passed a new law in Decem-
                                                    ber which among other things alters the tax
           New Vehicle Taxation                     treatment of company cars. All yearly ex-
           Measures in Portugal                     penses incurred by companies on passenger
[Sergio Vasques, University of Lisbon, 2009]        cars will now be subject to a specific tax of
The Portuguese Budget Law for 2009 com-             5% or 10% depending on their CO2 emis-
prises several new environmentally-minded           sions.
measures on vehicle taxation. These measures
are a follow-up to the comprehensive Vehicle              Miliband's Manifesto to Make
Taxation Reform of 2007, in result of which              Britain a Low-Carbon Economy
both Vehicle Tax, due on purchase, and Cir-         [The Independent, July 16, 2009, by Michael
culation Tax, due on a yearly basis, are now        McCarthy, Environmental Editor] The na-
for the most part calculated upon CO2 emis-         tional strategy to cut emissions published yes-
sions.                                              terday comes at a price. But are we willing to
First and foremost, the Vehicle Tax CO2             pay it?
brackets have been revised in order to keep up      Thousands more wind turbines, millions of
with the industry’s technological progress.         "smart" electricity meters for homes and new
Tax brackets for diesel-powered cars have           cars emitting 40 per cent less pollution than
been reduced by 10 g/km and now have their          they do now all are on the way in the next
highest bracket starting at 170 g/km, while tax     decade under ambitious plans to slash CO2
brackets for gasoline-powered cars have been        emissions from every sector of the economy.
reduced by 5 g/km and now have their highest        They form part of the UK Low Carbon Tran-
bracket starting at 205 g/km.                       sition Plan, a national government strategy for
In second place, from 2009 on diesel-powered        cutting greenhouse gas emissions in the fight
vehicles lacking particulate filters will be sub-   against climate change, which was launched
ject to a tax penalty of EUR 250. Up to now         by the Energy and Climate Change Secretary,
diesel-powered vehicles fitted with particulate     Ed Miliband, July 17th.
filters benefitted from a Vehicle Tax rebate of     Although the detail may sound familiar –
EUR 500.                                            many of these projects are already on the
Thirdly, some tax incentives have been sub-         drawing board – it is the bringing them to-
ject to environmental criteria. The existing        gether into an all-inclusive society-wide plan
50% Vehicle Tax rebate for rent-a-cars has          which is new, as the Government faces up to
been limited to the purchase of vehicles with       its legally-binding target of cutting UK car-
emissions up to 140 g/km. Likewise, the Ve-         bon emissions to 34 per cent below 1990 lev-
hicle Tax incentive of EUR 1.250 for the            els by 2020.
scrapping of used cars has been will now only       Under last year's Climate Change Act, minis-
be granted upon the purchase of cars with           ters have bound themselves to hit the target
emissions up to 140 g/km.                           with a system of rolling five-year "carbon
The Budget Law for 2009 has also introduced         budgets", and the strategy shows in detail for
an allowance in personal income tax for the         the first time how they intend to do this.
GREENBUDGETNEWS NO. 24                                                         PAGE 14 OF 45



Its central component is a seven-fold increase        newable energy sources and 10 per cent
– in just a decade – in the amount of Britain's       from nuclear and clean coal. Later this
energy for power generation, transport and            year there will be a national Policy
home heating supplied from renewable                  Statement on Nuclear Power which will
sources such as wind, wave and solar power            assess potential sites for new atomic
(from just over 2 per cent to 15 per cent).           power stations. The Government has al-
This leap will mean that by 2020 about 30 per         ready said that any new coal-fired
cent of electricity alone will come from re-          power stations will have to be fitted
newables (up from 5.5 per cent today) and             with Carbon Capture and Storage tech-
this huge expansion will derive principally           nology. Later this year plans will be
from much more wind power. Although no                published for a "smart" version of the
precise figure was given, this will involve, Mr       National Grid which will be more flexi-
Miliband said, "thousands" of new wind tur-           ble.
bines, both onshore and offshore (one current        Workplaces: Industry and Business (20
estimate is about 7,000).                             per cent of emissions)
By the 2020 date another 10 per cent of elec-
                                                      High-carbon industries will be included
tricity will come from non-renewable low-
                                                      in the EU Emissions Trading Scheme
carbon energy sources, principally the new
                                                      which will save around 500 million ton-
nuclear power stations whose construction the
                                                      nes of carbon dioxide a year by 2020.
Government is backing, and the infant tech-
                                                      There will be financial incentives to
nology of carbon capture and storage (CCS),
                                                      save energy and invest in low-carbon
which takes the CO2 emissions from power
                                                      technologies. The Government will seek
stations and buries them underground. Dem-
                                                      to boost green industries with £405m
onstration power plants fitted with CCS
                                                      for new technologies, up to £120m of
should be coming onstream by 2020.
                                                      investment in offshore wind, and £60m
The Government accepts that low-carbon en-            for marine energy and to help develop
ergy will be more expensive for consumers             the South-west as the UK's first Low
and gave two sets of estimated increases on           Carbon Economic Area.
power bills. Just paying for the new system
might add £77 to electricity and £172 to gas         Homes and Communities (13 per cent
bills each year but when all climate change           of emissions)
measures are taken into account – such as             Emissions will be cut from homes by 29
home insulation which will save consumers             per cent on 2020 levels by much greater
money – the total addition is likely to be be-        energy efficiency achieved through the
tween £75 and £92 by 2020, the Government             wider use of insulation. Smart meters,
said. On the other hand, the White Paper fore-        which enable people to understand ex-
sees a substantial increase in employment             actly how much energy they are using
from the changes, with as many as 400,000             in real time, and maximise their energy
new green jobs being created.                         saving opportunities, will be rolled out
The Low Carbon Transition Plan: Major cuts in         to every home – 26 million – by 2020.
five sectors of society                               The obligation on energy suppliers to
                                                      help households save energy will be ex-
    Energy Generation (responsible for 35            tended. From 2016 all new homes will
     per cent of UK emissions)                        have to be zero-carbon and rental prop-
     The plan envisages 40 per cent of UK             erties may have to have Energy Per-
     electricity coming from low-carbon               formance Certificates.
     sources by 2020 – 30 per cent from re-
GREENBUDGETNEWS NO. 24                                                               PAGE 15 OF 45



     Farming, Land Use and Waste (11 per           Council meeting held on 20th October. There
      cent of emissions)                            were some interesting points on the agenda.
                                                    State Secretary Joachim Würmeling from the
      Farmers will be encouraged to cut emis-
                                                    Ministry of Economics talked about revolu-
      sions by 6 per cent by 2020 through
                                                    tionary results and also department chief of
      more efficient use of fertiliser and better
                                                    Ministry of Finance, Wilfried Steinheuer
      management of livestock and manure.
                                                    started his demonstration with similar words.
      Although the UK now recycles or com-
                                                    In many places, though, they could have
      posts a third of its waste, more must be
                                                    saved their words of praise.
      done. There will be support for anaero-
      bic digestion (a technology which turns       The ministers agreed that an exit-strategy, i.e.
      waste and manure into renewable en-           phasing out the economic stimulus and recov-
      ergy) and there will be a push to reduce      ery measures, would be put into action at lat-
      the amount of waste sent to landfills,        est in 2011 in all Member States. Both fiscal
      and also for better capture of landfill       and monetary policies and direct financial
      emissions.                                    aids will be taken into account.
                                                    Four principless were agreed:
     Transport (20 per cent of emissions)
                                                         coordinated proceeding
      By 2020 transport emissions will be cut
                                                         starting the exit-strategy in 2001 at lat-
      by 14 per cent on 2008 levels, and the
                                                          est
      first step will be to improve the fuel ef-
      ficiency of conventional vehicles : C02            ambitious goal in cutting the deficit:
      emissions from new cars will have to                over 0,5% GDB/Year
      fall by 40 per on current levels across            natinal dept brakes should be estab-
      the EU by 2015, to 95 grams per kilo-               lished
      metre. British government vehicles will       A “risk board” for surveillance of the finance
      comply with this by 2011. £30m will be        market will be set up. There will be an early
      invested to deliver several hundred low-      warning system but no control authority in
      carbon buses and there will be more           every institute. The control of the single insti-
      support for new technology for low-           tutes will lay on a new surveillance authority,
      carbon cars. £140m is being invested to       founded for this purpose. The agreement over
      promote cycling and £5m is being spent        the details is awaited by the end of 2009.
      on new cycle storage at rail stations.
                                                    In financing of climate change the Member
http://www.independent.co.uk/environment/climate-   States were divided into two different groups.
change/milibands-manifesto-to-make-britain-a-
lowcarbon-economy-1748282.html
                                                    One of the groups wanted to see the EU at
                                                    cutting edge in fighting climate change. The
                                                    others, among others Germany, wanted to
                                                    take more moderate steps. In a memorandum
3. G REEN B UDGET R EFORM                     ON
                                                    of the Commission, there are calculations
  EU-L EVEL                                         about the situation in developing countries.
                                                    According to the memo the developing coun-
                                                    tries will need approximately 100 bn € every
         EU-De-Briefing ECOFIN                      year, starting in 2020, for green house gas-
            21st October 2009                       reduction, adaptation and migitation. There
[Saija Kononen/ Sebastian Schmidt, Green            are different proposals how to finance it.
Budget Germany, October 21st 2009] On               A new model of burden sharing will be up on
Wednesday 21st October the German Ministry          discussion: sharing would base on national
of Finance was briefing about the Ecofin
GREENBUDGETNEWS NO. 24                                                               PAGE 16 OF 45



reduction goals and the GDB. Germany does           ing to 10% fewer CO2 allowances than re-
not agree.                                          quested for the 2008-2012 period (EurActiv
In the matter of CO2-Taxation, Germany un-          29/10/07).
derlines that the directive can be approved         Moreover, the EU ETS does not include two
only if it fits to the national taxation law.       key polluting sectors, agriculture and trans-
Steinheuer seemed calm about this issue, does       port, which could be easily covered by a car-
not really believe that there will be an agree-     bon tax.
ment over a new energy tax directive – it has       In an attempt to find more effective ways of
been on the table for so many times in the          regulating carbon emissions and filling the
past 5 years and still nothing has happened.        state coffers, countries previously averse to
Although in Gothenburg, at the Environment          the idea - and most notably France - are now
Council meeting, nobody actually opposed            engaged in debating national carbon taxation
László Kovács, they did not cheer either.           schemes.
They anticipate him resigning soon.                 The Commission hopes that an EU-wide tax
                                                    would also help finance the international cli-
      Ministers cautious on EU-wide                 mate treaty to be agreed in December (see
            CO2 tax proposal                        EurActiv LinksDossier on 'The Road to Co-
[EurActiv.com, October, 5, 2009] The Euro-          penhagen').
pean Commission's plans to introduce an EU-         Meeting in Sweden on 1-2 October, the
wide carbon tax to leverage money for financ-       Commission floated the idea of imposing a
ing a post-Kyoto climate treaty received a          carbon tax on sectors outside the EU's emis-
positive but cautious welcome from finance          sions trading scheme (EU ETS; see EurActiv
ministers last week.                                LinksDossier) for the first time at ministerial
Background                                          level.
                                                    "There were not many reactions but those re-
Since the early 1990s, there have been several
                                                    actions were all positive," said Taxation
attempts to introduce a unitary carbon tax
                                                    Commissioner László Kovács, speaking to
across all EU member states.
                                                    journalists after the meeting. He indicated that
But an EU carbon tax has never materialised,        the Commission had been encouraged to pro-
as countries like the UK were unwilling to          pose the legislation next year at the earliest.
render national competencies on taxation to
                                                    "The introduction of a new tax in the Euro-
Brussels. Moreover, the member states af-
                                                    pean Union has never been easy and particu-
fected worst by the current financial crisis, in-
                                                    larly it's not easy in the time of a financial and
cluding Spain and Ireland, argued that they
                                                    economic crisis," Kovács said. "But it is evi-
would be hit harder by the tax than more in-
                                                    dent that climate change is an even more dis-
dustrialised countries.
                                                    astrous global challenge than the current fi-
Consequently, the EU built its climate policy       nancial and economic crisis."
around an emissions trading scheme instead
                                                    The EU ETS only covers around 45% of the
(EU ETS; see EurActiv LinksDossier), which
                                                    EU's greenhouse gas emissions, leaving out
requires large industrial plants to buy and sell
                                                    major emitting sectors, notably agriculture
permits to release carbon dioxide into the at-
                                                    and transport. The Commission has been
mosphere.
                                                    drafting a proposal to review the current En-
However, the shortcomings of the EU ETS             ergy Taxation Directive in order to address
have led to doubts about its emissions reduc-       these and small industrial installations ex-
tion potential. The initial over-allocation of      cluded from carbon trading (EurActiv
pollution credits sent carbon prices plummet-       29/09/09).
ing and forced a rethink of the CO2 cap, lead-
GREENBUDGETNEWS NO. 24                                                                  PAGE 17 OF 45



As taxation is the sole competency of the            the Commission presented its blueprint for
member states, any EU proposal will require          climate aid, suggesting that the EU earmark
unanimity in the 27-state Council of the             €2-15 billion per year per year by 2020 to
European Union. The taxation commissioner            poor countries (see EurActiv 11/09/09).
stressed that the EU executive is under no il-       EU leaders hope to finalise the bloc's position
lusions that it will be possible to get a deal be-   at their meeting in Brussels on 30 October.
fore the UN climate conference in Copenha-           Preparation for the summit will take place
gen, where an agreement on a new interna-            during meetings of finance and environment
tional climate treaty is due to be reached.          ministers the previous week.
Nevertheless, the EU hopes to use the possi-
                                                     'Convergence' on burden-sharing?
ble adoption of the new market instrument to
leverage greater commitments from other              The EU's position on financing is steadily
countries in the negotiations, which have            coming together, the Swedish finance minis-
stalled on funding in particular.                    ter stated after last week's meeting. Previ-
"The revenue could be used both to compen-           ously, EU debates have stalled on disputes
sate lower-income households and also to             over how the burden should be shared be-
build trust between developed and developing         tween member states, with Eastern European
countries, simply putting money on the Co-           countries in particular concerned that their
penhagen table," Kovács said.                        contribution will become too high.
                                                     But the Swedish finance minister spoke of "a
Pressure on the US                                   very strong convergence" on burden-sharing
The ministers also stepped up pressure on the        that emerged at the discussions in Sweden. He
US to bring more to the negotiating table.           argued that "very few” were now arguing
Anders Borg, finance minister of Sweden,             against the Commission's assessment of how
which currently holds the EU presidency,             this could be done.
stated that while the new US administration is       At the same time, however, Polish Finance
making the right kind of noise, it has yet to        Minister Jan Rostowski was reported as say-
put its full weight behind securing an ambi-         ing that his country would not agree to a
tious agreement in December.                         mechanism that could lead to an unjust pro-
"We have some countries that are very, very          posal for the parties in the international
sceptical, and if we're going to make progress,      agreement.
it can't only be Europe that takes leadership.       "From our point of view it's totally unaccept-
We must also see US leadership, and we will          able that the poor countries of Europe should
do our utmost to convince the US on this is-         help the rich countries of Europe to help the
sue," he said.                                       poor countries in the rest of the world,"
Developing countries have repeatedly pointed         Rostowski said.
out that the historical responsibility for emis-     http://www.euractiv.com/en/climate-change/ministers-
sions lies in the industrialised world. They         cautious-eu-wide-co2-tax-proposal/article-186073
want to see the EU and US devote around 1%
of their GDP to helping them cope with cli-          Fiat Made Cleanest Cars Sold in Europe
mate change.                                         [Bloomberg, By Beth Mellor, September 15,
The EU is so far the only region to have pro-        2009] Fiat SpA produced cars with the lowest
duced tentative figures for how much funding         average carbon-dioxide emissions sold in
would have to flow from industrialised na-           Europe in 2008, while Daimler AG made the
tions to developing countries to finance ef-         most-polluting autos, according to the Euro-
forts to cut emissions and adapt to inevitable       pean Federation for Transport & Environ-
consequences of global warming. Last month,          ment.
GREENBUDGETNEWS NO. 24                                                               PAGE 18 OF 45



Turin, Italy-based Fiat made cars with aver-         turer, cut average CO2 emissions by more
age emissions of 138 grams of carbon dioxide         than 10 percent, to 154 grams, the biggest de-
per kilometer, while PSA Peugeot Citroen’s           cline of any carmaker, the researchers said.
cars averaged 139 grams of CO2, followed by          The stock slipped as much as 67.5 cents, or
Renault SA, whose autos emitted an average           1.9 percent, to 34.35 euros in Frankfurt.
143 grams, the Brussels- based environmental         The overall 3.3 percent improvement this year
group said today in its fourth annual report         is more than in any other year under the in-
since 2006.                                          dustry’s voluntary commitment to reduce
Overall, carmakers reduced emissions by 3.3          emissions, Dings said.
percent to 159 grams of CO2 per kilometer in
                                                     ‘Industry Can Do More’
2008, short of a voluntary industry commit-
ment to cut average emissions to 140 grams           “This shows that the industry can do more
last year, researchers led by federation direc-      than it was doing the whole time the pressure
tor Jos Dings said. European Union lawmak-           was not on,” he said. “It shows that voluntary
ers in December approved legislation requir-         commitments do not work and regulation is
ing manufacturers to reduce average emis-            much more effective.”
sions to 130 grams by 2015, and are aiming           Among European Union member states, the
for a further 95 grams average target by 2020.       most fuel- efficient cars were sold on average
Reaching the 130-gram requirement is “a              in Portugal, France and Italy. The most envi-
piece of cake,” Dings said in a telephone in-        ronmentally unfriendly cars were sold in
terview. “Take a company like Volkswagen –           Sweden, Estonia and Latvia, the report said.
all they have to do is bring their entire fleet up   Germany, the region’s biggest car market,
to the level of their best models now.”              was ranked 20th.
Volkswagen AG ranked 12th in the average             The report included the world’s 14 largest car
amount of CO2 emissions.                             manufacturers by number of cars sold. The
Fiat rose as much as 11.5 cents, or 1.3 per-         study was based on vehicle-registration data
cent, to 8.94 euros in Milan. Peugeot climbed        collected in 2008 by the European Commis-
as much as 84.5 cents, or 4.1 percent, to 21.68      sion in 25 of the 27 EU countries. Bulgaria
euros in Paris trading after the carmaker,           and Slovakia failed to provide data in time to
Europe’s No. 2, scaled back its loss forecast        be included.
for the year.                                        To contact the reporter on this story: Beth
                                                     Mellor in London at bmellor@bloomberg.net
Daimler and Nissan
                                                     http://www.bloomberg.com/apps/news?pid=20601085
Stuttgart, Germany-based Daimler AG, the             &sid=aQMEPhaAcW4A
world’s second- largest maker of luxury cars,
and Nissan Motor Co., Japan’s third-largest             Environmentally harmful subsidies
automaker, made the least environmentally                          in fishery
friendly cars, according to the study. Daimler-      [Saija Kononen, Green Budget Germany, Oc-
built cars including Mercedes-Benz produced          tober 21st 2009] The EU Commission is plan-
an average of 175 grams of CO2 per kilome-           ning a “whole-scale and fundamental reform”
ter, while Nissan’s cars averaged 161 grams.         of the Common Fisheries Policy (CFP) as one
Daimler fell as much as 51.5 cents, or 1.5           part of the new Financial Framework after
percent, to 32.89 euros in Frankfurt trading.        2013. A “Green Paper” was pub-lished in
Nissan declined 132 yen, or 2 percent, to 578        April 2009 to promote discussion about the
yen in Tokyo trading.                                subject. The aim of the reform is to encourage
Munich, Germany-based Bayerische Motoren             a change in the current, rather sad, reality of
Werke AG, the largest luxury-car manufac-            European fishery industry. The main prob-
GREENBUDGETNEWS NO. 24                                                                PAGE 19 OF 45



lems accord-ing to the Commission are over-        should support the transition by creating new
fishing, fleet overcapacity, heavy subsidises,     jobs in new ar-eas.
low economic resil-ience and decline in the        Although subsidies to fisheries are much less
volume of fish caught by European fishermen.       substantial than those to agriculture, they are
The last changes done in the CFP in year           significant in terms of their potential impact
2002 could not bring about a noteworthy            on the environment, and also given the size of
change.                                            the industry in several countries. Like Com-
The well-known problem of overfishing still        mission Says in the Green Paper: “In several
is a topical issue in Europe like all around the   Member States, it has been estimated that the
world. Up until 2004 the fishery policy of the     cost of fishing to the public budgets exceeds
EU went totally to the wrong direction: a          the total value of the catches. In simple terms,
large share of the money was spent on build-       this means that European citizens almost pay
ing powerful new fishing vessels and given to      for their fish twice: once at the shop and once
other practices compound-ing overfishing.          again through their taxes.” The fact that fish-
The last CPF was aimed to bring this devel-        eries subsidies can have the effect of increas-
opment to halt but like the Commission itself      ing fishing effort and thus have negative im-
writes “the objectives agreed in 2002 to           pacts on the level of fish stocks has been uni-
achieve sustainable fisheries have not been        ver-sally accepted in the fisheries subsidies
met over-all”. As a result most of the fish        literature. Nonetheless, European fisheries are
stocks have now been fished down. One prob-        eroding their own ecological and economic
lem is that also the Member States that do not     basis and the EU keeps unwantedly maintain-
adhere to the agreement from 2002 keep cash-       ing it.
ing subsidies. Besides, on national level the      If you want to get more information or par-
Member States are free to allocate their share     ticipate in the consultaion, please click here:
however they want. Between the years 1994–
2006 Spain got 48 % of all subsidies dis-          http://ec.europa.eu/fisheries/reform/consultation/i
pensed. In Spain, most of the funding went to      ndex_en.htm
building new boats (and not to scrap them like
recommended in the CFP). A huge trawler                Environment to Round off GDP as
named by Greenpeace as the most egregious                Measure of Europe’s Success
offender against vulnerable stocks of Mediter-
                                                   [Circle of Blue, September 12, 2009] At a
ranean blue fin tuna enjoyed EU subsidies of
                                                   time when Europe struggles to emerge from
more than 4 million euros.
                                                   economic recession, the European Union
There certainly is a need for new guidelines       vows to create indicators for its well-being
and a new binding CFP. At the same time the        that go beyond calculating the Gross Domes-
surveil-lance of the allocation in the national    tic Product (GDP). The European Commis-
states should be more effective and the com-       sion said Tuesday that it will propose in 2010
plying with the CFP should be a precondition       a pilot environmental index that complements
for getting subsidies. There is no need for new    GDP as a measure of progress by gauging wa-
rules and principles if they are not to be fol-    ter use and pollution, greenhouse gas emis-
lowed. The subsidies should be aimed to revi-      sions, loss of natural landscapes, air pollution
talize the industry an not to en-courage emp-      and waste generation.
tying the seas. The structural change should       The EU also plans to implement more timely
be accepted – the more sustainable policy is       social indicators, including more accurate re-
likely to lead to reduction of employees in the    porting on inequality.
sector. The subsidies should not be aimed to
                                                   “GDP was not intended to be a measure of
sus-taining the jobs, on the contrary, they
                                                   well-being,” a Commission press release said
GREENBUDGETNEWS NO. 24                                                               PAGE 20 OF 45



Tuesday. “It doesn’t pick up on issues that are              Environmental Quality as a
vitally important to the quality of our lives                   Component of GDP
such as a clean environment, social cohesion          [Lindsay Condit, October 2009] The Euro-
or even how happy people are.”                        pean Union has recently announced plans to
The proposals are part of the Union’s efforts         add an environmental indicator to the world’s
to make the shift towards a low-carbon, re-           leading economic reference point: gross do-
source-efficient economy.                             mestic product (GDP): The indicator will take
“To meet the challenges of the 21st century           into account environmental harm and pollu-
we need more integrated and transparent poli-         tion levels in EU member states, as well as
cies,” European Environment Commissioner              consider elements such as biodiversity, water
Stavros Dimas said in the press release. “To          use, climate change, and waste generation.
change the world we need to change the way            GDP is a measure of short-term spending and
that we understand the world, and to do this          is not necessarily compatible with today’s
we need to go beyond GDP.”                            policymaking, which aims to keep environ-
The proposed actions, however, will only              mental and social objectives in mind. In short,
complement, and not replace, GDP as a yard-           GDP is not, on its own, intended to measure
stick of economic and social development.             well-being.
Introduced after the Great Depression in the          Stavros DImas, the head of the environment
1930s, GDP measures the total final market            directorate of the European Commission,
value of all goods and services produced              says, “To change the world we need to change
within a country during a given period. Al-           the way that we understand the world. And to
though it effectively indicates a country’s           do this we need to go beyond GDP:”
economic growth, it has long been criticized          In order to accomplish this, the EU is imple-
by civil society groups for overlooking non-          menting an environmental indicator to sup-
marketed economic activities as indicators of         plement GDP measurements, a move that will
well-being and wealth.                                act as a stepping stone for the development of
Despite the Commission’s plans to move be-            a “Green GDP” measurement.
yond it, however, some NGOs are still skepti-         Critics of GDP have been citing undervalua-
cal, EUobserver reported.                             tion of non-commercial goods for years,
“Fifteen years have passed since initial dis-         which includes natural resources. Environ-
cussions, and we are no closer to implement-          mental damage does not yet have an official
ing measures for environmental sustainability,        monetary value, meaning that events like Hur-
societal progress and well-being,” said Tony          ricane Katrina in 2005 showed up as eco-
Long, director of the European Policy Office          nomic growth, when in reality, the money in-
at the World Wildlife Fund (WWF).                     jected into the economy was $80 billion to
He added that the Commission’s plans also             cover damages.
exclude other indices, such as WWF’s “Liv-            During his 1968 presidential campaign, Sena-
ing Planet Index” – which reflects the health         tor Robert F. Kennedy called for similar re-
of the planet’s ecosystems – and the “Eco-            forms, saying, “Gross national product counts
logical Footprint” – which shows the extent of        air pollution and cigarette advertising, and
human demand on these ecosystems.                     ambulances to clear our highways of carnage.
http://www.circleofblue.org/waternews/2009/world/en   It counts special locks for our doors and the
vironment-to-round-off-gdp-as-measure-of-europes-     jails for the people who break them. It ounts
success/                                              the destruction of the redwood and the loss of
                                                      our natural wonder in chaotic spraw. Yet the
                                                      gross national product does not allow for the
GREENBUDGETNEWS NO. 24                                                              PAGE 21 OF 45



health or our children, the quality of their edu-   In addition, the president of the European
cation or the joy of their play.”                   Commission, Jose Manuel Barroso, urged, “I
The process of adding an environmental indi-        am determined that Europe will continue to
cator to GDP has been ongoing for the last ten      provide a lead, but developed and economi-
years in Europe. The reason this change is so       cally advanced developing countries must
slow to come is that it has proven very diffi-      also make a contribution,” apparently a strong
cult to develop monetary values for ecological      hint at China.
services, and carbon and ecological footprints,     The figures were determined using a formula
which already exist, neglect other values; eco-     based on GDP and emissions levels, and Mr.
logical footprints ignore water impacts and         Dimas claims the wide range resulted from
carbon footprints focus too narrowly on             different methods of balancing the criteria.
greenhouse gas emissions.                           Using the same formula, the United States
In addition, environmental data needs to be         should be accountable for €3 billion to €12
more quickly produced, and is something the         billion annually by 2020.
EU has promised to improve. Environmental           This announcement comes at a crucial time,
data have typically lagged two to three years       and the addition of concrete figures should
behind, while the turnaround time for GDP is        prove enormously helpful in avoiding obsta-
usually only a few weeks.                           cles before the climate treaty talks in Copen-
The EU would ideally like to publish an envi-       hagen in December. Not only is the timing
ronmental indicator annually along with GDP         crucial, but the announcement itself is crucial
for each of its member states. Initially the in-    because developing countries have refused to
dicator will focus on environmental harm, but       agree to emissions cuts as part of a worldwide
should extend to environmental quality in the       treaty unless more developed countries help
future, something that is even harder to meas-      fund their adaptation and technological devel-
ure.                                                opments.
The ultimate goal, say Dimas, is an index that      However, environmental proponents have
will be “as simple, as reliable, and as widely      claimed that the amount of money discussed
accepted as GDP. It would be an index where         was inadequate both for the persuasion of de-
populations take pride in positive results. It      veloping countries to take part, and for what
would change the way we understand pro-             is actually needed to accomplish the goals in
gress and would be a catalyst for changing the      the developing world.
way we live.”                                       “The EU is trying to get away with leaving a
                                                    tip, rather than paying its share of the bill to
       Europe Produces Realistic                    protect the planet’s climate,” said climate and
     Expectations for Climate Funds                 energy policy director for Greenpeace Europe,
[Lindsay Condit, October 2009] The current          Joris den Blanken.
plan for helping developing nations combat          Mr. den Blanken has criticized MR. Dimas
climate change is for EU member nations,            for reducing the sum from a range of €13 bil-
among others, to pay €2 billion to €15 billion      lion to €24 billion per year to help win ap-
from their national budgets annually by 2020.       proval for the plan, as many member states
However, there has been some dispute over           are reluctant to pledge large sums of money
these figures.                                      before other wealthy nations declare their in-
The European Union’s commissioner for the           tentions.
environment, Stavros Dimas, said that these         There are some in the political sphere, how-
funds “cannot be a blank check.”                    ever, who have praised Mr. Dimas’ offer as
GREENBUDGETNEWS NO. 24                                                             PAGE 22 OF 45



politically realistic and as something that         demand falls, causing the price to fall. The
could be negotiated.                                demand then shifts to a country without said
Bernice Lee, an expert in energy and envi-          premiums, which then takes over demand us-
ronment at Chatham House, a London-based            ing the same supplies. If by implementing
research group, declared, “It’s an opening          more environmentally friendly policies the
gambit. I assume the commission is, at this         end result is not a reduction of CO2 emissions,
point, testing the political appetite among key     but rather simply a shift in location of CO2
member states in Europe to see if they c an         emissions, the policy is not effective. The
offer more and still win their approval.”           European Commission is therefore tasked
                                                    with researching which sectors could be af-
Mr. Dimas has said that the total cost of aid-
                                                    fected by this carbon leakage, and then postu-
ing developing countries would approach
€100 billion annually by 2020. He said              lating what to do to compensate for it, or how
                                                    to avoid it.
wealthy nations would have to take themoney
from their public finances to make up even          The European Commission is still in the ana-
one half of that sum, and that the private sec-     lysation stage, and has determined three cate-
tor would have to make up for the rest              gories that sectors can be divided into. First
through initiatives like emissions-trading pro-     are those sectors where evidence is present to
grams that encourage companies to invest in         suggest that there is risk of carbon leakage.
green technologies in the developing world.         Second, those that require further analysis
He also stated that he hopes the developing         (border-line cases, those that lack statistics,
world will aid in encouraging investment by         those whose quality of statistics is question-
taking steps on their own to improve energy         able, and those with sectoral specificities).
efficiency.                                         Lastly, those sectors with no evidence of risk
                                                    of carbon leakage. A further group that the
       Carbon Leakage and the EU                    European Commission is paying special atten-
                                                    tion to includes sectors with low profit mar-
[Lindsay Condit, October 2009] Throughout           gins. Low profit margins indicate a high com-
2009 the European Commission has been               petition pressure, making it much more diffi-
tasked with amending the EU ETS Directive           cult for those companies to invest in innova-
(2003/87/EC, passed in 2008) with respect to        tive new technologies and techniques (for ex-
carbon leakage. Most of this work involves          ample, casting of light metals).
analysation of statistics to determine which
sectors or sub-sectors will be at risk for car-     Many conferences have been held by the
bon leakage.                                        Commission that have gathered together
                                                    members of the EU and representatives from
A preliminary definition of carbon leakage          various industries to discuss research con-
would be prudent to such a description of the       ducted on the matter. So far timetables have
situation. Carbon leakage can be defined as an      been set up, as well as lists of data compiled
increase in CO2 emissions in one state or re-       to show which sectors will be affected. Those
gion as a result of an emissions reduction by a     sectors at significant risk should be deter-
second state or region with a strict climate        mined by June of 2010, and the Commission
policy. Strict climate policies often raise local   will report on the risk of carbon leakage by
costs, thereby implementing a trade advantage       June of 2011. In the meantime more research
for another country. Demand remains at the          will be conducted and the Commission will
same level, but the production costs will shift,    continue to schedule bilateral meetings with
and end up being taken over by a country that       stakeholders to determine the best outcomes
can produce goods more cheaply. Another             from both a policy and business perspective.
possibility is for a premium to be added to
certain fuels or commodities. In that case,
GREENBUDGETNEWS NO. 24                                                                  PAGE 23 OF 45



      Effectiveness of EU Cohesion                 Current and future challenges related to adap-
      Spending on the Environment                  tation and vulnerability to climate change will
[EEA, September 3, 2009] Structural Funds          also need additional attention. Here, the report
and the Cohesion Fund are the European Un-         highlights a shift in spending priorities. Policy
ion's main financial instruments to reduce the     goals for climate change, for example, were
gap between poor and rich regions. In its new      given a much higher priority in the spending
report, the European Environment Agency            cycle for 2007–2013 than previously.
evaluates the effectiveness of these funds in      But the report also notes that the link between
achieving environmental goals by focusing on       spending and results has not always been easy
investments in wastewater treatment, biodi-        to evaluate: for some regions, the right data
versity, and energy efficiency and renewable       were not available. The EU needs to do more
energy in three pilot countries: Austria, Italy    to ensure and demonstrate that funds are spent
and Spain.                                         effectively.
The new EEA technical report 'Territorial co-      More information:
hesion – analysis of environmental aspects of      http://www.eea.europa.eu/publications/territorial-
the EU Cohesion Policy in selected countries'      cohesion-2009/
                                                   http://ec.europa.eu/environment/integration/structural_f
supports the European Network of Environ-          unds_en.htm
mental Authorities' evaluation of the envi-        http://www.eea.europa.eu/highlights/effectiveness-of-
ronmental impact of cohesion spending. In          eu-cohesion-spending-on-the-environment
addition to specific analyses and recommen-
dations linked to the three case studies, the
report includes overall recommendations for        4. G REEN B UDGET R EFORM
more effective management of cohesion                 WORLDWIDE
spending.
Most effective cohesion spending occurs
when clear environmental policies and strate-           Achieving the G-20 Call to Phase
gies are developed outside the Structural Fund            out Subsidies to Fossil Fuels
programming and then fully integrated into         [Summarised by Lindsay Condit, from The
the programmes. Some regions have encoun-          Global Subsidies Initiative Policy Brief, Oc-
tered difficulties in spending all the resources   tober 2009] In its most recent policy brief, the
allocated to them, in particular for innovative    Global Subsidies Initiative (GSI) outlined the
environmental projects such as those linking       recent steps the G-20 has undertaken to dis-
biodiversity protection and rural development.     mantle subsidies to fossil fuels. As many
Fewer problems were seen for 'traditional'         countries move forward with economic and
projects, such as wastewater treatment plants.     environmental policies aimed at reducing car-
To address such issues, EU-wide initiatives        bon dioxide and other harmful emissions, they
could be established to promote 'best spend-       realise that it is counter-productive to subsi-
ing' practices.                                    dise the use of fossil fuels simultaneously.
The report recommends that the funds be used       Many kinds of subsidies are identified in this
to promote new and more sustainable mobil-         brief. Countries like China, India, Indonesia,
ity patterns, as well as minimising the nega-      Russia and Saudi Arabia particularly favour
tive impacts of transport and infrastructure       “consumer subsidies”, where fossil fuels are
projects supported. Moreover, guidelines on        supplied to consumers at prices below a refer-
green public procurement should be devel-          ence or “world” level, especially petroleum
oped to ensure that cohesion spending helps        and kerosene products. In addition, may
achieve the objectives of the EU Sustainable       OECD countries provide indirect support for
Development Strategy.                              consumption, through subsidies for airline
GREENBUDGETNEWS NO. 24                                                                                   PAGE 24 OF 45



service to remote areas, for example. A fur-                             more targeted instruments, and production
ther type of subsidy provided by most G-20                               subsidies serve to exhaust the domestic re-
countries benefits the producers of fossil fu-                           source earlier than otherwise would have oc-
els, through direct grants, preferential tax                             curred.
treatment, below-market payments for access                              The GSI calls for several policy reforms.
to publicly-owned resources, subsidised or                               First, the G-20 countries need to establish
government guaranteed loans, and govern-                                 standardised and regular reporting on fossil-
ment assumption of liability for accidents.                              fuel subsidies and an international framework
The IEA has provided estimates that put the                              for monitoring them. Greater awareness of
amount of subsidies to fossil fuels and elec-                            consequences would lead to avoidance of
tricity at $310 billion in 2007. These esti-                             some new, poorly-designed policies being
mates are incomplete, however, because they                              adopted, and pressure for the reform of exist-
ignore consumer subsidies in other countries                             ing ones. Second, policy-makers need to un-
and the producer subsidies believed to be pro-                           derstand the complex political motivations
vided in almost all countries. The GSI esti-                             and interest groups behind each subsidy in or-
mates the current figure to be at least $500                             der to plan effective communication and con-
billion, or approximately 1 per cent of world                            sultation strategies for successful reform.
GDP.                                                                     Third, that planning an effective subsidy re-
A recent OECD study found that removing                                  form strategy requires: clear objectives and
just the consumer subsidies to energy in the                             timeframes; rigorous and thorough research to
20 largest developing countries over the next                            identify subsidies and evaluate their effects; a
decade would reduce global greenhouse gas                                coherent package of policies (including flank-
emissions by 2 per cent in 2020, rising to 10                            ing measures to cushion any negative effects
                  1
per cent in 2050. In addition, these subsidies                           of the reform); a communications strategy
are an enormous drain on government fi-                                  combined with extensive consultation with
nances, are often diverted to purposes for                               stakeholders; the creation of an ongoing
which they were not intended, and they often                             monitoring system; and a peer review process
promote smuggling and corruption.
                                    2                                    for reviewing progress.
Subsidy reform is often hindered by miscon-                              The G-20 communique calls for individual
ceptions and the influence of special interest                           Energy and Finance Ministers to develop im-
groups. They often argue that lowering the                               plementation strategies and timeframes, and
cost of fuel and electricity helps the poor,                             to report back to Leaders at the next Summit
thereby meeting social policy objectives. In                             in Hunstville, Ontario, Canada in June 2010.
reality the subsidies tend to benefit the                                The G-20 has also called on international fi-
wealthy, as they comprise the sector of soci-                            nancial institutions to provide support to
ety that generally can afford motor vehicles                             countries during this process.
and have higher rates of ownership of electri-                           Although this subsidy reform will be difficult,
cal goods. Subsidies on domestic production                              especially politically, it is not impossible; it
are often defended as means to achieve en-                               can be accomplished through painstaking,
ergy self-sufficiency, which is erroneously                              structured work and political leadership.
equated with national security. Governments
would do better to compensate the poor using                                Resource Governance – Managing
                                                                            Growing Demands for Material on
1                                                                                    a Finite Planet
    Burnlaux et al., The Economics of Climate Change Mitigation:
          How to Build the Necessary Global Action in a Cost-            [Declaration of the World Resources Forum -
          Effective Manner, OECD, 2009.
2                                                                        Sept. 16, 2009]
    Jennifer Ellis, Approaches to Assessing the Impacts of Fossil Fuel
           Subsidy Reform, will be released in November 2009.
GREENBUDGETNEWS NO. 24                                                             PAGE 25 OF 45


Preamble                                           nically possible to achieve this without aban-
The recent financial crisis has dramatically       doning the things that we value most.
shown how flimsy the banking and invest-           It is now widely accepted that wellbeing is
ment institutions are that were supposed to be     more than material consumption. Human ful-
so robust, and how vulnerable they are to          fillment includes factors such as education,
false expectations of continued rapid growth       health, safety, freedom from violence, envi-
and consequent over-exploitation of the            ronmental quality, social embeddedness, lei-
monetary and fiscal arrangements that serve        sure, and equity. Despite huge technological
as surrogates for the real economy.                progress, many aspects of human wellbeing
What is true of the economic system is also        have not increased in industrialized countries
true of the ecosystem. Beyond a critical           since the mid 1970s; some are even declining.
threshold, the services that the biosphere has     We call for a new global strategy for govern-
evolved and provided over millions of years        ing the use of natural resources that generates
can breakdown with little warning and with         fair access to them for present needs while
much loss to human, social and economic            maintaining their availability for future gen-
values.                                            erations. By combining efficiency and re-
The underlying deficiencies that can cause         source productivity targets with sufficiency
failure or collapse of ecosystems are much the     norms evolved through participative mecha-
same as for economic systems: short term           nisms, it should be possible to avoid the tradi-
profit maximization, toxic by-products, wrong      tional type of growth rebound effect some-
pricing signals, and the failure by govern-        times experienced.
ments to implement precautionary policies          Alarming Signs
because of insufficient controls and inade-
quate early warning systems. The surprise          Rising global over-use of natural resources
element is enhanced by the absence of proper       (metal ores, fossil energy carriers, biomass,
accounting methods and the scarcity of requi-      non-metallic minerals, water, and land sur-
site skills in systems analysis and manage-        face) is beginning to affect the life sustaining
ment.                                              ecosystemic services of the earth, which are a
                                                   prerequisite for human life, and are not re-
The extent to which the economy and material       placeable by technical means. Climate
wealth can grow are constrained by the limits      change, widespread water shortages, desertifi-
set by the Earth’s resource endowments.            cation, massive erosion and increasing natural
Technology and innovation can in some cases        disasters show that several of the environ-
extend these limits, but rarely by very much.      ment’s safety thresholds have already been
We, the supporters of this Declaration,            surpassed. And yet, only some 20 percent of
strongly believe that economic stability in our    humankind enjoy the full benefits of the
finite world depends on how quickly we can         mainstream economic model, while all people
introduce low impact production systems that       - in particular the poor - have begun to suffer
can satisfy human needs and bring quality of       the consequences of its flaws.
life to all people.                                There is observational evidence from all con-
Traditional environmental technologies are no      tinents - and most oceans - that natural sys-
longer enough. Decoupling the meeting of           tems are being affected by regional climate
human needs from the use of nature’s re-           changes (IPCC 2007). Climate change is only
sources will require radically new infrastruc-     one example demonstrating how inordinate
tures, goods, services, processes, systems and     resource flow (in this case of fossil fuels
business models. While some changes in life-       transformed to CO2) can affect human quality
style, consumption patterns and production         of life on earth. Other alarming signs are the
systems will certainly be necessary, it is tech-
GREENBUDGETNEWS NO. 24                                                           PAGE 26 OF 45



loss of the global forest area, which shrank at   and population growth will lead to a projected
an annual rate of 0.2 percent between 1990        two-and-a-half fold increase in annual global
and 2005 (UNEP 2007) and species extinction       resource extraction with corresponding seri-
rates increasing 50 to 500 times the natural      ous reactions of the ecosphere.
rate (World Watch Institute 2008).
                                                  Respecting Physical Limits
To some degree, different world regions face
specific problems resulting from global over-     Satisfying the needs of a growing world popu-
use of natural resources (UNEP 2007): In Af-      lation within physical limits is a challenge to
rica, land degradation is the main issue of       economic and environmental policymakers.
concern; in Asia and the Pacific urban air        Globalizing the traditional model of economic
quality, fresh water stresses, degraded ecosys-   growth is rapidly increasing the extraction of
tems, agricultural land use, and increased        limited natural resources, thus augmenting
waste are priority issues; in Europe the still    ecological disruption. Current economic and
increasing emission of green house gases,         environmental policies have not stopped these
biodiversity loss, land-use change, and fresh     trends. As a consequence, we are losing ever
water stresses are issues of concern. In Latin    more the freedom to shape the future of hu-
America and the Caribbean, growing cities         manity.
create threats to biodiversity and ecosystems,    Moreover, key technologies that we will need
degraded coasts and polluted seas are threat-     for the transition to a more sustainable econ-
ening signs, as is regional vulnerability to      omy depend on chemical elements that are
climate change.                                   currently being dissipated regardless of their
North America, consuming over 24 % of             geochemical scarcity. These include anti-
global primary energy with 5.1% of world          mony, copper, gallium, germanium, indium,
population, faces urban sprawl and fast grow-     lithium, niobium, platinum, ruthenium, sele-
ing freshwater stresses. In West Asia, land       nium, and tellurium, which are particularly
degradation, freshwater stresses, degradation     important for emerging energy supply tech-
of coastal and marine eco-systems, urban          nologies as well as for information and com-
management, peace and security are priority       munication technologies. Technology cannot
issues.                                           replace the life-sustaining services of nature.
Global resource extraction grew from 40 bil-      However, we can improve the ways in which
lion tons in 1980 to about 55 billion tons in     we make use of these services, creating qual-
2002 and is expected to grow to 80 billion        ity of life for more people with less strain on
tons by 2020 (OECD, 2008). If one also takes      nature. Eco-Innovation is capable of achiev-
into account the materials displaced from         ing this goal without loss of end-use satisfac-
their natural settings, but not used to create    tion, but only if economic incentives support
commercial value, this number more than           such a development (gws Discussion Paper
doubles. We should seek to stabilize resource     2009/5 of Prof B. Meyer et al, ISSN 1867-
use at 6 to 10 tons per capita per year by 2050   7290; Europe Innova 2008).
with reductions at the top of global society      Accepting this challenge means that the
and catch-up from the bottom. The range of 6      global average of per capita yearly material
to 10 tons is based on present best estimates     resource use should by no means be allowed
and based on the current total resource use di-   to rise any further. This means that a process
vided by the world population. Considerable       of convergence needs to be initiated in which
research has to be invested in order to arrive    the wealthy industrialized countries substan-
at more specific policy options.                  tially reduce their resource consumption in
If we continue with business as usual, devel-     order to leave space for others to improve
opment in industrializing parts of the world      their standard of living. Developing countries
GREENBUDGETNEWS NO. 24                                                                  PAGE 27 OF 45



should not be encouraged to invest in expen-         side effect of creating new jobs and redistrib-
sive infrastructure without a future, but be         uting income to developing countries where
supported in leapfrogging the wasteful modes         many of the resources come from - and mar-
of production and consumption in which the           ket creation policies including tradable per-
wealthy countries have presently locked in.          mits. Instead of applying value added taxation
                                                     to final goods it may be more effective to tax
The Political Challenge
                                                     natural resources at the point at which they
Traditionally environmental policies have fo-        are removed from nature or where they enter
cused on specific problems. In certain re-           the industrial metabolism.
spects this approach has been quite success-         However, because of market failures, eco-
ful. For instance, this strategy has cleaned up      nomic instruments may not work in all cases.
water pollution in rich countries, taken dan-        Therefore other instruments and measures
gerous goods off the market, recycled certain        should be considered too - such as informa-
products, and stopped ozone depletion.               tion and coordination instruments, and com-
But these policies are toothless against the         mand and control mechanisms as, for in-
problem of exploding global resource con-            stance, adapting standards. The choice of pol-
sumption. What we urgently need is economic          icy options should depend on the relative de-
policies that make the global economic sys-          sirability of dematerializing goods and ser-
tem take into account the inherent limitations       vices while maximizing employment oppor-
and the value of the cost-free life sustaining       tunities, improving international equity and
services of nature. The politically defined          per capita welfare.
economic framework conditions have to be
adjusted to protect the global ecosystems, and       Call for Action
to preserve resources for future generations –       For the reasons stated above we urge political
while lowering the cost of labor.                    leaders to adopt a strategy of resource gov-
These conditions must include incentives to          ernance consisting of the following elements:
make planned transitions now, rather than be-        1. ºººº Seek international agreements on world-
ing forced upon us by catastrophes. Major in-                wide per-capita targets for natural resource
creases in resource productivity would occur                 extraction and consumption to be effective
if all relevant markets operated perfectly in-               by 2015 at the latest, the main objective be-
stead of being blind to the environmental                    ing to bring about an absolute decoupling
                                                             between economic development and re-
costs of growth, and if there were no barriers               source use, the implication being less re-
to entrepreneurial innovation.                               source inputs for more value.
However the markets are not operating per-           2. ºººº Introduce effective policy measures to
fectly, market prices are wrong due to dis-                  greatly enhance resource productivity as
counted externalities, relevant information is               well as curbing demand over time, in the
not available to the actors, and innovation                  form of standards, higher taxes on resource
barriers exist. No incentives or policies cur-               use with the possibility of reduced taxes
rently exist for a sufficiently resource efficient           elsewhere, cap and trade mechanisms, etc.
                                                     3. ºººº Introduce with urgency resource use targets
economy. Adjusting the fiscal framework is
                                                             in areas of particular concern – like fresh
therefore the most fundamental and urgent                    water, marine resources and tropical forests
pre-requisite for approaching a sustainable fu-              – to put a halt to the rapid destruction of
ture. Subsidies that increase the consumption                ecosystem services and biodiversity.
of natural resources must be eliminated, and         4. ºººº Focus research and development on the
economic instruments should be deployed                      goal of increasing resource productivity.
such as a shift away from overheads on labor                 The resulting innovation will create space
and toward taxing raw materials - with the                   for economic and social development. As a
                                                             side-effect, national economies and cities
GREENBUDGETNEWS NO. 24                                                                     PAGE 28 OF 45


         will become less dependent on resource im-                   World forum calls for
         ports, in particular fossil energy carriers.                 natural resource tax
5.   ººººSeek societal consensus by 2012 on eco-
         logical and economic indicators (on micro-,       [EurActiv.com, September 15, 2009] To com-
         meso-, and macro-levels) in tune with the         bat soaring consumption of natural re-
         laws of nature and beyond GDP. These in-          sources, the World Resources Forum (WRF)
         dicators must be applied by industry and          is calling for a global strategy to frame a new
         governments when reporting on the pro-            economic model that would directly tax raw
         gress attained toward sustainability, and         materials instead of products and labour.
         they must become the subject of learning
                                                           The World Resources Forum 2009 (WRF) on
         processes at all levels of education.
6.   ººººReshape the framework conditions for the
                                                           September 16th will adopt a declaration call-
         economy to account for the scarcity of natu-      ing for a new global strategy governing the
         ral resources and recognize the need for          use of natural resources.
         their extraction and sale to promote the en-      The forum will call for goods and services to
         vironmental sustainable development of the        be "dematerialised" and employment oppor-
         countries in which they take place.               tunities to be "maximised", as well
7.   ººººSeek dialog with the business community to        as demanding international equity and per
         help redesign business models where reve-         capita welfare improvements.
         nues would be increasingly derived from
         quality of services rather than by selling        The draft declaration argues that while tradi-
         material products.                                tional environmental policies have in some
8.   ººººInitiate process to rethink lifestyles and help   cases been quite successful regarding water
         develop consumption patterns based on suf-        pollution in rich countries or recycling and
         ficiency and careful use of natural re-           removing dangerous goods from the market,
         sources. Traditional knowledge, wisdom            for example, these policies are "tooth-
         and spirituality should inspire help frame        less" when it comes to fighting the depletion
         education and policies.                           of natural resources.
9.   ººººStrengthen education to increase awareness
         for resource limits, especially among             New economic framework
         economists, and foster the ability of deci-       The draft declaration stresses that "politically
         sion makers to analyze long-term and sys-         defined economic framework conditions have
         temic trends and to implement sustainabil-        to be adjusted to protect global ecosystems"
         ity-driven innovation.                            and preserve resources for future genera-
References                                                 tions. Such conditions should include incen-
EUROPE INNOVA (2008): Final Report for                     tives to make planned transitions immedi-
the EU Innovation Watch Panel on Eco-                      ately, instead of waiting for catastrophes to
Innovation, www.europe-innova.org.                         force the changes, it adds.
IPCC (2007): Climate Change 2007, Synthe-                  There are no incentives or policies in place to
sis Report.                                                create a "sufficiently resource-efficient econ-
                                                           omy," notes the draft, while current markets
OECD (2008): Measuring Material Flows and
                                                           are "blind to the environmental costs of
Resource Productivity. Synthesis Report
                                                           growth" and hamper major increases in re-
UNEP (2007): GEO 4 - Global Environment                    source productivity. This is largely because
Outlook. Environment for Development.                      market prices do not include environmental
World Watch Institute (2008): State of the                 externalities and information is not made
World 2008. Innovations for a Sustainable                  available to the relevant innovative stake-
Economy.                                                   holders, it adds.
http://www.worldresourcesforum.org/wrf_declaration         Tax resource use, not labour or end products
GREENBUDGETNEWS NO. 24                                                              PAGE 29 OF 45



Adjusting the fiscal framework is "the most               Cold front on climate change
fundamental and urgent pre-requisite for ap-       [The Star, September 14, 2009, Global Trends
proaching a sustainable future," the draft         by Martin Khor] News from Europe of a
states.                                            threat to impose import taxes, and the offer of
It calls for subsidies that increase resource      only small funds for developing countries,
consumption to be eliminated, and highlights       may impact negatively on a climate deal.
the need to shift away from taxing labour to       Hopes for a global deal on climate change by
taxing raw materials. This would have the          December look less bright after two disap-
"side effect of creating new jobs and redis-       pointing developments in Europe.
tributing income to developing countries
                                                   First was a threat that Europe could introduce
where many of the resources come
                                                   trade measures to block products from devel-
from," WRF notes.
                                                   oping countries as part of its policy to address
Going even further, the declaration suggests       climate change.
that instead of applying VAT to end products,
                                                   French President Nicolas Sarkozy on Sept 10
"it may be more effective to tax natural re-
                                                   called for a European carbon tax on imports.
sources at the point at which they are re-
moved from nature or where they enter the          It follows his previous proposal for Europe to
industrial metabolism".                            place import tariffs on goods from countries
                                                   that do not commit to international targets on
'Dematerialising' goods and services and in-
                                                   Greenhouse Gas emission reductions.
troducing low impact production systems will
also require "radically new infrastructures,       Sarkozy said he “will not accept a system that
goods, services, processes, systems and busi-      imports products from countries that don’t re-
ness models," as traditional environmental         spect the rules in France. I will fight for a car-
technologies are no longer enough to de-           bon tax at the borders of Europe.”
couple the meeting of human needs from the         He referred to the recent passing of a Bill in
use of natural resources, WRF underlines.          the United States House of Representatives
Europe urged to measure resource use               containing measures to impose a charge on
                                                   imports based on emissions, saying: “I don’t
Michael Warhurst of Friends of the Earth
                                                   see why the US can do it and Europe cannot.”
Europe        (FoEE),     an     environmental
NGO, deplored that Europe "has no tar-             This confirms the fear of developing countries
gets" for reducing resource use, while "new        that since the US is embarking on trade-
policies are not assessed for their potential to   protectionist measures in the name of climate
increase our resource efficiency".                 change, there will be strong pressures in
                                                   Europe to do likewise.
In a joint report with the Sustainable Europe
Research Institute, FoEE is calling on the         The developing countries are the targets and
EU to measure its resource use and adopt new       they will be the losers if these threats are car-
policies, such as higher recycling targets, to     ried out. Compared to the developed coun-
increase resource efficiency.                      tries, they have less funds and technology to
                                                   make their production systems less polluting.
They suggest that Europe should measure its
use of materials in particular, but also its       The developed countries which are mainly re-
land and water use and greenhouse gas emis-        sponsible for the climate crisis should be as-
sions, taking account of the impact                sisting developing countries, instead of mak-
of Europe's consumption on the rest of the         ing them victims doubly – of the effects of
world in terms of imported resources.              climate change, and of climate-linked trade
http://www.euractiv.com/en/sustainability/world-   protectionism.
forum-calls-natural-resource-tax/article-185401#
GREENBUDGETNEWS NO. 24                                                              PAGE 30 OF 45



At the climate talks in Bonn in August, India      cost of global climate action is about 2% of
and other countries protested against the          world GNP (around $1,000 billion today or
looming trade measures and proposed that the       $2,000 billion in 2050).
Copenhagen climate conference in December          He advocated $130 billion per annum of pub-
proclaim that such measures be prohibited.         lic funding from developed countries for use
If the threat of protectionist measures contin-    by developing countries ($15 billion for forest
ues, it will sour the negotiating atmosphere       conservation, $40 billion for R&D and $75
and make a deal in Copenhagen more diffi-          billion for adaptation), and also estimated an-
cult.                                              other $50 to $100 billion flow to developing
The second adverse development was the re-         countries for mitigation, through carbon trad-
lease also on September 10 of Europe’s offer       ing.
of financial resources to developing countries.    On adaptation alone, the UN Climate Conven-
The European Commission said that develop-         tion secretariat estimated the global annual
ing countries would need 100 billion Euros a       costs at $40 to $170 billion.
year (by 2020) to act on climate change.           But the actual adaptation costs are three to
But it added that the governments of devel-        three times higher in the sectors covered by
oped countries should fund only 20% to 40%         the report, according to a recent study by the
of that, while the carbon market will come up      International Institute for Environ-ment and
with 40% and the developing countries will         Development and the Grantham Institute of
self-finance 20% to 40%.                           Imperial College London.
It proposed that international public financing    And if sectors left out of the secretariat report
for climate activities would be 22 billion to 50   are included, the cost would be higher still.
billion Euros in 2020, of which Europe would       For example, the cost of protecting eco-
fund 2 billion to 15 billion Éuros.                systems could cost $350 billion.
And in the near term, 2010-2012, there would       Another study by scientists in China esti-
be only 5 billion to 7 billion Euros a year,       mated the cost of reducing China’s emissions
with Europe contributing .5 billion to 2.1 bil-    as $438 billion per year within 20 years.
lion Euros.                                        The developing countries’ grouping, the G77
These figures are extremely low, especially        and China, have called for developed coun-
since they cover the whole range of activities     tries to provide 0.5% to 1% of their GNP
– mitigation (reduction of emissions), adapta-     (which is around $200 to $400 billion a year)
tion (coping with the effects of climate           to fund developing countries’ climate actions.
change), capacity building (the development        Besides being so inadequate in quantum, the
of institutions) and technology development.       European proposal also comes with many
The proposed amounts pale in comparison            conditions and assumptions.
with the estimates made by many organisa-          These include that some developing countries
tions of what is needed by developing coun-        should also contribute to the international
tries to fight climate change.                     funding, that they must agree to cap their
Two weeks ago, the United Nations’ Econom-         emissions and take part in carbon trading
ics and Social Department published a de-          within a certain year, that much of the funding
tailed report estimating that $500 billion to      will go through existing channels such as bi-
$600 billion is required annually by develop-      lateral aid and the World Bank.
ing countries for mitigation and adaptation.       It practically ignores the G77 and China pro-
The economist Nicholas Stern (who authored         posal for a big fund to be set up under the UN
the Economics of Climate Change for the            Climate Convention. Many of these condi-
British government) estimated that the annual      tions are counter to the Convention’s provi-
GREENBUDGETNEWS NO. 24                                                                  PAGE 31 OF 45



sions and principles, and are likely to be op-           Regulations alone fall short of the measures
posed by many developing countries.                      needed to protect the environment; green
Finance is a crucial part of any global climate          taxes are essential. The beauty of eco-taxes is
deal, and it was hoped that the long-awaited             that they incorporate costs of environmental
offer from Europe could help break the im-               damage into the prices of goods and services
passe in the climate talks.                              which cause this effect.
Unfortunately, it may have the opposite ef-              Green taxes, if sufficiently significant, can
fect.                                                    modify behavior or at least contribute to the
http://thestar.com.my/columnists/story.asp?col=globalt   cost of reinstatement, for example, the dam-
rends&file=/2009/9/14/columnists/globaltrends/470877     age caused by the recent floods in Taiwan.
8&sec=Global%20Trends                                    The principle is – let the polluters pay. Green
                                                         taxes spur technological innovation and the
 Taxes that help protect the environment                 embracing thereof by the marketplace. Fur-
[The Star, September 7, 2009, Part 1 in a 2-             ther, eco-tax can also be used as a means of
part series] Remember Anya Hindmarch’s                   reducing income tax by shifting part of tradi-
“I’m NOT a plastic bag” that created queues              tional taxation to greener pastures.
at Suria KLCC and which sold for astronomi-              Some examples of green taxes include Hong
cal prices on eBay? Hong Kong recently im-               Kong’s plastic bag tax which was also im-
plemented its anti-plastic bag programme by              plemented in Ireland years ago. (Interestingly,
requiring 50 cents tax per plastic bag. This tax         in certain parts of India, the use of plastic
led to a dramatic 85% drop in the issue of               bags attracts a jail term of up to seven years
plastic bags by shops and supermarkets in the            or a fine of up to 100,000 rupees i.e.
first two days!                                          RM7,000.)
Green taxes are in fashion globally. No, I am            Japan has removed duties on biofuel and de-
not referring to Islamic taxes like zakat and            creased taxes on cars with low emissions such
fitrah but rather, eco-taxes. Just as green-             that these cars are now a status symbol and
striped ties are in vogue, tax designers                 more popular while China offers tax incen-
worldwide are creating green taxes.                      tives for companies which reduce water con-
In a groundbreaking initiative in April 2009,            sumption.
Britain presented the world’s first carbon               China, however, taxes disposals of waste, in-
budgets alongside its traditional fiscal budget          cluding water, whether by companies or
when Alistair Darling, Chancellor of Excheq-             households and also levies tax on energy con-
uer, stipulated legally-binding carbon emis-             sumption.
sion targets.
                                                         Sweden has increased recycling by taxing
Barack Obama has also set out to green the               waste disposal. Norway taxes certain products
United States. Through Uncle Sam, he offered             which contain fluorine and this has encour-
tax credits to consumers who acquire hybrid              aged sales of refrigerators which use envi-
cars from 2009 and homeowners who install                ronmental-unfriendly products.
energy-efficient items like air conditioners,
                                                         Britain doubled its air passenger duty in 2007
windows, roofs and water heaters.
                                                         and increased revenue but did not signifi-
In Taiwan, a cabinet-level reform committee              cantly dampen inelastic air travel.
proposed an energy tax and an environment
                                                         Another method of decreasing carbon emis-
tax to be implemented in 2011. And so the list
                                                         sions is through carbon trading. The EU
continues as governments must be careful to
                                                         Emission Trading Scheme is the largest trad-
be seen to be environment friendly.
                                                         able permits programme in the world.
GREENBUDGETNEWS NO. 24                                                                    PAGE 32 OF 45



Initially, governments set caps on carbon di-        2010. What will Malaysia do to reduce its
oxide (CO2) emissions and issue permits to           carbon footprint?
that extent with annual reductions until the         Ronnie Lim is country tax leader of Deloitte
target level is reached.                             Malaysia.
Companies acquire these permits, perhaps             http://biz.thestar.com.my/news/story.asp?file=/2009/9/
through an auction process, to enable them to        7/business/4656008&sec=business
legally emit a quantity of CO2. Companies are
permitted to buy and sell permits.                             Maldives President Plans
With all taxes, avenues are provided for tax                    Green Tax for Tourists
planning. Eco-taxes provide for tax avoidance        [The Telegraph, September 7, 2009] Mo-
and indeed encourage this in the same way            hammed Nasheed, the President of the Mal-
that tax incentives work in the realm of in-         dives, said he plans to introduce a $3 (£1.80)
come tax.                                            a day green tax for all tourists at the Indian
The green tax man does not seek to merely            Ocean nation's popular island resorts.
increase tax revenue but more importantly, to        The tax would help to pay for the country's
enhance the noble aim of preserving the envi-        ambitious goals in fighting climate change.
ronment.                                             Since taking office last year, President Nash-
Every time there is a shift to environment-          eed has emerged as an important voice on the
friendly assets, goods or services resulting in      impact of climate change amid fears that
less tax revenue, the green tax man rejoices!        within a century, rising ocean levels could
Regrettably, where taxes are high, unintended        swamp the Indian Ocean archipelago. Its is-
evasion is promoted, for example, tobacco            lands average 7ft above sea level, making the
smuggling where duties are high, and illegal         Maldives the lowest-lying nation on Earth.
landfills and illegal sales of fuel in relation to   Mr Nasheed has announced plans for a fund
high eco-taxes. The green tax man would then         to buy a new homeland if the 1,192 low-lying
see red and take action.                             coral islands are submerged. He has also
McDonald’s recently migrated its European            promised to make the Maldives, with a popu-
headquarters from Britain to Switzerland, a          lation of 350,000, the world's first carbon-
more income tax friendly country. In the ab-         neutral nation within a decade.
sence of a coordinated global tax initiative,        He said on Monday that rich and poor coun-
companies in countries with high eco-taxes           tries need to look beyond national interests if
may choose to migrate to jurisdictions with          the world is to reach a deal on fighting cli-
lower or no such taxes or which grant envi-          mate change.
ronment tax holidays. There is thus a need for       Mr Nasheed said the issue of climate change
a worldwide protocol, amidst challenges, be-         is too important to allow disagreements to
cause poor countries may suffer more.                stop a deal. Climate change soon will be seen
On an individual level, green taxes are said to      as a national security concern, not just an en-
be regressive because the poor are more af-          vironmental one, as countries compete for
fected than the rich. These are real concerns        natural resources, he said.
which need to be addressed, for example,             "But the core point is, there's hope. It's not
through redistribution of green tax revenue, or      doomed," he said. "We can reverse the situa-
else political leaders may suffer the same fate      tion."
as Margaret Thatcher.                                Mr Nasheed will not be attending the United
Part II of this article will focus on Malaysian      Nations climate summit in Copenhagen in
green taxes, especially in view of Budget            December. In light of his nation's financial
GREENBUDGETNEWS NO. 24                                                                    PAGE 33 OF 45



crisis, he has decided to stay home to save            Development and the Environmental Protec-
money.                                                 tion Administration work out a plan within a
http://www.telegraph.co.uk/earth/copenhagen-climate-   month.
change-confe/6152517/Maldives-president-plans-         He also said the government may consider
green-tax-for-tourists.html
                                                       scrapping other taxes, such as commodity tax,
                                                       printing tax and entertainment tax, to reduce
      Taiwan: Government Proposes
                                                       the green tax's impact.
       Introduction of 'Green Tax'
                                                       Daigee Shaw, president of the Chung-Hua In-
[China Post, August 4, 2009] A Cabinet-level
                                                       stitute for Economic Research, said that the
tax reform committee proposed that the gov-
                                                       green tax should be based on a “users and pol-
ernment impose a “green tax” to help reduce
                                                       luters pay” principle and designed to encour-
the emission of greenhouse gases, a plan that
                                                       age energy conservation while granting incen-
spurred concerns and skepticism among busi-
                                                       tives to those who meet specified targets.
ness leaders.
                                                       Shaw said the green taxation system his think
Under the committee's proposal, the tax
                                                       tank is proposing is not meant to increase
would begin in 2011. Once the plan passes the
                                                       taxes on the public, but rather is a two-
legislature, it would enable the government to
                                                       pronged strategy for improving environmental
levy an energy tax and an environmental tax
                                                       protection and simplifying the taxation sys-
on high energy users and environmental pol-
                                                       tem.
luters in efforts to cut carbon emissions.
                                                       Under a “financially independent” model,
By the tenth year of the tax's imposition, the
                                                       added revenues that the government collects
government will have received a tax revenue
                                                       via the green taxation system would be used
of NT$810.1 billion, according to the pro-
                                                       to finance the overhaul of outdated taxation
posal.
                                                       systems, the operations of mass rapid trans-
A committee meeting was convened to dis-               port systems and research on energy conser-
cuss the direction, parameters and details of          vation and emission reduction, he added.
the proposed green tax. The meeting was at-
                                                       He estimated that the green tax will help cut
tended by officials from the Ministry of Fi-
                                                       carbon dioxide emissions by 19.67 million
nance, including Finance Minister Lee Sush-
                                                       tons within one year and by 78 million tons
der, as well as academics from research think
                                                       within 10 years.
tanks and representatives from the industrial
                                                       http://www.chinapost.com.tw/business/asia/b-
sector.                                                taiwan/2009/08/04/219083/Govt-proposes.htm
According to the tax reform committee's plan,
the energy tax will be tied to the production
and consumption of fossil and nuclear energy,          5. R ENEWABLES : W INDPOWER
while the environment tax will target the pro-
duction of greenhouse gas emissions and pol-
lution of the air, surface and underground wa-                Wind Power-20 Year Plan for
ter, land, and ocean regions.                                     Offshore Wind Grid
As the tax is expected to have a strong impact         [EV Wind, September 15, 2009] A 20 year
on the industry, Lee said the government is            plan for the development of European off-
also considering certain “non-tax tools” to            shore wind power was presented by the Euro-
discourage carbon emissions.                           pean Wind Energy Association (EWEA) at
He didn't specify what these non-tax tools             the world's largest-ever meeting on harnessing
were and only said the Ministry of Finance             Europe's most plentiful energy source.
has requested that the Ministry of Economic
Affairs, Council of Economic Planning and
GREENBUDGETNEWS NO. 24                                                            PAGE 34 OF 45



EWEA’s 20 year offshore network develop-           Swedish mariners have known for more than
ment plan, launched to 4,000 business and          eight centuries that the combined power of
government participants at the European Off-       wind and water is an unstoppable force to be
shore Wind 2009 Conference today in Stock-         reckoned with, feared, admired and exploited.
holm, provides a comprehensive approach to         Today in Stockholm, at the Offshore Wind
constructing a transnational offshore power        2009 conference, politicians from Sweden
grid.                                              and throughout the European Union learned
Building on the 11 grids already in place and      from a new report called Oceans of Opportu-
the 21 being studied by grid operators in the      nitythat the 100 GW of offshore projects al-
North and Baltic Seas, EWEA proposes eight         ready being planned could produce 10% of
additional offshore grids by 2020 and six          Europe’s electricity.
more by 2030.                                      The same report, published by the European
2010 is a key year for planning Europe's fu-       Wind Energy Association (EWEA), told poli-
ture electricity grid, which needs massive up-     ticians and others at the conference that those
grading, as the European Commission is due         offshore wind projects could avoid 200 mil-
to publish a Blueprint for a North Sea Grid        lion tonnes of CO2 emissions annually.
while European electricity network operators       Not only that, the 66-page publication begins
will publish a 10 year plan for developing a       with the statement that Europe’s future de-
truly European grid -essential for a single        pends on offshore wind. “Europe is faced
European energy market, harnessing renew-          with the global challenges of climate change,
able energies and improving security of sup-       depleting indigenous energy resources, in-
ply.                                               creasing fuel costs and the threat of supply
“EWEA’s new offshore network plan will             disruption,” the report says. “Offshore wind
provide a truly pan-European electricity super     power provides the answer to Europe’s en-
highway”, said Christian Kjaer, Chief Execu-       ergy and climate dilemma – exploiting an
tive of EWEA. “This will bring affordable          abundant energy resource which does not
electricity to consumers, reduce import de-        emit greenhouse gases, reduces dependence
pendence, cut CO2 emissions and allow              on increasingly costly fuel imports, creates
Europe to access its largest domestic energy       thousands of new jobs and provides large
source – offshore wind.                            quantities of indigenous affordable electric-
“EWEA urges the European Commission to             ity.”
incorporate our plan when drafting its Blue-       On a similar note, Maud Olofsson, Swedish
print for a North Sea Grid, and the European       Deputy Prime Minister and President of the
Network of Transmission System Operators           EU Energy Ministers Council, said wind
to do the same when drafting its 10 Year           power off Europe’s coastline is a resource
Network Development Plan”, Kjaer went on.          ready for exploitation and developers are ea-
European offshore wind projects would, if          ger to get started. “Provided governments are
implemented, supply 10% of Europe's elec-          ready to play their part,” she said, “we can
tricity whilst avoiding over 200 million ton-      revolutionise Europe’s energy future.”
nes of CO2 emissions every year.                   Stan Messemaekersis one of the more than
                                                   3,000 people at the conference, Europe's big-
It is fitting that a new plan to power Europe in
                                                   gest-ever gathering to plan the harnessing of
the future with a massive increase in offshore
                                                   its huge offshore wind energy potential. Like
wind energy was released today here in this
                                                   Olofsson and the Oceans of Opportunity re-
historic 13th century city of islands on Swe-
                                                   port, Messemaekershas faith in the amazing
den’s southeast coast where Lake Malaren
                                                   power of wind on water.
meets the relentless Baltic Sea.
GREENBUDGETNEWS NO. 24                                                                 PAGE 35 OF 45



“It’s going to be a booming business and a               ing considered by the grid operators in
good one,” said Messemaekers, who is Geo-                the Baltic and North Seas to give
Sea’s offshore wind assistance manager. “I               Europe a truly pan-European electricity
sincerely believe that oil-based energy will             super highway.
come to an end and offshore wind will help
                                                        Realising the potential
fill that void, certainly in Europe.” He said
GeoSea, which started in 2005 and is head-               Strong political support and action from
quartered in Antwerp, has about 100 employ-              Europe’s policy-makers will allow a
ees working across the entire offshore wind              new, multi-billion euro industry to be
sector. The company, he added, is optimistic             built.
that offshore wind has an illustrious future.
“It’s a necessity.”                                Results that speak for themselves
With positive thoughts like that ricocheting       This new industry will deliver thousands of
throughout the conference, it seems a cer-         green collar jobs and a new renewable energy
tainty that offshore wind power will help          economy and establish Europe as world
greatly improve the future for Europe’s econ-      leader in offshore wind power technology.
omy, energy system and environment. All we         A single European electricity market with
have to do is continue to believe in wind, just    large amounts of wind power will bring af-
like those hearty and courageous Swedish           fordable electricity to consumers, reduce im-
sailors from yesteryear who depended on            port dependence, cut CO2 emissions and al-
fully-charged sails bringing them safely back      low Europe to access its largest domestic en-
home across the formidable Baltic Sea.             ergy source.
Europe’s offshore wind potential is enormous and   Offshore wind power is vital for Europe’s fu-
able to power Europe seven times over.             ture. Offshore wind power provides the an-
                                                   swer to Europe’s energy and climate dilemma
     Huge developer interest                      – exploiting an abundant energy resource
      Over 100 GW of offshore wind projects        which does not emit greenhouse gases, re-
      are already in various stages of plan-       duces dependence on increasingly costly fuel
      ning. If realised, these projects would      imports, creates thousands of jobs and pro-
      produce 10% of the EU’s electricity          vides large quantities of indigenous affordable
      whilst avoiding 200 million tonnes of        electricity.
      CO2 emissions each year.                     This is recognised by the European Commis-
     Repeating the onshore success                sion in its 2008 Communication ‘Offshore
                                                   Wind Energy: Action needed to deliver on the
      EWEA has a target of 40 GW of off-           Energy Policy Objectives for 2020 and be-
      shore wind in the EU by 2020, implying       yond’. Europe is faced with the global chal-
      an average annual market growth of           lenges of climate change, depleting indige-
      28% over the coming 12 years. The EU         nous energy resources, increasing fuel costs
      market for onshore wind grew by an av-       and the threat of supply disruptions. Over the
      erage 32% per year in the 12-year pe-        next 12 years, according to the European
      riod from 1992-2004 – what the wind          Commission, 360 GW of new electricity ca-
      energy industry has achieved on land         pacity – 50% of current EU capacity – needs
      can be repeated at sea.                      to be built to replace ageing European power
     Building the offshore grid                   plants and meet the expected increase in de-
                                                   mand. Europe must use the opportunity cre-
      EWEA’s proposed offshore grid builds         ated by the large turnover in capacity to con-
      on the 11 offshore grids currently oper-     struct a new, modern power system capable of
      ating and 21 offshore grids currently be-
GREENBUDGETNEWS NO. 24                                                           PAGE 36 OF 45



meeting the energy and climate challenges of      nical potential of offshore wind in 2020 at
the 21st century while enhancing Europe’s         25,000 TWh, between six and seven times
competitiveness and energy independence.          greater than projected electricity demand, ris-
                                                  ing to 30,000 TWh in 2030, seven times
EWEA target
                                                  greater than projected electricity demand. The
In March, at the European Wind Energy Con-        EEA has clearly recognised that offshore
ference 2009 (EWEC 2009), the European            wind power will be key to Europe’s energy
Wind Energy Association (EWEA) increased          future.
its 2020 target to 230 GW wind power capac-       Over 100 GW already proposed It is little
ity, including 40 GW offshore wind. Reach-        wonder therefore that over 100 GW of off-
ing 40 GW of offshore wind power capacity         shore wind energy projects have already been
in the EU by 2020 is a challenging but man-       proposed or are already being developed by
ageable task. An entire new offshore wind         Europe’s pioneering offshore wind develop-
power industry and a new supply chain must        ers. This shows the enormous interest among
be developed on a scale that will match that of   Europe’s industrial entrepreneurs, developers
the North Sea oil and gas endeavour. How-         and investors. It also shows that EWEA’s tar-
ever, the wind energy sector has a proven         gets of 40 GW by 2020 and 150 GW by 2030
track record onshore with which to boost its      are eminently realistic and achievable. The
confidence, and will be significantly longer      100 or more GW is spread across 15 EU
lived than the oil and gas sector.                Member States, as well as three other Euro-
To reach 40 GW of offshore wind capacity in       pean countries. The rewards for Europe ex-
the EU by 2020 would require an average           ploiting its huge offshore wind potential are
growth in annual installations of 28% - from      enormous – this 100 GW will produce 373
366 MW in 2008 to 6,900 MW in 2020. In the        TWh of electricity each year, meeting be-
12 year period from 1992-2004, the market         tween 8.7% and 11% of the EU’s electricity
for onshore wind capacity in the EU grew by       demand, whilst avoiding 202 million tonnes
an average 32% annually: from 215 MW to           of CO2 in a single year.
5,749 MW. There is nothing to suggest that        In order to ensure that the 100 GW of projects
this historic onshore wind development can-       can move forward, and reach 150 GW of op-
not be repeated at sea.                           erating offshore wind power by 2030, coordi-
Unlimited potential                               nated action is required from the European
                                                  Commission, EU governments, regulators, the
By 2020, most of the EU’s renewable elec-
                                                  transmission system operators (TSOs) and the
tricity will be produced by onshore wind
                                                  wind industry. Working in partnership on de-
farms. Europe must, however, use the coming
                                                  veloping the offshore industry’s supply chain,
decade to prepare for the large-scale exploita-
                                                  putting in place maritime spatial planning,
tion of its largest indigenous energy resource,
                                                  building an offshore electricity grid based on
offshore wind power. That the wind resource
                                                  EWEA’s 20 Year Offshore Network Devel-
over Europe’s seas is enormous was con-
                                                  opment Master Plan, and ensuring continued
firmed in June by the European Environment
                                                  technological development for the offshore
Agency’s (EEA) ‘Europe’s onshore and off-
                                                  industry, are key issues. By 2020, the initial
shore wind energy potential’. The study states
                                                  stages of an offshore pan-European grid
that offshore wind power’s economically
                                                  should be constructed and operating with an
competitive potential in 2020 is 2,600 TWh,
                                                  agreed plan developed for its expansion to ac-
equal to between 60% and 70% of projected
                                                  commodate the 2030 and 2050 ambitions.
electricity demand, rising to 3,400 TWh in
2030, equal to 80% of the projected EU elec-      Grids
tricity demand. The EEA estimates the tech-
GREENBUDGETNEWS NO. 24                                                             PAGE 37 OF 45



The future transnational offshore grid will       Year Network Development Plan, which
have many functions, each benefitting Europe      should, if suitably visionary, integrate the first
in different ways. It will provide grid access    half of EWEA’s 20 Year Offshore Network
to offshore wind farms, smooth the variability    Development Master Plan.
of their output on the markets and improve        The European Commission will also publish
the ability to trade electricity within Europe,   its EU Energy Security and Infrastructure In-
thereby contributing dramatically to Europe’s     strument which must play a key role in put-
energy security. We must stop thinking of         ting in place the necessary financing for a
electrical grids as national infrastructure and   pan-European onshore and offshore grid, and
start developing them – onshore and offshore      enable the European Commission, if neces-
– to become European corridors for electricity    sary, to take the lead in planning such a grid.
trade. And we must start developing them
now. The faster they are developed, the faster    Supply chain
we will have a domestic substitute if future      The offshore wind sector is an emerging in-
fuel import supplies are disrupted or the cost    dustrial giant. But it will only grow as fast as
of fuel becomes prohibitively expensive, as       the tightest supply chain bottleneck. It is
the world experienced during 2008.                therefore vitally important that these bottle-
The future European offshore grid will con-       necks are identified and addressed so as not to
tribute to building a well-functioning single     constrain the industrial development. Turbine
European electricity market that will benefit     installation vessels, substructure installation
all consumers, with the North Sea, the Baltic     vessels, cable laying vessels, turbines, sub-
Sea and the Mediterranean Sea leading the         structures, towers, wind turbine components,
way. Preliminary assessments of the eco-          ports and harbours must be financed and
nomic value of the offshore grid indicate that    available in sufficient quantities for the de-
it will bring significant economic benefits to    velopers to take forward their 100 GW of off-
all society.                                      shore wind projects in a timely manner.
Europe’s offshore grid should be built to inte-   Through dramatically increased R&D and
grate the expected 40 GW of offshore wind         economies of scale, the cost of offshore wind
power by 2020, and the expected 150 GW of         energy will follow the same path as onshore
offshore wind power by 2030. It is for this       wind energy in the past. The technical chal-
reason that EWEA has proposed its 20 Year         lenges are greater offshore but no greater than
Offshore Network Development Master Plan.         when the North Sea oil and gas industry took
This European vision must now be taken for-       existing onshore extraction technology and
ward and implemented by the European              adapted it to the more hostile environment at
Commission and the European Network of            sea. An entire new offshore wind power in-
Transmission System Operators (ENTSO-E),          dustry and a new supply chain must be devel-
together with a new business model for in-        oped on a scale that will match that of the
vesting in offshore power grids and intercon-     North Sea oil and gas endeavour, but one that
nectors which should be rapidly introduced        will have a much longer life.
based on a regulated rate of return for new in-   Technology
vestments.
                                                  Offshore wind energy has been identified by
2010 will be a key year for grid development      the European Union as a key power genera-
planning                                          tion technology for the renewable energy fu-
The European Commission will publish a            ture, and where Europe should lead the world
‘Blueprint for a North Sea Grid’ making off-      technologically. The support of the EU is
shore wind power the key energy source of         necessary to maintain Europe’s technological
the future. ENTSO-E will publish its first 10
GREENBUDGETNEWS NO. 24                                                              PAGE 38 OF 45



lead in offshore wind energy by improving         farms in the UK and by Princess Amalia in
turbine design, developing the next generation    the Netherlands.
of offshore wind turbines, substructures, in-     In addition to these large projects, Phase 1 of
frastructure, and investing in people to ensure   Thornton Bank in Belgium was developed to-
they can fill the thousands of new jobs being     gether with two nearshore projects, one in
created every year by the offshore wind sec-      Finland and one in Germany. In addition, an
tor.                                              80 kW turbine (not connected to the grid) was
To accelerate development of the technology       piloted on a floating platform in a water depth
and in order to attract investors to this grand   of 108 m in Italy. Subsequently decommis-
European project, a European offshore wind        sioned, this turbine was the first to take the
energy payment mechanism could be intro-          offshore wind industry into the Mediterranean
duced. It should be a voluntary action by the     Sea, which, together with developments in the
relevant Member States (coordinated by the        Baltic Sea, North Sea and Irish Sea, highlights
European Commission) according to Article         the pan-European nature of today’s offshore
11 of the 2009 Renewable Energy Directive.        wind industry.
It is important that such a mechanism does        2009 has seen strong market development
not interfere with the national frameworks        with a much larger number of projects begin-
that are being developed in accordance with       ning construction, under construction, ex-
that same directive.                              pected to be completed, or completed during
Spatial planning                                  the course of the year. EWEA anticipates an
                                                  annual market in 2009 of approximately 420
The decision by countries to perform mari-        MW, including the first large-scale floating
time spatial planning (MSP) and dedicate ar-      prototype off the coast of Norway.
eas for offshore wind developments and elec-
tricity interconnectors sends clear positive      By the end of 2009 EWEA expects a total in-
signals to the industry. Provided the right       stalled offshore capacity of just under 2,000
policies and incentives are in place, MSP         MW in Europe. 2010: annual market passes 1
gives the industry long-term visibility of its    GW Assuming the financial crisis does not
market, and enables synergies with other          blow the offshore wind industry off course,
maritime sectors. Consolidated at European        2010 will be a defining year for the offshore
level, such approaches would enable invest-       wind power market in Europe. Over 1,000
ments to be planned out. This would enable        MW (1 GW) is expected to be installed. De-
the whole value chain to seek investment in       pending on the amount of wind power in-
key elements of the supply chain (e.g. turbine    stalled onshore, it looks as if Europe’s 2010
components, cables, vessels, people) while        offshore market could make up approximately
potentially lowering risks and capital costs.     10% of Europe’s total annual wind market,
                                                  making the offshore industry a significant
2008 and 2009: steady as she goes                 mainstream energy player in its own right.
2008 saw 366 MW of offshore wind capacity         www.offshorewind2009.info/index.php,
installed in the EU (compared to 8,111 MW         http://www.evwind.es/noticias.php?id_not=1270
onshore) in seven separate offshore wind
farms, taking the total installed capacity to           Europe Wind Power Body Sees
1,471 MW in eight Member States. The UK                    Big Offshore Potential
installed more than any other country during      [Reuters, September 14, 2009 by John Acher
2008 and became the nation with the largest       and Anthony Barker] Offshore wind turbines
installed offshore capacity, overtaking Den-      could meet 13-17 percent of Europe's electric-
mark. Activity in 2008 was dominated by on-       ity need in 2030 if wind power projects get
going work at Lynn and Inner Dowsing wind
GREENBUDGETNEWS NO. 24                                                           PAGE 39 OF 45



sufficient support, an industry lobby organiza-   or less than 2 percent of Europe's sea area not
tion said on Monday.                              including the Atlantic, the EWEA said.
Offshore wind installations currently account     http://www.reuters.com/article/GCA-
for about 0.2 percent of Europe's electricity     GreenBusiness/idUSTRE58D30J20090914
demand, the European Wind Energy Associa-
tion (EWEA) said in a report. "Offshore wind      British Wind industry wants feed-in tariff
power is vital for Europe's future," the EWEA     changes – Current proposals discourage
said in the report published in conjunction               smaller scale generation
with a wind industry conference in Stock-         [Cath Everett, BusinessGreen, 15 Oct 2009]
holm.                                             The British Wind Energy Association
It said offshore wind projects with 100 giga-     (BWEA) is calling for changes to the feed-in
watts of capacity have been proposed or are       tariff system proposed by the UK government
being developed in Europe.                        as part of a consultation exercise on financial
"If realized, these projects (of 100 GW)          incentives to boost renewable energy genera-
would produce 10 percent of the EU's elec-        tion in the country.
tricity whilst avoiding 200 million tons of       Feed-in tariffs (FITs) are considered an im-
CO2 emissions each year," the association         portant mechanism to stimulate the growth of
said.                                             renewable energy production and to help the
The EWEA's targets are for Europe's offshore      UK to meet its 2020 goals in this area. They
installed wind power capacity to grow to 40       work by requiring utilities companies to buy
gigawatts by 2020 from 1.9 GW in 2009, and        electricity from microgeneration facilities
to 150 GW by 2030.                                producing up to 5MW at fixed rates, which
                                                  are set at a higher level than standard whole-
The 2020 target implies annual average mar-       sale prices.
ket growth of 28 percent over the coming 12
years, it said.                                   Provision was made for their introduction in
                                                  the 2008 Energy Act and the consultation on
"The EU market for onshore wind grew by an        how the FITs scheme will work, including
average 32 percent per year in the 12-year pe-    proposed tariff levels, closes today. The aim
riod from 1992-2004 – what the wind energy        is to implement it by April 2010.
industry has achieved on land can be repeated
at sea," it said.                                 But the organisation is unhappy with current
                                                  proposals. It claims that they only encourage
To reach 150 GW of operating offshore wind        the development of sites subject to the highest
power by 2030 will require coordinated action     of mean wind speeds, and not small-scale
from the European Commission, European            generators.
Union governments, regulators, grid operators
and the wind industry, the association said.      Alex Murley, head of small systems at the
                                                  BWEA, said: “The FIT needs to grasp a rare
The European Commission estimates total EU        opportunity to stimulate grass root interest in
electricity demand at between 4,279 TWh and       self-generation of green energy, while simul-
4,408 TWh in 2030, according to the EWEA.         taneously delivering economic and industrial
The association said wind resources would         value for money.”
never be a limiting factor.                       If installations with mean wind speeds of 5.0
"There is enough energy over the seas of          and above were provided with financial incen-
Europe to meet total European electricity de-     tives instead, however, it would stimulate the
mand several times over," it said.                creation of a high-volume consumer and
It would require eight areas of 10,000 square     business market for the use of small wind tur-
km to meet all of the EU's electricity demand,    bines generating less than 15kW.
GREENBUDGETNEWS NO. 24                                                               PAGE 40 OF 45



Wind Band 3 tariff levels should also be             Ministry of Finance, the Ecologic Institute
changed from a proposed 15-50kW to 15-               and Infras explored the extent to which the
100kW to more accurately reflect the current         economic impacts of climate change might
nature of the small wind market, the BWEA            threaten the sustainability of public budgets in
said. It believes that a reasonable tariff for the   Germany. The Final Report is now available
expanded band would be the currently sug-            on the Ecologic website: http://ecologic.eu/2599
gested 20.5p/kWh.                                    . The study is written in German but includes
Moreover, the organisation contests that an          an English summary.
initial two to three year freeze on small-scale      Key results:
wind tariffs should be introduced before de-         In 2100, climate change could result in 27 to
gression – or an annual reduction of those tar-      120 billion Euros of additional costs and
iffs – is applied.                                   revenue losses for the public budget in Ger-
The aim here would be to give UK manufac-            many, equal to a GDP loss of 0.6 to 2.5%.
turers sufficient time to up capacity in order       The results for 2050 show a more ambivalent
to cope with the increased demand generated          picture: Depending on the prevailing impact,
by the creation of a high-volume market.             climate change could either result in a fiscal
And such demand is likely to be forthcoming,         burden of up to 0.25% of GDP, or, with a
the BWEA believes. The UK already ac-                smaller probability, in a net benefit.
counts for between 20-25 per cent of global          Regarding the sector-specific impacts,
demand for small wind turbines and is the            changes in international trade and tourism
second largest market in the world behind the        demand were found to incur the most impor-
US.                                                  tant changes. Due to a drop in demand for
UK manufacturers, of which there are cur-            German export goods in the world regions
rently 18, control an 82 per cent share of the       most affected by climate change, export in-
domestic market in revenue terms and employ          dustries are expected to suffer from income
2,000 staff in the country.                          losses. By contrast, positive effects are likely
The UK also became the world’s largest ex-           to dominate in the tourism sector.
porter of small wind systems in 2008, when           For sustainability of public finances, climate
overseas revenue doubled. Export to about            change represents a risk that is comparable in
100 different countries accounted for about          magnitude to the burden caused by the ageing
half of UK manufacturers’ product sales last         population. However, while the costs caused
year.                                                by demographic change will peak around
http://www.businessgreen.com/business-               2050, costs of climate change will only in-
green/news/2251330/wind-industry-wants-feed-tariff   crease substantially in the second half of the
                                                     century.

                                                      Biofuels – New Report Brings Greater
6. L INKS      AND     P UBLICATIONS                        Clarity to Burning Issue
                                                     [UNEP, Nairobi, October, 16, 2009] Interna-
                                                     tional Panel Says Some Crop-Based Fuels
             Climate Change and                      Show Positive Climate Benefits: Others Envi-
               Public Finance                        ronmentally Questionable – a far more so-
[Ecologic,Berlin, October 2009]Climate               phisticated approach needs to be taken when
change will alter the basis of economic activ-       developing biofuels as an environmentally-
ity in Germany. It will therefore also affect        friendly energy option a new report con-
public finances. On behalf of the Federal            cludes.
GREENBUDGETNEWS NO. 24                                                                 PAGE 41 OF 45



Governments should fit biofuels into an over-       Press                                      Release:
all energy, climate, land-use, water and agri-      http://www.unep.fr/scp/rpanel/pdf/Assessing_Biofuels
cultural strategy if their deployment is to         _Press_Release.pdf
benefit society, the economy and the envi-          Full                                        Report:
ronment as a whole.                                 http://www.unep.fr/scp/rpanel/pdf/Assessing_Biofuels
                                                    _Full_Report.pdf
The report, the first by the United Nations
Environment Programme’s (UNEP) Interna-
                                                    Socially Sustainable Economic Degrowth
tional Panel for Sustainable Resource Man-
agement, says some first generation biofuels        [Club of Rome, Vienna 2009, Editors: Leida
such as ethanol from sugar cane can have            Rijnhout, Thomas Schauer] The global econ-
positive impacts in terms of greenhouse gas         omy has been growing for decades with a
emissions.                                          high speed, largely ignoring the warnings of
                                                    "The Limits to Growth", the first report to the
As currently practiced in a country such as
                                                    Club of Rome by Donella Meadows, Dennis
Brazil, it can lead to emissions reductions of
                                                    Meadows and Jorgen Randers in 1972. But in
between 70 percent and well over 100 percent
                                                    a limited system, unlimited growth is impos-
when substituted for petrol.
                                                    sible. It has to come to an end, the question is
However, the way in which biofuels are pro-         just when and how.
duced matters in determining whether they are
                                                    Instead of a planned and managed degrowth
leading to more or less greenhouse gas emis-
                                                    of material consumption in the developed
sions. Conditions under which productionof
                                                    countries, there is now a deep crisis, a chaotic
biofuels does lead to higher emissions have
                                                    period of the global economy. Social imbal-
been identified in the report.
                                                    ance might further increase. Could we have
The production and use of biodiesel from            done it better and can we do it better in the fu-
palm oil on deforested peatlands in the tropics     ture? Is there a possibility of socially sustain-
is cited. It can lead to significant increases in   able economic degrowth?
greenhouse gas emissions--up to 2,000 per-
                                                    In April 2009 a conference on the topic took
cent or more when compared with fossil fuels.
                                                    place for the first time in the European Par-
This is mainly as a result of carbon releases       liament. It was organized by Vlaams Overleg
from the soils and land. However, a positive        Duurzame Ontwikkeling, the European Sup-
contribution to greenhouse gas emissions can        port Centre / Brussels-EU Chapter of the Club
arise if the palm oil or soya beans are instead     of Rome, Research and Degrowth Network
grown on abandoned or degraded land.                and SERI in cooperation with Bart Staes MEP
The report Towards Sustainable Production           and ULB. The proceedings of the event show
and Use of Resources: Assessing Biofuels is         that we are still at the very beginning of the
based on a detailed review of published re-         discussions about a design for degrowth in the
search up to mid-2009 as well as the input of       developed countries.
independent experts world-wide.                     Book-Order:
It has been written to assist governments and       http://www.clubofrome.at/archive/degrowth_brussels.h
industry in making sustainable choices in an        tml
area that over the past few years has become        Pdf-Version:
deeply divided while triggering sharply polar-      http://www.clubofrome.at/archive/degrowth_brussels.p
ized views.                                         df

Home                                       Page:
http://www.unep.fr/scp/rpanel/biofuels.htm
GREENBUDGETNEWS NO. 24                                                              PAGE 42 OF 45



 Sustainable Growth and Resource Pro-              cially lead to the unreliability of economic
 ductivity: Economic and Global Policy             calculations. A further reason against the buil-
                 Issues                            ing of new plants can be seen in their long
                                                   lofe-spans of more than forty years. If future
[September 2009] Sustainable management of
                                                   power generation is primarily based on re-
natural resources is a crucial element for a
                                                   newables, this is incompatible with an expan-
sustainable development, but also a precondi-
                                                   sion of base load power stations such as coal-
tion for economic growth. The book analyses
                                                   fired power plants: They lack the flexibility of
raw materials supply and resource use in a
                                                   being switched on and off as a supplement to
global context. The contributions present
                                                   renewables’ fluctuating feeding volume, and
state-of-the art results and perspectives on the
                                                   times of low operation levels endanger their
availability of resources. They discuss factors
                                                   economic profitability. Thus, today’s newly-
such as demand from emerging and other
                                                   built power plants run the risk of becoming
countries as well as critical shortage of some
                                                   bad investments if expenses do not cover the
materials together with the resulting conse-
                                                   operation and amortisation costs.
quences for economies. It also gives new
views and perspectives on the sustainable          According to utility companies, the frequently
growth in ermerging economies and examines         discussed technology of “carbon capture and
the possibilities and experiences concerning       storage” could lead to a climate-friendly elec-
the decoupling of resource use from economic       trification of coal in the future. But the decla-
growth. Moreover, it offers cross-country          ration’s subscribers doubt the feasibility of
comparisons with emphasis on emerging              CCS in light of environmental risks, uncer-
countries. A key focus is placed on China re-      tainty of storage capacity, and high costs. Fur-
garding its domestic energy, climate and re-       thermore, CCS will not become commercially
source policy but also its developing foreign      available until 2020 or 2030 and thus comes
policy in Africa.                                  too late to benefit today’s power plant pro-
                                                   jects. Although the retrofitting of CCS is gen-
Raimund Bleischwitz, Paul J. J. Welfens,
                                                   erally conceivable, its higher costs imply eco-
Zhong Xiang Zhang (Editors): Sustainable
                                                   nomic unprofitability. Based on these argu-
Growth and Resource Productivity. Economic
                                                   ments, the ecnomists call for the abandonment
and Global Policy Issues, Greenleaf Publish-
                                                   of new coal-fired power plants until CCS’s
ing, Sheffield, 2009, 360 pp. ISBN 978-1-
                                                   uncertainties and risks can be clarified.
906093-28-0
                                                   The declaration, the list of subscribing
Economists’ declaration: The unprofita-            economists, and further background informa-
                                                   tion is available at www.wiwis-kohle.de.
             bility of coal
In a joint declaration, more than sixty econo-
                                                      PIK-Study backs up concerns about
mists caution against the financial and cli-
matic risks of new coal-fired power plants in
                                                         coal’s future unprofitability
Germany. Among the subscribers are re-             A recently published study by the Potsdam
nowned experts from several different re-          Institute for Climate Impact (PIK) and
search institutes, as well as numerous profes-     WestLB Bank investigates investments into
sors. According to them, the construction          large fossil-fuel-fired power plants and re-
plans of twenty-nine new coal-fired power          veals that they “don’t pay off for numerous
plants does not only jeopardise the achieve-       reasons.” This also holds without taking emis-
ment of necessary emissions reduction targets      sions trading into consideration or assuming
for the year 2050, but also risks turning out to   low CO2 prices. The four big German elec-
be a poor economic investment. The uncer-          tricity and utility companies (EnBW, E.ON,
tainty of futer fuel and carbon prices espe-
GREENBUDGETNEWS NO. 24                                                              PAGE 43 OF 45



RWE, Vattenfall) are stuck in an investment         see if such payments could be used to help
dilemma.                                            tackle climate change. A review of 13 sche-
New hard coal-fired and gas-fired power             mees in Africa, South-East Asia and Latin
plants hardly prove to be profitable alterna-       America concluded that they can be part of
tives. Single lignite-fired power plants are the    REDD but only if important preconditions are
most likely to be economically viable, yet          met.
they may conflict with climate policy since         Ivan Bond, Maryanne Grieg-Gran, Sheila
lignite-fired plants have the highest CO2 out-      Wertz-Kanounnikoff, Peter Hazlewood, Sven
put of all energy sources. The German gov-          WUnder, Arild Angelsen: Natural Resources
ernment’s mitigation targets for 2050 corre-        Issues No 16, 2009, 60pp. ISBN 978-1-
spond, proportional to the German energy            84369-742-8.
sector, to emissions of about five big lignite-
fired power plants of 2000 MW each.                 Fairer flying: an air travel levy for adap-
In addition to climate policies, price dynamics                       tation
on the commodity markets bear substantial           [IIED Briefing, Muyeye Chambwera, with
risks for investors. Considering the official       Benito Muller, 2008]
support and the lower risks, renewable ener-        For the world’s poorest countries and com-
gies appear to be a promising option. For that      munities, adaptation to climate change is ur-
reason the progressive investments of the           gently needed, but costly: estimates run into
large electricity and utility companies in re-      tens of billions of dollars a year. Given the
newable energies have been evaluated as an          shortfall in current international adaptation
economically appropriate step. “The SuperS-         funding, how can resources for the developing
mar Grid is a big opportunity for electricity       world be raised? An adaptation levy on inter-
and utility companies to escape from their in-      national air travel could help fill the gap. A
vestment dilemma. It combines two ap-               small per-trip payment by passengers could
proaches that complement each other: On the         contribute US$8 billion to US$10 billion a
one hand, large-scale, wide-area electricity        year towards adaptation. Similar schemes in
supply from renewable sources and on the            France and elsewhere show that this kind of
other hand, intelligent grids for decentralised     ethical solidarity and ‘polluter pays’ approach
renewable energies, demand control, and vir-        would be simple to implement in practical and
tual power plants,” says Armin Haas from            institutional terms.
PIK, and co-author of the study.
                                                    2008,               Download               only.
The study and further information are avail-        http://www.iied.org/pubs/display.php?o=17045IIE
able            at            http://www.climate-   D
mainstreaming.net/co2elec.htm.

  Incentives to sustain forest ecosystem            7. E VENTS
services: A review and lessons for REDD
[Natural Resource Issues No. 16]
Paying people to protect forests can be an ef-         The Copenhagen Climate Exchange
fective wax to tackle deforestation and cli-             2009, Copenhagen, Denmark,
mate change but only if there is good govern-               3rd – 6th December 2009
ance of natural resources, claims this study        The Copenhagen Climate Exchange 2009 of-
funded by Norway’s Government. This report          fers you an opportunity to share your visions
explores existing efforts to pay people in de-      and experiences on how to fight climate
veloping nations to protect ecosystems in re-       change with an international audience. NGOs,
turn for the services they provide. It aimed to
GREENBUDGETNEWS NO. 24                                                                  PAGE 44 OF 45



cities and innovative enterprises from across       public from all over Europe, and beyond, to
the World gather in Copenhagen to exchange          discuss this important and highly relevant
ideas. Thousands of visitors and international      subject in a very timely moment of the run up
media exposure will be expected. The Copen-         to the international climate change conference
hagen Climate Exchange 2009 is a four-day           in Copenhagen.
event leading up to COP15, the official UN          http://ec.europa.eu/taxation_customs/taxation/gen_info
climate summit in Copenhagen, December              /tax_conferences/low_carbon/index_en.htm
2009.
Further details:                                     The 11 th Global Conference on Envi-
http://www.cphco2009.dk                                       ronmental Taxation
                                                     Bangkok, THAILAND, 3 - 5 November
 From the Financial Crisis to the Green                              2010
              Economy
                                                    The 11th GCET provides an international, in-
    Bern, CH, November 17th 2009                    terdisciplinary forum to explore issues in-
This event is dealing with the economic crisis,     volved in designing and implementing envi-
EFR and the concept of a Green New Deal,            ronmental taxes. The conference is not in-
organised by PUSCH and ÖBU, with GBE as             tended to advance any particular environ-
patronate, in Bern. Kai Schlegelmilch will gi-      mental agenda on an advocacy basis but
ve a presentation on stimulus packages:             rather to advance knowledge, understanding,
http://www.umweltschutz.ch/index.php?pid=109        and debate.
&id=56
                                                    More Information is available here:
                                                    http://www.acc.msu.ac.th/gcet2010/index.php
  What taxation for a low carbon econ-
  omy? Brussels, 30th November 2009
The European Commission (Directorate Gen-            EnvEuro MSc programme in Environ-
eral for Taxation and Customs Union) is or-
                                                     mental Science - application deadline 1
ganising a one-day conference in Brussels on
'What taxation for a low carbon economy?'                        January 2010
The conference will take place November, 30,        Are you interested in environmental issues
2009.                                               and looking for a career in environmental sci-
The threat to the climate is one of the greatest    ence or environmental management? Would
challenges our world is facing today. Substan-      you like to study at some of the leading uni-
tial mitigation efforts are needed and it is cru-   versities in Europe together with students
cial to use cost-effective instruments for this     from all over the world? Do you have a
purpose. The EU opted for the EU emission           Bachelor degree or higher in Natural sci-
trading system (ETS) to be its main instru-         ences? Then the EnvEuro MSc programme in
ment in this context. However, the question         Environmental Science is just what you are
remains what is the role that taxation could or     looking for!
should play with respect to emissions in the        The EnvEuro MSc programme is a two-year
non-ETS sector.                                     EnvEuro Master programme in Environ-
The conference will focus on possibilities to       mental Science featuring six different spe-
address global warming through targeted             cialisations: Water Resources, Soil Resources
taxation instruments, in theory and in practice     and Land Use, Ecosystems and Biodiversity,
and taking into account broader economic and        Environmental Impacts, Environmental Man-
social considerations.                              agement and a brand new specialisation in
                                                    Cimate Change.
The conference will bring together policy
makers, experts, stakeholders and the general
GREENBUDGETNEWS NO. 24                                                                       PAGE 45 OF 45



The EnvEuro MSc programme focuses on                    For more information about the EnvEuro MSc
European and global environmental problems              programme and how to apply visit our home-
and solutions, and gives you the best of Envi-          page at www.enveuro.eu.
ronmental Science from four leading Euro-               Check out this YouTube video from the Intro
pean universities: University of Copenhagen             Course 2008:
in Denmark, University of Hohenheim in                  http://www.youtube.com/watch?v=rgfI8Bl4q2Y
Germany, Swedish University of Agricultural             Join the EnvEuro group on Facebook at:
Sciences in Sweden, and University of Natu-             http://www.facebook.com/group.php?gid=290960
ral Resources and Applied Life Sciences in              17590
Vienna, Austra.                                         If you have any questions you are very wel-
The programme will start on Monday 23 Au-               come to contact the EnvEuro Secretariat via
gust 2010 with a one week introduction                  e-mail: enveuro@life.ku.dk .
course in Copenhagen.                                   You may also contact the EnvEuro Secretariat
If you are from a non-European country or               if you do not want to receive further informa-
would like to study at the Swedish University           tion and updates about the EnvEuro pro-
of Agricultural Sciences in Sweden you must             gramme.
submit your application by 1 January 2010 (as
per postmark).




8. I MPRINT

Best wishes from the founders and the editors!

                                 Green Budget Germany’s Team of Editors
You can contact the Green Budget News editors at the following addresses:
  Forum Ökologisch-Soziale Marktwirtschaft                   European Environmental Bureau
  Green Budget Germany                                       Boulevard de Waterloo 34,
  Seestraße 113 – D – 13353 Berlin                           B-1000 Brussels
  Tel.: +49 30 510 530 -80, Fax: - 79                        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                                        The Ecological Council
  Clean Air Action Group                                     Blegdamsvej 4B
  H-1465 Budapest, Pf. 1676, Hungary                         DK - 2200 Copenhagen N
  Phone: +36-1 4110509/-10                                   Phone: +45 33 15 09 77
  Fax: +36-1 2660150                                         Fax:    +45 33 15 09 71
  levego@levego.hu                                           info@ecocouncil.dk
  www.levego.hu                                              www.ecocouncil.dk
  ÖGUT – Österreichische Gesellschaft
  für Umwelt und Technik
  Austrian Society for Environment and
  Technology
  Hollandstraße 10/46
  A – 1020 Vienna
  Tel.: +43 1 315 63 93 – 13, Fax: - 22
  office@oegut.at
  www.oegut.at

								
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