Table of Contents

Greening the Budget

Greening the Budget

Budgetary Policies for Environmental Improvement

International Studies in Environmental Policy Making series

Edited by J. Peter Clinch, Kai Schlegelmilch, Rolf-Ulrich Sprenger and Ursula Triebswetter

Greening the Budget regards the fundamental cause of environmental degradation as government and market failure and proposes the use of budgets as an instrument of environmental policy to rectify this problem. The book focuses on the elements of the public budget which currently affect the environment and explores the scope for greening both revenue and expenditure through specific measures.

Chapter 11: Technical potential for CO2 emissions reductions and the scope for subsidies

Johan Albrecht

Subjects: economics and finance, environmental economics, environment, environmental economics


Clinch 03 chap 8 15/11/01 1:30 pm Page 195 11. Technical potential for CO2 emissions reductions and the scope for subsidies1 Johan Albrecht 1. INTRODUCTION Economic instruments such as taxes, tradable permits and subsidies are gaining importance in environmental policy. In this chapter, we present some estimates of the potential of environmental subsidies to reduce energy use and CO2 emissions. The projected CO2 emissions in the European Union are presented and by using data on sectoral energy efficiency. We suggest some policy priorities that are elaborated as three types of consumer subsidies: subsidies for replacing old burners/boilers; subsidies for energy-efficient cars; and subsidies for other consumer products that have clear energy-saving potential. 2. PROJECTED CO2 EMISSIONS IN THE EUROPEAN UNION In the European Union, energy taxes and taxes on CO2 content have been the most discussed instrument for climate policy. As a consequence of the Rio Conference in 1992, the European Union elaborated several measures, of which the controversial CO2 tax received most attention. This CO2 tax was first reproposed in a very weakened and modified form and then ‘declared dead’ in March 1996 (Howes et al., 1997). The tax was replaced in 1997 by a new proposal; the energy product tax (COM(97)30), with higher minimum tax rates for all energy products. A survey by Klassen and Jansen (1998) on the impact of this EU energy tax proposal indicated that in the year 2005, CO2 emissions in the EU will be only 0.5 to 1.6 per cent...

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