Ecological tax reform in Germany: handling two hot potatoes at the same time

Combining environmental with employment objectives, ecological tax reform (ETR) envisages a double dividend. While research has mainly focused on the socio-economic and environmental impacts of ETR, there is less literature on the social responses. This paper gives an overview and history of German ETR as well as investigating the understanding of perceptions and attitudes towards ETR of those being “subject to tax”. The research is based on qualitative social research methods. As with the other PETRAS papers, interviews were conducted with policy-makers and business leaders and focus groups were formed with lay persons. The results show that responses of policy-makers and business leaders are modest. Although some criticisms about the specific design of the German ETR remain, complaints towards ETR are settled. Attitudes appear influenced by more fundamental convictions such as economic interest or altruistic views. In contrast, ETR appears to politicise common people. Attitudes are influenced by the overall comprehension of the ETR concept, the expected impacts, perceived information deficits, as well as a general distrust in politics. Our data show that the linking of environmental and employment objectives is not understood and not welcomed. In order to increase social acceptance, the paper discusses refocusing ETR on environmental objectives, modestly increasing the share of ETR revenue spent for environmental purposes, removing inconsistencies in the ETR design, and improving information policy.     

Ecological Tax Reform in Denmark: history and social acceptability

Despite the long-term and positive experience with Ecological Tax Reform (ETR), the PETRAS study indicates that awareness about the principles behind ETR is low among both businesses and the general public in Denmark. As well as the lack of awareness of ETR, attitudes towards environmental taxation appear negative. When explaining the political intentions behind ETR, attitudes seem to improve somewhat, but they still remain overall sceptical.     

Environmental and wider implications of political impediments to environmental tax reform

The most common notion of environmental tax reform (ETR) is the use of the revenue from environmental taxes to reduce distortionary labour taxes. The PETRAS project¹ has shown that there are a number of social and political impediments to implementing such reform. This paper firstly outlines some of the environmental and economic implications of environmental taxes generally. It goes on to explore three broad approaches to ETR, based on the allocation of the tax revenues, and explores the environmental and economic implications of each approach and the likelihood of political and social acceptance. Particular attention is paid to reducing regressive impacts and impacts on competitiveness. It is concluded that some combination of earmarking a proportion of revenues to environmental projects and diverting rest to reduce labour taxes is probably the best approach in light of the results of the project. The balance should depend upon local labour market and macroeconomic conditions, the extent to which environmental projects are already funded and the extent of government failure, i.e., the problems of resource allocation that occur as a result of government intervention in markets. Funding should only be provided to environmental projects if it can be shown that, in themselves, they are economically efficient. In addition, it is most important that a proportion of the funds be used to ameliorate any regressive impacts. It is also important to bear in mind that hypothecation or recycling of revenue is not the same as a tax shift, which is a reform of the entire system, so some of these approaches may take away from the integrity of ETR. The paper concludes with some of the initiatives that are likely to be necessary to facilitate social and political acceptance of this approach to ETR.     

History and social responses to environmental tax reform in the United Kingdom

This paper gives a short history of fuel taxation and the Climate Change Levy in the UK. The research described was based around the use of interviews and focus groups to inform the assessment of social responses to ETR policies and the development of improved designs for them. Interviews were conducted with selected policy makers and companies. Focus groups were conducted with quota samples of the general public. The research shows that the problem that ETR faces in terms of public acceptance is not so much outright hostility to environmental taxation as conceptual problems with the design. Similar conceptual problems were also found in the interviews with business people. These can be summarised as lack of trust about use of the revenues, difficulty in understanding the purpose of a tax shift and a desire for incentives for good behaviour as well as perceived ‘penalties’ for bad behaviour.     

Environmental tax reform: an assessment of social responses in Ireland

Environmental tax reform (ETR) is widely accepted to be a policy with desirable environmental, and other economic effects. The question arises then as to why its implementation has been so patchy. There is a broad literature on the economic impact of ETR, however, there have been very few research efforts devoted to understanding the roles and imperatives of the public, policy makers, businesses and other stakeholders who are addressed by ETR. This paper examines the impediments to ETR in Ireland. Focus groups were formed comprising of members of the general public and these provided a forum for detailed reactions to the ETR concept. Interviews were conducted with policy makers and key business people in an attempt to identify both the patterns of thinking behind ETR and the main obstacles to its introduction. Having presented the results, a theory of the main impediments to ETR is developed. The opinions of the members of the public, the business community and the policy makers highlight a number of issues that need to be addressed in the future design of ETR in Ireland. The principal potential impediments to ETR include: mistrust of the government, implausibility of the policy, means of hypothecation, information asymmetries, the political system, the structure of government, the macroeconomic environment, the impact on competitiveness, inequity between sectors, regressivity, elasticities and the level of the tax, terminology, and the marketing of ETR.     

Reevaluating the first and the second dividends of environmental tax reforms

There is increasing global interest in market-based climate change policies following the last elections in the United States. In this context an Exxon Mobil chief executive came out in favour of a carbon tax. This paper is concerned with the welfare analysis of Environmental Tax Reforms (ETR), and takes up the claims for the need of an unambiguous and operative definition of the double dividend both for empirical purposes and political advisement. In this paper, we contest the usual definition of the second dividend and its assimilation to an “efficiency dividend”. We propose alternative definitions by suggesting a different splitting of the total welfare variation between the first and the second dividend in order to isolate the efficiency effects of the ETR. The new definitions become clearly understandable and easy for economic and policy interpretation. Concepts like “weak” and “strong” double dividend turn out to be unnecessary. Finally, we analyze ETR for the US economy to illustrate the advantages of the proposed definitions for policy implementation.     

全球太阳能热利用行业激励政策及对我国的启示

太阳能热利用是一种重要的可再生能源,在我国已经实现了商业化运行。如何支持已实现了商业化运行的太阳能热利用行业,是目前可再生能源政策研究的热点问题。本文研究分析了立法、财政补贴和间接市场等激励政策的适用环境,剖析了欧盟、西班牙、以色列和澳大利亚等国家和地区的现行激励政策,针对我国的产业发展现状,提出了相应的政策建议。     

The rise and fall of French Ecological Tax Reform: social acceptability versus political feasibility in the energy tax implementation process

The French government has a 10-year history of negotiations with industry, resulting in voluntary agreements on energy consumption. When implemented, these voluntary agreements produced very few results in terms of global reduction of greenhouse emissions (Politiques et Management Public 11(4) (1993) 47), hence the idea of an energy tax became increasingly attractive for many French decision-makers. Ecological/Environmental Tax Reform (ETR) should have been one of the major political decisions and successes of the past leftwing coalition government. Instead it became one of its major failures as the Constitutional Court decided to terminate the energy tax project in December 2000. Through insights gleaned from focus groups and interviews with business-people and decision-makers, an attempt is made to understand the failure of the energy tax project. Firstly, decision-makers lacked crucial information about public and business opinions and secondly, there were conflicts between the relevant administrations. The fuel revolts of 2000 ended any hope of resolving the conflicts and implementing ETR, which was ultimately found unconstitutional. This paper examines the political controversies raised by the ETR project and the reasons for its eventual collapse, in the hope of contributing new understanding to the body of knowledge on the political difficulties of introducing environmental policy instruments.     

Asian energy and environmental policy: Promoting growth while preserving the environment

Asia has experienced spectacular economic growth over the past two decades. However, this economic progress has come at a high cost. It has led to unprecedented environmental consequences. So this region needs to shift the conventional pattern of “develop first and then treat the pollution” to a trajectory of sustainable development. To that end, this paper examines a variety of policy responses, at national, regional and international levels, to deal with growing concerns about the environmental challenges in Asia. In the context of national responses, special attention is paid to the following issues: coordination between the central and local governments, market-based environmental instruments and industrial policies, tougher emissions standards for mobile and stationary sources and fuel quality, policies to promote energy efficiency and the use of clean energy and biofuels, the integration of environmental policies with economic and sectoral policies, and engagement of the private sector through e.g., ecolabelling, green government procurement, corporate ratings and disclosure programs, and drawing the support of financial institutions to promote improved corporate environmental performance. The paper concludes that having the right policy mix, coupled with strengthened cooperation at national, local and regional levels, will ensure continuing economic growth in the region without compromising its limited ecological-carrying capacity and environmental quality.     

Strategies for addressing climate change: Policy perspectives from around the world

The greenhouse effect is intrinsically global. Accordingly, effective responses require global coordination. While limited policies have been adopted, notably for phasing out chlorofluorocarbons, there is no clear consensus as to what to do about other greenhouse gases. In this paper, we survey attitudes and policy responses among the nations of the world. Public opinion surveys are consistent in showing that considerable sensitivity to environmental issues exists virtually everywhere. On the other hand, there is acute awareness that other issues, especially economic development, can conflict with global climate-change mitigation goals. In such a state of uncertainty there is a strong argument to be made for implementing policies which are good ideas independent of greenhouse-gas considerations. There is also good reason to expand research. What is feasible depends strongly on present and changing attitudes of the citizens of the world, and of their governments. It is thus critical to follow closely the evolution of attitudes. The kind of work summarized in this paper needs to be updated on a continuing basis, and the results made available routinely to the global policy community. We conclude our review with several recommendations for research designed specifically to reduce uncertainty about costs and institutional issues relating to responses to global climate change.     

Extracting the resource rent from the CDM projects: Can the Chinese Government do better?

The revenue generated from a CDM project in China will be shared by the government and the project owner, and is also subject to the corporate income tax. This paper studies the impacts of the revenue sharing policy and income tax on the CDM market. The economic model presented in this paper shows that higher-cost CDM projects will be more affected by the CDM policies than lower-cost projects. In addition, the majority of CERs will be generated from lower-cost projects. This kind of distribution of CERs across different types of CDM projects, which is in line with the current picture of the CDM market in China, is not consistent with the goal of sustainable development. A simulation shows that a type-by-type tax/fee scheme would be more effective in assisting sustainable development than the current CDM policies. The study also suggests the government use negative tax/fee with the type-by-type scheme to subsidize the CDM projects that generate large sustainability benefits but would otherwise not be developed due to high costs. If all of the revenue from the CDM is recycled, it is estimated that CERs generation will increase by 98.28 MtC, mainly from the CDM projects that have substantial sustainability benefits for the host country.     

An indicator framework for assessing US state carbon emissions reduction efforts (with baseline trends from 1990 to 2001)

States are at the forefront of climate-related energy policy in the US, developing innovative policy and regional institutions for reducing carbon dioxide and other greenhouse gases. States matter because the larger ones use more energy and produce more carbon emissions than most nations and because their policies, though heterogeneous and until recently quite limited in scope, are shaping the context for national climate action. Despite this significance, little is known about trends in state carbon emissions or the effectiveness of state policies in reducing emissions. This paper describes a framework for analyzing and comparing state carbon emissions performance using sectoral indicators of emissions, energy consumption and carbon intensity linked to key policy domains. The paper also describes the range of state experience across indicators during the period 1990–2001, establishing a baseline of leading, lagging and average experience against which future state and regional change can be assessed. The conceptual framework and the empirical analysis of emission trends are intended to provide a better understanding of, and means for monitoring, state contributions toward achieving energy system sustainability.     

ASEAN towards clean and sustainable energy: Potentials,utilization and barriers

This paper reports the outcome of the project on “Capacity building in formulating harmonized policy instruments for the promotion of Renewable Energy and Energy Efficiency in the ASEAN member countries”. With the growing concerns about green house gas (GHG) emission and consequent climate change, renewable energy sources have become more attractive option for electricity generation around the world. Studies have been made on the status of renewable energy potential and utilization, major barriers in promoting renewable energy in ASEAN countries, major energy policies to overcome barriers, and existing renewable energy and energy efficiency policies in ASEAN countries. Paper concludes that ASEAN has not utilized its renewable energy resources anywhere near to the potential. Analysis found that the key factor that has to be amended is “policies and regulations in renewable energy and energy efficiency” at both country level and regional level. But, ASEAN is not yet ready for the full harmonization of the policies. However, it recommends that, with the project outputs it is possible to focus on the specific policy instruments common to most of the member countries, such that it could use to augment ASEAN Plan of Action for Energy Cooperation (APAEC) initiatives.     

Greenhouse gas mitigation policies and the transportation sector: The role of feedback effects on policy effectiveness

The US transportation sector is a major contributor to global greenhouse gas (GHG) emissions. As such, policymakers and stakeholder groups have proposed a number of policy instruments aimed at reducing these emissions. In order to fully evaluate the effectiveness of these policies, policymakers must consider both the direct responses associated with policy actions, and the indirect responses that occur through complex relationships within socioeconomic systems. In cases where multiple policy instruments are employed, these indirect effects create policy interactions that are either complementary or competing; policymakers need to understand these interactions in order to leverage policy synergies and manage policy conflicts. Analysis of these indirect effects is particularly difficult in the transportation sector, where system boundaries are uncertain and feedback among systems components can be complicated. This paper begins to address this problem by applying systems dynamics tools (in particular causal loop diagrams) to help identify and understand the role of feedback effects on transportation-related GHG reduction policies. Policymakers can use this framework to qualitatively explore the impacts of various policy instruments, as well as identify important relationships that can be later included in quantitative modeling approaches.     

Resource consumption in Japanese agriculture and its link to food security

Energy security and food security are two key policy objectives of the Japanese government. However, their study and the policies that have targeted them have been disjointed at best. This paper explores the links between these two policy objectives by quantifying the resources used in (a) the agricultural sector as a whole and (b) two very resource intensive sub-sectors, beef and pork production. Emergy synthesis is used as the analytical approach for the period 1975–2005 with the results suggesting that not only is more natural capital currently being used within the agricultural sector but the efficiency of the agricultural production has declined considering the increase in transformity during the same period. What is more important though is that agricultural yield is strongly correlated with resource use (quantified as emergy). This finding suggests that sudden changes in resource supply can affect agricultural production and as an extension national food security. Overall the evidence presented in this paper shows that energy security and food security are indeed interconnected and that integrated policy responses will be required if these issues are to be tackled effectively.     

Local strategies to promote energy retrofitting of single-family houses

Energy retrofitting of existing buildings is a central challenge for local, national, and international climate policies, and in several countries, single-family houses represent a major energy-saving potential. Although many municipalities are implementing local climate policies with initiatives to promote energy retrofitting of buildings, little research has been done regarding the role of single-family houses in local climate policies. Thus, we have little knowledge about specific initiatives to promote energy retrofitting amongst owners of single-family houses, we know little about experience from such initiatives, and we lack knowledge about the extent to which national and EU policies support local initiatives directed at homeowners. This article provides insights into these issues from an explorative study on local climate strategies in Danish front-runner municipalities where single-family housing is the dominating building segment. Based on a study of local governance strategies in 12 municipalities targeting homeowners’ engagement in energy retrofitting, the paper finds that these municipalities have developed promising local network-based ways to engage homeowners in energy retrofitting, but finds simultaneously that the national policy mix is only partly supporting these local initiatives. The paper also points out that the local and regional context for the programmes, including the local economic situation, is of great importance, and this context creates both potentials and challenges for the local programmes.     

Identifying barriers to the success of consumer energy conservation policies

Barriers to energy conservation inhibit or retard changes in current inefficient patterns of energy use. This paper reports the results of a project which identified barriers to energy conservation by individual householders. The focus was specifically on non-technical barriers; that is, social, institutional and economic factors which prevent people from increasing the efficiency with which they use energy. Barriers were identified by content analysis of interviews with householders; these barriers were therefore those that were seen as being important from the perspective of the householder. Six categories of barriers were identified on the basis of the circumstances out of which the barriers arose. Distributed among these six categories were 25 different types of barriers. Householders' responses towards energy conservation policy proposals were also assessed. Favourable evaluation of a policy proposal did not necessarily lead to an intention to adopt an energy-conserving practice, presumably because of the existence of barriers to energy conservation. Energy policy makers should examine in detail barriers to energy conservation of the types identified in this paper, and then develop appropriate policy mechanisms to overcome these barriers.     

Do manufacturing firms react to energy prices? Evidence from Italy

The reaction of energy demand to price changes is a key policy issue as it describes the economy's response to changes in market conditions or to policy interventions. The issue is even more important for the Italian economy, highly exposed to energy price changes, given its almost complete fossil fuel-related energy dependence, environmental sensitivity and highly fragmented industrial structure. Besides the policy issue, there is also an important methodological debate, concerning the best way to evaluate energy demand elasticities, looking at alternative models, data and elasticity definitions. After a discussion of the main methodological issues and the related empirical literature, this paper presents an estimation of factor and fuel demand elasticities for Italian industrial firms, by using a microeconomic panel in a two-stage translog model. Using cross-price and Morishima elasticities, we obtain information on the magnitude and asymmetry of firms' responses to price changes. Moreover, the use of a micro-dataset allows the high heterogeneity of Italian firms to be considered: the results are discussed according to technology intensity, sector and firm size. Our findings show that energy is the most elastic input for all sectors and that capital and energy are substitutes in the low technology sector and weak complements in all others. Estimated interfuel elasticities show a high degree of demand sensitivity to fuel price changes and the vast majority of cross-price elasticities exhibit substitutability. Appropriate fiscal policies can thus be identified to give an effective impulse in influencing the industrial energy mix by changing relative prices. These findings constitute an important foundation for analysing energy demand by Italian industrial firms, given that empirical literature is particularly rare on the Italian case study.     

The use of the planning system to encourage low carbon energy technologies in buildings

This paper presents the key findings of a study conducted by London South Bank University for the Greater London Authority on the performance of the energy policies contained in the London Plan. These policies require developers to demonstrate how new developments within London will meet specific energy efficiency and renewable energy targets in order to gain planning permission. The study shows that 10% savings on CO₂ emissions using renewable energy technologies were routinely met a year after the introduction of the policy. The study also shows that the largest CO₂ savings are due to the use of combined heat and power.     

Designing effective and efficient incentive policies for renewable energy in generation expansion planning

We present a bilevel optimization approach to designing effective and efficient incentive policies for stimulating investment in renewable energy. The effectiveness of an incentive policy is its capability to achieve a goal that would not be achievable without it. Renewable portfolio standards are used in this paper as the policy goal. The efficiency of an incentive policy is measured by the amount of policy intervention, such as taxes collected or subsidies paid, to achieve the policy goal. We obtain the most effective and efficient incentive policies in the context of generation expansion planning, in which a centralized planner makes investment decisions for the energy system to serve projected demand of electricity. A case study is conducted on integrated coal transportation and electricity transmission networks representing the contiguous United States. The numerical analysis from the case study provides insights on the comparison of various incentive policies. The sensitivity of the incentive policies with respect to coal production cost, wind energy investment cost, and transmission capacity is also studied.