Emission Permits Thomas Olsen, Statistics Denmark Presented by Ole Gravgård, Statistics Denmark Prepared for the 13th London Group meeting, Brussels, 29 September – 3 October 2008

Emission permits 13th London Group meeting 2 Outline of presentation Treatment in SNA93, SEEA 2003 and SNA 2008 Further developments for SEEA –Physical flows –Monetary flows –Link to environmental taxes –Some examples Points for discussion

Emission permits 13th London Group meeting 3 Treatment of emission permits SNA 1993 SEEA 2003 SNA 2008 Revised SEEA AN.22 Non-financial intangible non-produced assets (AN. 222 Leases and other transferable contracts) Other changes in volumes of assets: appearance Capital account: sale Revaluation account: change in market value Purchase from Government: Other taxes on production + Creation of assets (other changes in volumes) SNA 2008 with extensions

Emission permits 13th London Group meeting 4 Further developments for SEEA Accounts for the physical flows –Link to the use of energy, emissions, economy, etc. –Link between actual emissions and emission targets Who owns, holds and trades the permits? What is the relationship between the emissions of CO2 and the emission permits? Have the industries acquired a sufficient number of permits compared to their CO2 emissions? Basis for the national accounts’ treatment

Emission permits 13th London Group meeting 5 Further developments, cont. A supplementary description of the monetary flows –Highlight the flows in order to understand the permit market and the effects on the economy What is the value of the trade? Is it the energy companies or manufacturing industries that buy permits in order to undertake their activities? What is the role of non-emitters (e,g. investment banks) interested in the permits from an arbitrage perspective only?

Emission permits 13th London Group meeting 6 Further developments, cont. Link to the environmental taxes –Describe the total economic regulation of – and burden on - the industries The cost of CO 2 permits in relation to the environmental related taxes The value of the permits received for free in relation to (other) environmental related subsidies Extending the environmental tax accounts to include the costs of surrendering permits in general

Emission permits 13th London Group meeting 7 Link to use of energy, emissions etc.

Emission permits 13th London Group meeting 8 Physical stocks and flows of permits +÷+++÷÷=

Emission permits 13th London Group meeting 9 Monetary stocks and flows of permits

Emission permits 13th London Group meeting 10 Link between Danish emissions and targets Extra permits explain the gap Difference explained in bridge table

Emission permits 13th London Group meeting 11 Permits as a part of the environmental taxes Permits defined as taxes (SNA 2008) Traditional environmental taxes Other surrendered permits Accounts for total economic regulation Accounts for environmental related taxes Permits Other surrendered permits Permits Other surrendered permits

Emission permits 13th London Group meeting 12 Points for discussion Do you agree that the SEEA should follow the SNA 2008 as a starting point (accepting the tax treatment)? Should the revised SEEA be developed to include the physical flows of the permits? Should the revised SEEA offer supplementary information highlighting the monetary flows related to the permits? Do you agree that environmental tax accounts should be extended/supplemented to include the costs of surrendering permits in general? How to proceed?

Emission permits 13th London Group meeting 13 Contact information Thomas Olsen, Statistics Denmark