Fiscal policy settings for clean energy Dr Paul Burke Australian National University paul.j.burke@anu.edu.au @burke_ec ANU Energy Change Institute Picture: https://pixabay.com/en/solar-panel-solar-energy-panels-1175819/

Window tax What happens if you tax windows? Picture: https://en.wikipedia.org/wiki/Window_tax#/media/File:Window_Tax.jpg

Smart taxes can be put to work to help the environment Economic theory says that taxes should be set equal to the cost of external damage caused Taxman

Carbon tax has various benefits Reduces pollution Encourages clean energy Raises revenue Cheap to collect, as there are few taxpayers Reduces the need for some other policies Picture: https://upload.wikimedia.org/wikipedia/commons/3/35/Paiton_Java_Indonesia_Paiton-thermal-power-plant-01.jpg

Goal of a carbon tax Emissions Business as usual Index Green growth GDP

Tax and relax Picture: https://pixabay.com/static/uploads/photo/2015/02/02/23/41/solar-621744_960_720.jpg

Australia’s carbon pricing experiment Changes in emissions from the electricity sector Carbon price Introduced Removed Megatonnes of CO2-e Years are fiscal. Source: NGGI September 2015

Indonesia’s CO2 emissions from energy use million tons CO2 Source: IEA

Coal 35,000 MW program 35,000 MW of new capacity by 2019 > 20,000 MW from coal Image: http://www.theguardian.com/environment/gallery/2015/aug/17/indonesia-coal-power-in-pictures#img-8

Renewable share of electricity generation (non-hydro renewables only) % Source: IEA

Consumer subsidies for fossil fuel use, 2014 ($US billion) 3% of GDP 70% for gasoline & diesel Source: IEA

Question What outcomes would you expect to see if gasoline is subsidised? Picture: http://www.ft.com/cms/s/0/7e1411f0-7e3b-11e2-a6d1-00144feabdc0.html#axzz3Lqtaiqx8

Fuel subsidies lead to … More fuel use Purchases of fuel-inefficient vehicles Traffic jams Pollution +++ Image: http://en.tempo.co/read/news/2015/12/24/057730354/Toll-Roads-Show-Signs-of-Heavy-Traffic-as-Holiday-Nears

Indonesia’s recent fuel subsidy reforms June 2013: Premium price increased from 4,500 to 6,500 rupiah/liter November 2014: Increased to 8,500 rupiah/liter January 2015: Price linked to world market Currently: 6,450 rupiah/liter Future reform challenge: moving to a fuel excise Picture: http://www.cascadeasia.com/2013/03/fresh-ideas-discussed-about-fuel-subsidy-reform/, http://englishnews.thaipbs.or.th/constitutional-court-upholds-kpu-decision-declaring-jokowi-next-president

Impacts of 10% gasoline fuel excise Source: Burke (various papers)

2009 Green Paper Recommended introduction of a carbon tax Potential to transition to an emissions trading scheme (ETS) in the future Remove all fossil fuel subsidies

Renewable energy target Subsidies for clean energy Policy alternatives Carbon tax Institutional reform Coal moratorium Coal tax Renewable energy target +++ Subsidies for clean energy Feed-in tariffs

All the best! Dr Paul Burke Australian National University paul.j.burke@anu.edu.au @burke_ec