EEB’s Environmental Fiscal Reform Campaign Budapest European Environmental Bureau Stefan Scheuer, Policy Director

Content Role of Environmental Fiscal Reform EFR EEB’s EFR campaign Progress and bottlenecks The way forward Conclusions

Role of EFR – the scene Some progress but problems increasing –Climate and Biodiversity Objectives out of reach? Pollution standards and market mechanism did not solve long-term and global environmental problems –limited to EU’s internal market rules and mechanism –Low implementation and enforcement levels Challenging times: –“competitiveness” driven EU policy agenda –Black and white scaremongering – environmental regulation bad for competitiveness

What is EFR? What can it do? Umbrella for economic/fiscal measures to move towards sustainable development –Budget neutral shift of taxes from labour to environmental resource use –Phase out of perverse subsidies Goes beyond existing economic instruments as: –pollution charges, polluter pays principle –Tradeable pollution permits EFR has a huge potential –to fill regulatory gaps and support enforcement of existing laws in a non-bureaucratic way, –reconcile perceived contradicting interests, and –reduce overall resource use to achieve environmental objectives

EEB‘s EFR campaign Established in 2001 with great interest and support from EEB’s membership Objectives –Ambitious and effective EFR throughout the EU in order to Change production and consumption patterns towards sustainable development –Raising awareness and improving quality of political debate

EEB’s demands Additional 10% shift in total tax revenues from labour to environmental use by 2010 at EU and national level Removal of ALL environmentally harmful subsidies by 2010 Long term – QMV on Eco-taxes New energy taxation proposals: –with clear references to Sustainable Development –recommendations for tax recycling at national level –a price indexation mechanism and a timetable to review taxes

Campaign actions National actions by EEB Members: raising awareness Publications, positions on EU legislation and website for outreach Advocacy at EU level for inclusion of “environmental use costs” in Energy tax, emission trading, diesel fuel tax and Eurovignette Directives International cooperation and discussions with EU, OECD and UNEP: how subsidies harmful to environment and development can be removed/reformed at national level

Positive developments and… So far no real EFR exists Positive developments at national level: –German Eco-Tax reform – lowered petrol and diesel consumption –UK Climate Change Levy – reduced CO2 emissions –Dutch Eco-tax on energy – decreased energy use and increased demand for renewables –Danish car registration tax – lowered car- ownership At EU level –Gothenburg Council 2001 “Getting prices right” –2003 Emission trading 2003 –2003 Energy taxation? –2000 Water Framework Directive

… bottlenecks Increasing opposition based on claimed competitiveness concerns And EU dilemma –Unanimity for taxation required –“Brussels” hinders national EFRs Internal market rules make national EFRs difficult, e.g. VAT differentiation or state aid rules Plus lack of political will at national level Competitiveness is an issue but the lesser important one – innovation is the key! –Nevertheless EFR at EU level easier than at national level –Europe has become the world’s biggest consumer market!

The way forward Building on high level commitments Increased information and transparency Until QMV on environmental taxation introduced – use enhanced cooperation procedure Start strategic discussion about sectors not covered in the NAPs Start high-level process on environmental harmful subsidies under Dutch presidency –Criteria for identification based on key EU environmental objectives and –Harmonised reporting

Conclusion Great potential of measures under EFR umbrella –to foster win-win situations –strengthen the environmental dimension of SD –Fill legislative gaps and improve implementation BUT does progress depend on further EU integration, driven by –completion of EU internal market? –Or Environmental Crisis?

So only a long-term perspective after digestion of enlargement? Meanwhile –existing hurdles for frontrunners could be eliminated and cooperation promoted; –Data gathering and public communication could be strengthened; and –Lisbon strategy needs to incorporate EFR considerations – Dutch Presidency focus on Eco-Efficiency … New Commission…