1. 1 TF on environmental transfers of the WG environmental expenditure statistics Environmental subsidies and similar transfers – issues for discussion Unit E7 Stockholm 18-19 October 2011

2. Environmental Accounts 2 Background Results of the pilot exercise for collecting data on environmental subsidies and similar transfers Difficulties: –selection of environmental subsidies and similar transfers in COFOG other than 05 (environmental protection) –find the correspondence between the actual environmental domain from CEPA and the COFOG codes which are not detailed (e.g. COFOG 05.3 - pollution abatement) –split government transfers packages (or programs) into current and capital transfers –identify the environmental share of a single transfer which is predominantly but not entirely environmental (e.g. the case of agricultural subsidies) –find the relevant information to distribute the environmental subsidies and similar transfers by NACE

3. Environmental Accounts 3 List of the discussion issues 1.Advantages and disadvantages of data sources 2.Environmental subsidies and similar transfers in other COFOG codes beside 05 3.Calculation of the environmental shares versus main purpose principle in the case of: single transfers, programmes including a group of transfers 4.Borderline cases (e.g. transfers in kind, joint implementation types of transfers, tax credits, etc) 5.Classification of environmental subsidies and similar transfers by environmental domains 6.Distribution to industries (NACE and institutional sectors) 7.Potentially environmentally damaging subsidies

4. Environmental Accounts 4 Discussion issues 1.Advantages and disadvantages of the data sources National accounts Budget analysis Other sources 2.Environmental subsidies and similar transfers in other COFOG codes (beside COFOG 05) COFOG 04.2 – Agriculture, forestry, fishing and hunting COFOG 06.3 - Water supply Other COFOG codes such as 04.3 (Fuel and energy), 04.4 (Mining, manufacturing and construction), 04.8 (R&D Economic affairs)

5. Environmental Accounts 5 Discussion issues 3. Calculation of the environmental shares versus main purpose principle: Case 1: programmes including a group of transfers, of which only a part is environmental Case 2: single transfers with multipurpose, of which an environmental share is applied Questions: »Are single transfers with a main purpose that is not environmental within scope? »Should a share be calculated for single environmental transfers with non-environmental secondary purpose? »How much of the agricultural subsidies is environmentally related? How to identify this environmental share? Using coefficients? Using other sources?

6. Environmental Accounts 6 Discussion issues 4. Borderline cases (the list is not exhaustive ): Should transfers in kind (e.g. from NL: 'energy box with products that households can use to save energy') be included? Should joint implementation type of programs be included? –Joint implementation is a market based instrument on 'the carbon-market' under the Kyoto Protocol that enables industrialised countries to carry out joint implementation projects with other developed countries. It allows the country with an emission reduction or limitation commitment under the Kyoto Protocol to earn emission reduction units which can be counted towards meeting its Kyoto target. Should tax credits be included? How to measure them? 5. Classification of environmental subsidies and similar transfers by: –CEPA/CRUMA –environmental taxes categories (energy, transport, pollution, resources) –COFOG codes

7. Environmental Accounts 7 Discussion issues 5. Classification of environmental subsidies and similar transfers by environmental domains - questions What classification is more relevant to be applied to environmental subsidies and similar transfers? What are the methods for distributing environmental subsidies and similar transfers by environmental tax categories? How (if) to split the COFOG 05.3 (pollution abatement) into the relevant CEPA classes: protection of ambient air and climate (CEPA 1), protection and remediation of soil, groundwater and surface water (CEPA 4), noise and vibration abatement (CEPA 5) and protection against radiation (CEPA 7)? Is it relevant to use the COFOG codes as well in data collection?

8. Environmental Accounts 8 Discussion issues 6. Distribution to industries (NACE and institutional sectors): what level? how? 7. Potentially environmentally damaging subsidies: What should the future statistical guide contain on this issue? Any new experience concerning potentially environmentally damaging subsidies in the countries to be mentioned in the TF?