Mikael Skou Andersen

Europe's experience with carbon-energy taxation

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The COMETR project is a comprehensive attempt to account ex-post for the implications of carbon-energy taxation, taking into account differences in sectoral tax burdens and within a suitable macro-economic framework capable of providing an overall assessment, the E3ME model of Cambridge Econometrics. The results indicate reductions in greenhouse gas emissions for six member states as a result of carbon-energy taxation under revenue-neutral environmental tax reform (ETR). These effects are mirrored by reductions in total fuel consumption, with the largest reductions occurring in countries with the highest tax rates. Accordingly, the European environmental tax reforms had by 2004 caused reductions in greenhouse gas emissions of 3.1% on average for the six member countries examined, with the largest fall recorded for Finland
(5.9%). E3ME-results also suggest that ETR-countries did not experience marked impacts on economic growth (GDP). There was a negative effect for energy-intensive industries but due to many exemptions the burden has remained modest and, where revenues have been recycled to lower employers’ costs for social security contributions, generally below 2% of gross operating surplus.
Original languageEnglish
JournalSurveys and Perspectives Integrating Environment and Society
Volume3
Issue2
ISSN1993-3800
Publication statusPublished - 20 Dec 2010

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