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Transcript of COMETR China msa - pure.au.dkpure.au.dk/portal/files/83215023/COMETR_China_msa.pdf · per cent of...
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Insights from the COMETR projectfor China
COMpetitiveness effects of Environmental Tax Reforms
Prof. Mikael Skou Andersen, Dept. of Policy Analysis, NERI, Aarhus University
COMETR is a Specific Targeted Research Project (STREP) of the ‘Scientific Support to Policies’ initiative under the EU’s Sixth Framework Programme for Research (FP6) 2004-2007
NERI, Aarhus University, DENMARK
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COMETR partners
• Cambridge Econometrics• Economic and Social Research Inst., Dublin• Institute for Economic and Environmental Policy, Prague• Policy Studies Institute, London• Vienna Institute for International Economics• NERI, Aarhus University (coordinator)
NERI, Aarhus University, DENMARK
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Global CO2-emissions and China
• USA: 20%• China: 20%• EU: 12%• Russia: 6%• Japan: 4%
• China: Doubling projectedby IPCC for 2025 was a reality in 2007
Kina
0
1
2
3
4
5
6
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
år
Gig
aton
NERI, Aarhus University, DENMARK
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• Five-year plan (2006-2010) aims at a quadrupling of GDP before2020, while energy consumption may only double
NERI, Aarhus University, DENMARK
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• Ferrous industries and cement can deliver 2/3 of IEA-stipulated industrial energy savings for China
• Per year: 113 Mtoe and 0,3 Gton CO2
NERI, Aarhus University, DENMARK
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Environmental tax reform (ETR)revenue as a share of GDP (1995-2003)
UK (CCL) 0,07%Sweden 0,92%
Netherlands 0,47%Germany 0,84%
Finland 0,59%Denmark 1,08%
NERI, Aarhus University, DENMARK
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Mitigation for energy-intensive industries
Sweden and Finland: – cap on tax liability (SE<0,8 % sales value; FI<3,7% value added)– above threshold: minimum tax rates of EU Energy Taxation Directive
Great Britain and Denmark: – agreements and commitments as condition for reduced tax rates (up to
80%) in energy-intensive industries– recycling of revenue for energy efficient technology (both standard
solutions and tailor-made upgrade of production technology)
Germany and Netherlands:– DE: peak tax adjustment conditional on self-commitment; 40 per cent
reduction of ”extra” tax burden– NL: above threshold (1 mill. m3 gas or 10 mill. kWh) only minimum tax
rates of EU Energy Taxation Directive
NERI, Aarhus University, DENMARK
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Ferrous industries: real carbon-energy tax burden
0
0,2
0,4
0,6
0,8
1
1,2
1,4
1,6
1,8
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
euro
pr G
J
DKFINGERNLSLOVSWUK
NERI, Aarhus University, DENMARK
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Cement: real carbon-energy tax burden
-0,2
0
0,2
0,4
0,6
0,8
1
1,2
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
euro
pr
GJ
DKFINGERNLSLOVSWUK
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-20%
0%
20%
40%
60%
80%
100%
Denmark
Finland
Germany
Netherlands
Slovenia
Sweden
Great Britain
Ferrous industries: Net Energy Input
OtherHeat (sold)ElectricityNatural gasGas /diesel oilFuel oilCokeCoal
NERI, Aarhus University, DENMARK
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0
5
10
15
20
25
30
35
40
45
50
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
GJ
per 1
000
€ ou
tput Denmark
FinlandGermanyNetherlandsSloveniaSwedenUK
Sweden: energy taxes on industry abolished and CO2-tax reduced in mid-1990’s
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no real productivity gains due to fierce price competition
Energy productivity of ferrous industries
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
8,0
9,0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
euro
cent
in v
alue
add
ed p
er M
J
DenmarkFinlandGermanyNetherlandsSloveniaSwedenUK
NERI, Aarhus University, DENMARK
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-20%
0%
20%
40%
60%
80%
100%
Denmark
Finland
Germany
Netherlands
Slovenia
Sweden
Great Britain
Cement: Net Energy Input
OtherBiofuelWasteHeat (sold)ElectricityNatural gasGas /diesel oilFuel oilCokeCoal
NERI, Aarhus University, DENMARK
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Energy intensity of cement
0
10
20
30
40
50
60
70
80
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
GJ
per 1
000
€ ou
tput Denmark
FinlandGermanyNetherlandsSloveniaSwedenUK
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Energy productivity in cement
0,0
0,5
1,0
1,5
2,0
2,5
3,0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
euro
cent
in v
alue
add
ed p
er M
J
DenmarkFinlandGermanyNetherlandsSloveniaSwedenUK
NERI, Aarhus University, DENMARK
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Environmental agreements
Partial reimbursement of tax requires:• Binding energy saving target• Energy management system
– with energy audit, staff training, procurementpolicies and annual progress report
RESULT: 60 per cent higher energy savingsthan in companies subject to tax only(Bjørner and Togeby, 1999)
NERI, Aarhus University, DENMARK
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Green tax switch: real tax burdenper cent of gross operating surplus (GOS)
Denmark
-6,0
-5,0
-4,0
-3,0
-2,0
-1,0
0,0
1,0
2,0
3,0
glass cement steel non-ferrous
per c
ent o
f GO
S
Tax burden value of lowered employers SSC tax induced energy saving sum
NERI, Aarhus University, DENMARK
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Effect of ETR on GDP
-0,5
0
0,5
1
1994 1997 2000 2003 2006 2009 2012
Denmark
Netherlands
Slovenia
UK
GermanyFinland
Sweden
Note(s) : % difference is the difference between the base case and the counterfactual reference case.
Source(s) : CE.
% difference
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What carbon tax provides a level playingfield for energy-intensive industries ?• Cement and ferrous industries are taxed effectively at 0,1-0,3
€/GJ or 1-3 €/tCO2 in Europe’s ETR countries (net of exemptions)
• Tax rates in comparison– market exchange rate: 10 RMB ~ 1€– real exchange rate (purchasing power parity; PPP);
2,5 RMB buys what 1€ does (World Bank, 2005)
• China carbon tax arrangement for energy-intensive sectors:– China tax rate of 3-8 RMB/tCO2 (net of exemptions) would match
effective European tax rates of 1-3 €/tCO2– with environmental agreements (subject to penalty) and recycling
of 20% of revenue for technological upgrade and innovation
For non-energy intensive sectors a standard CO2 tax rate of 50 RMB could match CO2 price of 20 € in Europe
NERI, Aarhus University, DENMARK
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Cumulative CO2 emissions
NERI, Aarhus University, DENMARK
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Mikael Skou Andersen and Paul Ekins, eds.Carbon-energy taxation: lessons from Europe,Oxford University Press 2009 (in press)