Unapologetic insolence from an aging subversive

Unapologetic insolence from an aging subversive

Sunday, 5 June 2011

Hopefully More Light than Heat

There’s plenty of heat being generated by the carbon tax debate at the moment, but from where I sit, precious little light.

I’ll try, therefore to provide some light – it can’t do any harm.

I’m not going to argue the science. I’m not qualified. It’s a pity many of the opinionistas on both sides didn’t do the same.

Two examples from opposite sides are Andrew Bolt and Simon Sheik. Both are unqualified in the science, so when it’s all said and done, you’d be mad to listen to either of them. Having said that, on this topic, a lot more is being said than done. 

I’ll deal with one issue at a time. It’s a complex area, and I don’t have the time to research the fact across it all at once, so I’ll attempt to break it up into bite-sized chunks.

Boy on a Bike does this rather well IMHO. (See, I’m hip to all this blogspeak).

Today we’ll take a bite from the bit of the cake called “Countries that have introduced a carbon tax – did the sky fall?” You’ll also have to excuse a rather loose definition of “tax”.

My loose definition is “a financial penalty designed to encourage lower emissions of carbon”. So when I talk about a carbon tax – that’s what I mean. I’m not making judgements about whether it was effective or not – that comes later.

(Much later, actually – probably next week - I’m off to Thargomindah tomorrow).

The countries/states will be listed with some comments and references. Hopefully, you’ll be able to follow these up to test their reliability. I’m sure you’ll tell me if they’re dodgy. All I'm trying to do is to establish the fact of what the rest of the world is doing, as it seems to be an important part of the argument.

Let’s start with Europe – the UK to be precise. I'll look at North and South America next post.

United Kingdom

Way back in 1993, the Poms introduced what they called the fuel duty escalator (FDE), which was designed to reduce carbon dioxide emissions in the transport sector. The transport lobby hated it, and it was cancelled in 1999. In 2001, they introduced the Climate Change Levy. It was hoped to cut annual emissions by 2.5 million tonnes by 2010, and forms part of the UK's Climate Change Programme. It’s a tax bunged on all energy users, but the transport and household sectors are excused. On the carrot (as opposed to the stick) side, if you generate electricity from new renewables or cogenerational schemes, you don’t pay the tax. Nuclear is still taxed – that’s interesting.

You can check this out on the website of the quaintly named HM’s Revenue and Customs.
Let’s cross the dutch ditch and look at the Ditch Dutch.

The Netherlands

The clog wearers were quick off the mark in that they kicked off a carbon tax in 1990. That lasted only two years and morphed into something called the Environmental Tax on Fuels. This is a bit clever in that it is assessed on a split between carbon content and energy content. In 1996 The Regulatory Tax on Energy was added to the tax mix. The Environmental tax and the regulatory tax are/were 5.16 Dutch guilder, or NLG, (~$3.13) or per metric ton of CO2 and 27.00 NLG (~$16.40) per metric ton CO2 respectively. They don’t tax electricity, but they do tax fuels used to produce it. Energy-intensive industries were originally granted special rates, but these concessions expired at the beginning of 1997.
In 2007, the Dutch introduced what they call a Waste Fund that is funded by a carbon-based packaging tax. This tax encourages producers to create packaging that is recyclable. The goal is to of recycle 65% of used packaging by 2012. Tidy lot, the Dutch.
There’s a useful executive summary of European action (including the Netherlands) here.




Back in 1991 Norway introduced a CO2 tax on fossil fuels. It started at the very high rate of US$51 per metric ton of CO2 on petrol, with an average tax of US$21 per metric ton.  It covered diesel, mineral oil, and oil and gas used in North Sea extraction activities.  It is one of the highest rates in the OECD. Oil and gas produced offshore is also taxed. They generated US$1.3 billion in 2010 dollars by this. Some industry sectors have been granted exemptions from the tax to preserve their competitive position.
The Swedes first enacted a CO2 tax at the beginning of 1991 at $100 per tonne. It applied on the use of oil, coal, natural gas, liquefied petroleum gas, petrol, and aviation fuel used in domestic travel. Industrial users paid half the rate. There were exemptions for high-energy industries like horticulture, the pulp and paper industry, mining, and manufacturing. In 1997 the rate was raised to $150 per tonne of CO2. It’s paid in transport, space heating, and non-combined heat and power generation.
There’s lots of heating in Sweden. Here’s an article.




The land of the gnomes implemented a CO2 incentive tax on all fossil fuels in January 2008. Fuels used for energy were exempt as were petrol and diesel.  It adds up to US $11.41 per metric tonne of CO2. There is actually a Federal Law on the Reduction of CO2 (CO2 Law) in Switzerland. In 2010, the highest tax rate will be US $34.20 per metric tonne CO2.
Read more here.


Finland is notable because it was the first country in the 1990s to introduce a CO2 tax. They started with few exemptions for defined fuels or sectors, but substantial liberalisation has happened since then. When the Nordic electricity market opened further changes were made, because the Finns reckoned they would have been disadvantaged.

See page 17 here.

Republic of Ireland
The Paddies introduced their country's first in 2010 at approx US$20 per tonne of CO2 emissions.  It applies to kerosene, gas oil, lpg, fuel oil, and natural gas. Natural gas users are exempt if they’re using it to "generate electricity, for chemical reduction, or for electrolytic or metallurgical processes". The Economic and Social Research Institute has estimated the tax will cost between about €2 and €3 a week per household, or about €156 per year.
It’s controversial.

There’s a stoush in relation to heating charges for pensioners and people on fixed incomes, and of course the Irish economy is on life support.
To tidy up the rest of Europe, we look at Denmark where there’s been some form of carbon tax since 1992.  It was about $14 for business and $7 for households, per tonne of CO2 back then. Now it’s about $18 US dollars. The tax depends on the process the energy is used for, and whether or not the company has volunteered to apply energy efficiency measures.
The Danes also offer a tax refund for energy efficient changes. There are some details about Denmark here.

That’s a snapshot of Europe – a very light touch. I’m not into conclusions – that’s up to you.


cav said...

Don't forget India and China, me old china!

1735099 said...

Settle down. That’s for the week after next – North America next week, and South Africa in three weeks.

cav said...

Well I might learn something in the meantime, but then again.....

BTW I am a caravan owner now so expect a change!

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