ceu madrid msa [kompatibilitetstilstand] · aarhus university madrid 29.1.2015 co2 taxation (2014):...

VERSITET

Prof. Mikael Skou Andersen

AARHUS UNIVERSITY

DEPT OF ENVIRONMENTAL SCIENCE29. Januar 2015

UNI

Tax policies for the 21st centuryReflections on the Scandinavian model in an age of Europeanization and globalisation - some insights from Denmark

ENERGY TAXATION, ENVIRONMENTAL PROTECTION AND STATE AIDSUniversity Institute for European Studies, CEU San Pablo University, Madrid

DEPT OF ENVIRONMENTAL SCIENCE

Madrid 29.1.2015AARHUS UNIVERSITY

More than 60 years of Nordic cooperation

2

0

500

1000

1500

2000

2500

3000

Bil

lio

n €

GDP 2013



3



A shared model of energy taxation ?

4

Denmark Sweden Finland Norway Iceland

Energy tax:

Motor fuels

Heating

Industry

√

√

√

√

√

√

√

√

√

√

√

√

√

√

Carbon tax:

Motor fuels

Heating

Industry

√

√

√

√

√

√

√

√

√

√

√

√

√geothermal

√

Air pollution taxes

Motor fuels

Heating

Industry

√

√

√

√

√

√

√

√

Electricity tax

Domestic

Industry√

√

√

√

√

√

√

√

√

√

ETS - carbon √ √ √ √ √



Main principles

5

› Tax base1) Energy tax component – calorific

2) CO2 tax component - emissions

3) Air pollution taxes - emissions

› Tax rate differentiation1) Energy tax: Motor fuels/Households/Business/Industry

2) CO2 tax: Domestic vs. Manufacturing

3) Air pollution taxes: Stationary sources

› Power and heat sector1) Electricity: end-user tax

2) Heat: fuel-specific tax (good split required!)

3) CHP & power: no CO2-tax (but ETS)

› All: Indexation



Energy Taxation Directive proposal

6



How to calculate calorific value and CO2

7



CO2 taxation (2014): € per ton CO2

8

› Denmark

› Sweden Implicit tax rate

€/tonCO2

Motor fuels ETS-

industry

Manufact.

industnon-ETS

Other

business

Business

heating2)

Non-

business

Petrol 130

Gas oil/diesel 130 0 39 130 130

Heavy fuel oil 0 39 130 130

Kerosine 0 39 130 130

Gas/CNG 0 39 130 130

Coal & coke 0 39 130 130

Electricity 0 0 0 0 0 0

1) Excluding shipping and aviation. 2) No special rates for business heating in Sweden

Implicit tax

rate

€/tonCO2

Motor fuels1)

ETS-

industry

Business &

industry

Other

business

(liberal prof.)

Business

heating

Non-

business

Petrol 22

Gas oil/diesel 22 0 22/13/10 22 22 22

Heavy fuel oil 0 22/13/10 22 22

Kerosine 22 0 22/13/10 22 22 22

Gas/CNG 22 0 22/13/10 22 22 22

Coal & coke 0 22/13/10 22 22


1) Excluding shipping and aviation.




9

› Denmark


€/tonCO2

Motor fuels ETS-

industry

Manufact.

industnon-ETS

Other

business

Business

heating2)

Non-

business

Petrol 130

Gas oil/diesel 130 0 39 130 130


Kerosine 0 39 130 130

Gas/CNG 0 39 130 130

Coal & coke 0 39 130 130



Implicit tax

rate

€/tonCO2

Motor fuels1)

ETS-

industry

Business &

industry

Other

business

(liberal prof.)

Business

heating

Non-

business

Petrol 22

Gas oil/diesel 22 0 22/13/10 22 22 22

Heavy fuel oil 0 22/13/10 22 22

Kerosine 22 0 22/13/10 22 22 22

Gas/CNG 22 0 22/13/10 22 22 22

Coal & coke 0 22/13/10 22 22






10

› Denmark


€/tonCO2

Motor fuels ETS-

industry

Manufact.

industnon-ETS

Other

business

Business

heating2)

Non-

business

Petrol 130

Gas oil/diesel 130 0 39 130 130


Kerosine 0 39 130 130

Gas/CNG 0 39 130 130

Coal & coke 0 39 130 130



Implicit tax

rate

€/tonCO2

Motor fuels1)

ETS-

industry

Business &

industry

Other

business

(liberal prof.)

Business

heating

Non-

business

Petrol 22

Gas oil/diesel 22 0 22/13/10 22 22 22

Heavy fuel oil 0 22/13/10 22 22

Kerosine 22 0 22/13/10 22 22 22

Gas/CNG 22 0 22/13/10 22 22 22

Coal & coke 0 22/13/10 22 22






11

› Denmark


€/tonCO2

Motor fuels ETS-

industry

Manufact.

industnon-ETS

Other

business

Business

heating2)

Non-

business

Petrol 130

Gas oil/diesel 130 0 39 130 130


Kerosine 0 39 130 130

Gas/CNG 0 39 130 130

Coal & coke 0 39 130 130



Implicit tax

rate

€/tonCO2

Motor fuels1)

ETS-

industry

Business &

industry

Other

business

(liberal prof.)

Business

heating

Non-

business

Petrol 22

Gas oil/diesel 22 0 22/13/10 22 22 22

Heavy fuel oil 0 22/13/10 22 22

Kerosine 22 0 22/13/10 22 22 22

Gas/CNG 22 0 22/13/10 22 22 22

Coal & coke 0 22/13/10 22 22





Auto -diesel: sum of energy and CO2 taxes€ per GJ

12

› Denmark

› Sweden



Energy taxation (2014): € per GJImplicit tax

rate ENERGY

€/GJ

Motor fuels1)

ETS-

industry

Business &

industrynet

Other

business 2)

(liberal prof.)

Business

heating

Non-

business

Petrol 17.13

Gas oil/diesel 9.63 0.61 0.61 10.67 9.87 9.87

Heavy fuel oil 0.62 0.62 9.83 9.83

Kerosine 10.89 0.91 0.91 12.09 9.81 9.81

Gas/CNG 8.89 0.64 0.64 9.68 9.68

Coal & coke 0.61 0.61 9.67 9.67

Electricity 0.15 0.15 31.03 19.33 31.03

1) Excluding railways, shipping, aviation and agriculture/forestry. 2) Excluding forestry, agriculture and greenhouses.

13

Implicit tax

rate ENERGY

€/GJ

Motor fuels 1)

*class II

ETS-

industry

Manufact.

industnon-ETS

Other

business2)

Business

heating 3)

Non-

business

Petrol 11.44*

Gas oil/diesel 6.54* 0.79 0.79 2.63 2.63

Heavy fuel oil 0.74 0.74 2.47 2.47

Kerosine 6.63 0.80 0.80 2.67 2.67

Gas/CNG 0 4) 0.80 0.80 2.66 2.66

Coal & coke 0.76 0.76 2.53 2.53

Electricity 0.16 0.16 0.16 0.16 9.61


3) No special rates for business heating in Sweden 4) CNG exempt from energy tax when used as motor-fuel.

› Denmark

› Sweden

Motor fuel

taxes: gap

between

petrol and

diesel




rate ENERGY

€/GJ

Motor fuels1)

ETS-

industry

Business &

industrynet

Other

business 2)

(liberal prof.)

Business

heating

Non-

business

Petrol 17.13

Gas oil/diesel 9.63 0.61 0.61 10.67 9.87 9.87

Heavy fuel oil 0.62 0.62 9.83 9.83

Kerosine 10.89 0.91 0.91 12.09 9.81 9.81

Gas/CNG 8.89 0.64 0.64 9.68 9.68

Coal & coke 0.61 0.61 9.67 9.67

Electricity 0.15 0.15 31.03 19.33 31.03


14

Implicit tax

rate ENERGY

€/GJ

Motor fuels 1)

*class II

ETS-

industry

Manufact.

industnon-ETS

Other

business2)

Business

heating 3)

Non-

business

Petrol 11.44*

Gas oil/diesel 6.54* 0.79 0.79 2.63 2.63

Heavy fuel oil 0.74 0.74 2.47 2.47

Kerosine 6.63 0.80 0.80 2.67 2.67

Gas/CNG 0 4) 0.80 0.80 2.66 2.66

Coal & coke 0.76 0.76 2.53 2.53

Electricity 0.16 0.16 0.16 0.16 9.61



› Denmark

› Sweden

› Denmark

› Sweden

Uniform rates

per GJ;

highest for

households




rate ENERGY

€/GJ

Motor fuels1)

ETS-

industry

Business &

industrynet

Other

business 2)

(liberal prof.)

Business

heating

Non-

business

Petrol 17.13

Gas oil/diesel 9.63 0.61 0.61 10.67 9.87 9.87

Heavy fuel oil 0.62 0.62 9.83 9.83

Kerosine 10.89 0.91 0.91 12.09 9.81 9.81

Gas/CNG 8.89 0.64 0.64 9.68 9.68

Coal & coke 0.61 0.61 9.67 9.67

Electricity 0.15 0.15 31.03 19.33 31.03


15

Implicit tax

rate ENERGY

€/GJ

Motor fuels 1)

*class II

ETS-

industry

Manufact.

industnon-ETS

Other

business2)

Business

heating 3)

Non-

business

Petrol 11.44*

Gas oil/diesel 6.54* 0.79 0.79 2.63 2.63

Heavy fuel oil 0.74 0.74 2.47 2.47

Kerosine 6.63 0.80 0.80 2.67 2.67

Gas/CNG 0 4) 0.80 0.80 2.66 2.66

Coal & coke 0.76 0.76 2.53 2.53

Electricity 0.16 0.16 0.16 0.16 9.61



› Denmark

› Sweden

Uniform rates

per GJ;

modest in

Sweden




rate ENERGY

€/GJ

Motor fuels1)

ETS-

industry

Business &

industrynet

Other

business 2)

(liberal prof.)

Business

heating

Non-

business

Petrol 17.13

Gas oil/diesel 9.63 0.61 0.61 10.67 9.87 9.87

Heavy fuel oil 0.62 0.62 9.83 9.83

Kerosine 10.89 0.91 0.91 12.09 9.81 9.81

Gas/CNG 8.89 0.64 0.64 9.68 9.68

Coal & coke 0.61 0.61 9.67 9.67

Electricity 0.15 0.15 31.03 19.33 31.03


16

Implicit tax

rate ENERGY

€/GJ

Motor fuels 1)

*class II

ETS-

industry

Manufact.

industnon-ETS

Other

business2)

Business

heating 3)

Non-

business

Petrol 11.44*

Gas oil/diesel 6.54* 0.79 0.79 2.63 2.63

Heavy fuel oil 0.74 0.74 2.47 2.47

Kerosine 6.63 0.80 0.80 2.67 2.67

Gas/CNG 0 4) 0.80 0.80 2.66 2.66

Coal & coke 0.76 0.76 2.53 2.53

Electricity 0.16 0.16 0.16 0.16 9.61



› Denmark

› Sweden

Uniform

energy tax

rates for ETS

and non-ETS




rate ENERGY

€/GJ

Motor fuels1)

ETS-

industry

Business &

industrynet

Other

business 2)

(liberal prof.)

Business

heating

Non-

business

Petrol 17.13

Gas oil/diesel 9.63 0.61 0.61 10.67 9.87 9.87

Heavy fuel oil 0.62 0.62 9.83 9.83

Kerosine 10.89 0.91 0.91 12.09 9.81 9.81

Gas/CNG 8.89 0.64 0.64 9.68 9.68

Coal & coke 0.61 0.61 9.67 9.67

Electricity 0.15 0.15 31.03 19.33 31.03


17

Implicit tax

rate ENERGY

€/GJ

Motor fuels 1)

*class II

ETS-

industry

Manufact.

industnon-ETS

Other

business2)

Business

heating 3)

Non-

business

Petrol 11.44*

Gas oil/diesel 6.54* 0.79 0.79 2.63 2.63

Heavy fuel oil 0.74 0.74 2.47 2.47

Kerosine 6.63 0.80 0.80 2.67 2.67

Gas/CNG 0 4) 0.80 0.80 2.66 2.66

Coal & coke 0.76 0.76 2.53 2.53

Electricity 0.16 0.16 0.16 0.16 9.61



› Denmark

› Sweden

Electricity tax

at EU

minimum; not

in line with

other energy

products




rate ENERGY

€/GJ

Motor fuels1)

ETS-

industry

Business &

industrynet

Other

business 2)

(liberal prof.)

Business

heating

Non-

business

Petrol 17.13

Gas oil/diesel 9.63 0.61 0.61 10.67 9.87 9.87

Heavy fuel oil 0.62 0.62 9.83 9.83

Kerosine 10.89 0.91 0.91 12.09 9.81 9.81

Gas/CNG 8.89 0.64 0.64 9.68 9.68

Coal & coke 0.61 0.61 9.67 9.67

Electricity 0.15 0.15 31.03 19.33 31.03


18

Implicit tax

rate ENERGY

€/GJ

Motor fuels 1)

*class II

ETS-

industry

Manufact.

industnon-ETS

Other

business2)

Business

heating 3)

Non-

business

Petrol 11.44*

Gas oil/diesel 6.54* 0.79 0.79 2.63 2.63

Heavy fuel oil 0.74 0.74 2.47 2.47

Kerosine 6.63 0.80 0.80 2.67 2.67

Gas/CNG 0 4) 0.80 0.80 2.66 2.66

Coal & coke 0.76 0.76 2.53 2.53

Electricity 0.16 0.16 0.16 0.16 9.61



› Denmark

› Sweden

Big

discrepancies

in DK-

electricity tax



Gas: sum of energy and CO2 taxes€ per GJ

19

› Denmark

› Sweden



Air pollution taxes: SO2 and NOx

SO2-tax (2014)− Nominal rate

− Implicit rate

20

Nominal tax rate

SO2 (SE+DK)

€/kg sulphur

Motor

fuels1)

ETS-

industry

Manufact.

industnon-ETS

Other

business

Business

heating

Non-

business

Gas oil/diesel*) 3.47 3.47 3.47 3.47

Heavy fuel oil 3.47 3.47 3.47 3.47

Kerosine 3.47 3.47 3.47 3.47

Gas/CNG 3.47 3.47 3.47 3.47

Coal & coke 3.47 3.47 3.47 3.47

Peat 3.47 3.47 3.47 3.47

1) Legal requirement below 0.05% sulphur threshold for tax. Excluding railways, shipping and aviation. *) råtallolja exempt

Implicit tax rate

SO2 (SE+DK)

€/GJ

Motor

fuels

ETS-

industry

Manufact.

industnon-ETS

Other

business

Business

heating

Non-

business

Gas oil/diesel0.2% 0.16 0.16 0.16 0.16

Heavy fuel oil0.35% 0.31 0.31 0.31 0.31

Kerosine0.2% 0.16 0.16 0.16 0.16

Gas/CNG 0 0 0 0

Coal & coke0.5% 0.62 0.62 0.62 0.62

Peat0.35% 0.45 0.45 0.45 0.45

1) Excluding railways, shipping and aviation. *) råtall oil exempt *) exempt



Coal and coke 0,5%: energy/CO2 + air pollution€ per GJ

21

› Denmark

› Sweden

SO2 tax a

strong signal

to ETS-

installations



Heavy fuel oil 0.35%: energy/CO2 + air pollution€ per GJ

22

› Denmark

› Sweden

€3.5/kg SO2

- almost same

rate in DK and

SE



First reflections

23

› CO2 taxes are high in Sweden and low in Denmark, but in both cases introduced against a lowering of energy taxation

› When considering sum of carbon-energy taxes per GJ, more similarities than differences

› Lower fuel tax rates for industry and business in Denmark offset by higher taxes for business heating

› Air pollution taxes are a good complement to ETS; few exemptions - and relief to feed-in-tariffs

› Some challenges with electricity and CHP



State aid questions – role of EU (and EEA)

24

› 1994 environmental guidelines on state aid reflecting notification/negotiations with Denmark on CO2 tax-reductions (e.g. role of agreements)

› 1998 ECJ Outokumpu case (Finland): electricity tax must not discriminate against imports (C-213/96)

› 2001 ECJ Adria Wien case (Austria): reductions in unilateral energy tax rates constitute state aid, even if above minima (C-143/99)

› 2003 Energy Taxation Directive Art.17: Zero tax rate for energy-intensive industries is permissible

› 2008 CO2 tax reduction for ETS industry (Sweden)



Ongoing discussion in Nordic countries

› National Audit Office of Sweden (2012)− Huge windfall gain for free allocation of ETS – 1.8 billion €− Polluter-pays principle not well implemented when

households responsible for 20% of emissions pay 50% of taxes

− Differentiated reductions for auctioned and grandfatheredallowances ?

25



Effective tax rates in Sweden (2015)

26

öre

pe

r k

Wh

Source: National Institute of Economic Research, 2012



Could we do better ?

› “The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing”

› Jean Baptiste Colbert (Minister of Finance under King Louis XIV of France. 1619-1683)

27



Challenges ahead

› Reductions for ETS installations expire by 2017 !

› Biofuels subject to energy and CO2-taxation ?

› Reductions for motor fuel diesel and electricityqualify as environmentally harmful subsidies –should they also have been notified as state aid ?

28



Thank you for your attention

29



30




31

› Denmark


€/tonCO2

Motor fuels ETS-

industry

Manufact.

industnon-ETS

Other

business

Business

heating2)

Non-

business

Petrol 130

Gas oil/diesel 130 0 39 130 130


Kerosine 0 39 130 130

Gas/CNG 0 39 130 130

Coal & coke 0 39 130 130



Implicit tax

rate

€/tonCO2

Motor fuels1)

ETS-

industry

Business &

industry

Other

business

(liberal prof.)

Business

heating

Non-

business

Petrol 22

Gas oil/diesel 22 0 22/13/10 22 22 22

Heavy fuel oil 0 22/13/10 22 22

Kerosine 22 0 22/13/10 22 22 22

Gas/CNG 22 0 22/13/10 22 22 22

Coal & coke 0 22/13/10 22 22






rate ENERGY

€/GJ

Motor fuels1)

ETS-

industry

Business &

industrynet

Other

business 2)

(liberal prof.)

Business

heating

Non-

business

Petrol 17.13

Gas oil/diesel 9.63 0.61 0.61 10.67 9.87 9.87

Heavy fuel oil 0.62 0.62 9.83 9.83

Kerosine 10.89 0.91 0.91 12.09 9.81 9.81

Gas/CNG 8.89 0.64 0.64 9.68 9.68

Coal & coke 0.61 0.61 9.67 9.67

Electricity 0.15 0.15 31.03 19.33 31.03


32

Implicit tax

rate ENERGY

€/GJ

Motor fuels 1)

*class II

ETS-

industry

Manufact.

industnon-ETS

Other

business2)

Business

heating 3)

Non-

business

Petrol 11.44*

Gas oil/diesel 6.54* 0.79 0.79 2.63 2.63

Heavy fuel oil 0.74 0.74 2.47 2.47

Kerosine 6.63 0.80 0.80 2.67 2.67

Gas/CNG 0 4) 0.80 0.80 2.66 2.66

Coal & coke 0.76 0.76 2.53 2.53

Electricity 0.16 0.16 0.16 0.16 9.61



› Denmark

› Sweden

ceu madrid msa [kompatibilitetstilstand] · aarhus university madrid 29.1.2015 co2 taxation (2014):...

Documents