Høringssvar flyseteavgift 2016 utsendelse

Transcription

Toll- og avgiftsdirektoratet
Pr. epost: [email protected]
Kopi: Samferdselsdepartementet
Deres ref.: 15/84353-3, arkivkode 470
Vår ref.: sf37-11-1316
3. februar 2016
HØRINGSSVAR – flypassasjéravgift – endring av forskrift 11. desember 2001 nr. 1451
Norges Luftsportforbund (NLF) er et særforbund tilsluttet Norges idrettsforbund (NIF) og organiserer
følgende idretter under fellesbetegnelsen luftsport: Fallskjermhopping, hanggliding, paragliding,
seilflyging, motorflyging, mikroflyging, modellflyging og flyging med varmluftballonger. NLF har 245
tilsluttede klubber over hele landet med til sammen over 18 000 medlemskap. Våre medlemmer – i
særdeleshet motorflygere og mikroflygere – berøres direkte dersom innføringen av avgiften innebærer
at det ikke lenger er kommersielt grunnlag for én eller flere lufthavner i Norge. Medlemmene berøres
også indirekte – både på basis av rammevilkårene for luftfarten i Norge generelt, og naturligvis som
følge av global oppvarming på sikt.
NLF takker for muligheten til å kommentere forslaget til forskriftsendring og avgir herved følgende
høringssvar som søker å balansere luftfartens behov opp mot hva som er mest hensiktsmessige verktøy
for å redusere utslipp av klimagasser.
0 – Innledende bemerkning
NLF erkjenner at dette høringssvaret er omfattende og detaljrikt. Den offentlige debatten om
flyseteavgiften viser imidlertid at det er en betydelig risiko for uheldige vedtak dersom ikke detaljene i
denne kompliserte saken er kjent. Vi håper derfor at Toll- og avgiftsdirektoratet vil gå grundig
gjennom våre analyser og redegjørelser i dette svaret før vedtak fattes.
1 – Miljømessige påvirkning
NLFs eget strategidokument slår fast at forbundet skal planlegge og gjennomføre
luftsportsaktivitetene med minst mulig negativ virkning på miljøet, og at man skal ta omgivelsene på
alvor i miljøspørsmål. Dette innebærer at NLF generelt sett er positive til tiltak som kan bidra til å
redusere klimagassutslipp, både innenfor egen aktivitet og for luftfarten for øvrig.
Norges luftsportforbund
Møllergata 39, 0179 Oslo, Tlf.: +47 23 01 04 50, [email protected] www.nlf.no
Bankgiro 5002 05 01577, Foretaksnr: 974 953552 MVA
At luftfarten bidrar til klimagassutslipp er hevet over tvil. Nøyaktig hvor mye, på hvilken måte og med
hvilken vekstrate, er derimot mer omstridt. NLF legger til grunn at utslippene som er knyttet til
nordmenns flyreiser (både nasjonalt og internasjonalt) kan utgjøre om lag 7,5 prosent av nasjonens
samlede CO2-utslipp, basert på en studie fra 20051.
Det at en del av utslippene skjer i stor høyde istedenfor på bakkenivå innebærer at de direkte
utslippene fra luftfarten angitt i CO2-ekvivalenter må multipliseres med en forsterkningsfaktor.
Studien fra 2005 opererer med en gjennomsnittlig faktor på 1,3 for innenlandstrafikk og 2,0 for
utlandstrafikk. For NLFs egne aktiviteter vil en forsterkingsfaktor neppe komme på tale, siden det
utelukkende flys i lavere høyder med fly uten trykkabin, og siden aktiviteten ikke skaper cirrusskyer.
Luftfarten har imidlertid en rekke egenskaper som balanserer bildet med tanke på klimagassutslipp, så
vel som andre miljøpåvirkninger.
a) Luftfarten fordrer vesentlig mindre infrastruktur enn bakkebasert transport, noe som gir
betydelig færre inngrep i natur og nærmiljø, samtidig som man eliminerer vei-/baneslitasje.
b) Infrastrukturens begrensede omfang gir en betydelige reduksjon i klimgassautslipp,
sammenliknet med om tilsvarende infrastruktur skulle vært bygget for bakkebasert transport.
Her må man ta i betraktning CO2-utslipp fra produksjon av bygningsmaterialer så vel som
utslippene knyttet til tunnelboring, bygging av vei-/banelegemer mv. Asplan Viak har på
oppdrag fra Jernbaneverket gjort beregninger for bygging av høyhastighetsbaner i Norge2. Av
Asplan Viaks studie framkommer det at det vil ta hele 60 år å ”nedbetale CO2-gjelden” fra
byggingen av en høyhastighetsbane Oslo–Trondheim. I et slikt tidsperspektiv er det realistisk
at luftfarten er gjennomelektrifisert.
c) Luftfart kan skje med langt kortere transportstrekninger enn annen transport, siden direkte
ruteføringer i en helt annen grad er mulig. Modernisering av innflygingssystemene som nå er i
gang, vil gjøre denne fordelen enda mer betydelig enn tidligere. Dette gir igjen mindre utslipp
av klimagasser pr oppdragskilometer enn annen transport, når andre faktorer holdes
konstant.
Når miljøavgiftspolitikken utmeisles, må denne typen effekter tas i betraktning. Det å se blindt på
utslipp fra framdriftsmotorer i f eks fly og biler, gir ikke et realistisk bilde av helheten.
2 – Framtidig karbonnøytral luftfart
Luftfart omtales ofte i det offentlige ordskiftet som en ”klimaversting”, noe som bidrar til å underbygge
påstanden om at ”nordmenn må fly mindre”. Etter NLFs oppfatning er dette en svært éndimensjonal
framstilling av virkeligheten. For det første har luftfarten betydelige miljømessige fordeler, ref ovenfor,
og for det andre er det viktig å ha i bakhodet at stempelet som en betydelig forurenser ikke reflekterer
realistiske framtidsscenarier. Det burde for øvrig være politikkens mål å redusere det samlede
“Utslipp av klimagasser fra flytrafikk”, Arvesen og Hertwig, NTNU Trondheim, 2007.
“A Methodology for Environmental Assessment – Norwegian High Speed Railway Project Phase 2”, Svanå et
al, Sandvika, 2011.
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utslippet pr innbygger til et bærekraftig nivå, snarere enn å peke på én forurensende aktivitet som bør
reduseres framfor en annen (innbyggerne bør selv kunne velge mellom f eks kjøtt eller flyreiser, så
lenge de betaler for sine egne utslipp uansett valg).
Det er NLFs påstand at luftfarten innen noen årtier vil bli den mest miljøgunstige av
samtlige transportformer. Store forskningsmiljøer jobber intenst med elektrifisering av luftfarten.
I skrivende stund finnes allerede elektriske småfly for treningsformål. Innenfor en kort tidshorisont på
to til fem år vil småfly for mer omfattende allmennflyoperasjoner være tilgjengelige på markedet
gjennom Airbus’ satsing på E-Fan-konseptet3. Rekkevidden vil være på linje med siste generasjons
Tesla-elbil, og Airbus har med sitt datterselskap Voltair etablert en egen fabrikk for produksjon av elfly
i Pau, Frankrike.
Allerede i 2030 mener forskningssamarbeidet Bauhaus Luftfahrt i Tyskland at deres konseptstudie CeLiner vil kunne være på vingene. Dette er et hel-elektrisk passasjerfly med 190 seter og en rekkevidde
på 600 nautiske mil (som strekningen Oslo–Tromsø)4. I 2040 vil rekkevidden kunne være hele 1400
nautiske mil (som strekningen Oslo–Barcelona).
På kortere sikt – allerede i løpet av få uker inneværende år – vil blant annet SAS og Lufthansa ta i
bruk biologisk jetdrivstoff levert på Oslo lufthavn Gardermoen som ledd i Avinors, AirBPs og
flyselskapenes biologiske drivstoffsatsing. Dette drivstoffet har et vesentlig mindre karbonavtrykk enn
fossilt jetdrivstoff, og framtidig utvikling av algebasert biojetfuel kan redusere karbonavtrykket
ytterligere.
Etter NLFs oppfatning er det avgjørende at avgiftssystemene i Norge:
•
differensierer etter hvilken drivstofftype som benyttes (fossil eller
fornybar/karbonnøytral)
•
bidrar til en styrking av teknologisk utvikling for karbonnøytral luftfart
•
bidrar til akselerert implementering av karbonnøytral luftfart i Norge
Avgiftssystemet bør etter NLFs syn være insentivbasert for å kick-starte elektrifisering og innføring av
biologisk drivstoff, slik Norge med stort hell har fått til på elbilfronten.
3 – Dagens miljøavgifter
NLF forstår det slik at det er tverrpolitisk enighet i Norge om at ”forurenser skal betale”. Gitt dette
som premiss, er det vesentlig at avgiftene designes og innrettes med dette for øyet, og ikke som følge
av sideordnede hensyn (eksempelvis rene fiskale begrunnelser). Dersom luftfartsavgiftene derimot
designes på basis av rent fiskale behov, vil to vesentlige ulemper inntreffe: Det vil undergrave
legitimiteten til miljøpolitikken (herunder senke oppslutningen i befolkningen om nødvendige og
rasjonelt baserte miljøavgifter), og det vil ramme luftfarten på utilbørlig vis.
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http://www.airbusgroup.com/int/en/innovation-citizenship/airbus-e-fan-the-future-of-electric-aircraft.html
http://www.bauhaus-luftfahrt.net/presse-medien/ila-2012/08-der-ce-liner/BHL_ILA2012_08_Ce-Liner.pdf
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Forskning på miljøavgifter5 viser klart at prinsippet om at ”forurenser skal betale” har en rekke
fordeler framfor et system hvor visse forurensere får avgiftsfritak. Dagens norske avgiftspolitikk er
utformet som lag på lag med miljøavgifter, hvor visse sektorer fritas for avgift for helt åpenbare
utslipp, noe som er lite samfunnsøkonomisk og miljømessig hensiktsmessig. Flere har tatt til orde for
en opprydding i avgiftssystemet, herunder Bruvoll og Dalen i en artikkel fra 2008:
En opprydding av virkemiddelbruken innebærer like avgifter for utslipp av klimagasser og
andre miljøutslipp for alle forurensere, og at fiskale elektrisitets- og fyringsoljeavgifter kun
legges på sluttforbruket og, igjen, er lik for alle. Etter prinsippet om at forurenser betaler,
skal utslippene betales for gjennom avgifter eller kjøp av utslippsrettigheter.
NLF viser også til ICAO (FNs luftfartsorganisasjon) som har en uttalt holdning til avgifter i luftfarten:
Avgiftene skal ikke ha et fiskalt formål, de skal være direkte knyttet til miljøkostnad og de skal ikke
diskriminere luftfart sammenliknet med andre transportformer.6
Ser vi på avgiftssystemet i Norge og internasjonalt – både pr i dag og etter en eventuell innføring av
den foreslåtte flyseteavgiften – ser vi at disse klart definerte, forskningsmessig anbefalte og
internasjonalt vedtatte målene ikke er oppnådd. Som Toll- og avgiftsdirektoratet peker på i sitt
høringsbrev, har luftfart med fossilt drivstoff i grove trekk følgende miljøavgifter pr nå:
–
Internasjonalt luftfart: Ingen avgifter
–
Europeisk luftfart (intra EØS): Indirekte avgiftsbelastning gjennom EU-ETS-kvotesystemet.
–
Innenriks luftfart: CO2-avgift for drivstoff, NOx-avgift for motorer med stor effekt og
svovelavgift for svovelholdig mineralolje. Visse sektorer er fritatt for visse av avgiftene. I tillegg
kommer den indirekte avgiftsbelastningen gjennom EU-ETS-kvotesystemet.
Videre: Etter det NLF erfarer, er ingen av inntektene fra miljøavgiftene øremerket tiltak som
kompenserer for skadene på miljøet, i strid med det ICAO anbefaler for internasjonal luftfart og som
det ville vært naturlig at Norge appliserte for innenlands luftfart.
4 – Prinsipper for optimalisering av miljøavgifter
Det finnes som kjent tre hovedtyper av miljøavgiftsregimer: Kvotesystemer (TEP – tradable emission
permits) som EU-ETS, miljøskatter/miljøavgifter (environmental taxes) som dagens CO2-avgift for
jetdrivstoff og flybensin, samt fleksible miljøavgifter (FEF – flexible emission fees)7. Hvert system har
sine styrker og svakheter, men for luftfarten som i seg selv er like grenseoverskridende som utslippene,
har gjerne kvotesystemer blitt ansett som mest relevante.
I de tilfellene kvotesystemene enten mangler (som i internasjonal luftfart) eller er utilstrekkelig til å
oppnå et visst resultat (som i europeisk luftfart med dagens EU-ETS), kan nasjonalstatene under visse
forutsetninger velge å innføre enten tradisjonelle eller fleksible miljøavgifter. Fleksible avgifter har
“Lag på lag i norsk klima- og energipolitikk”, Bruvoll og Dalen, Økonomiske analyser 5/2008.
ICAO Council Resolution, 1996
7 “Two approaches to pricing pollution”, Christina van Breugel, Mattias Enggaard, Jes Erik Jessen, Ulrika
Stavlöt, Christopher Sköld og Elina Berghäll, Nordisk ministerråd, København, 2014.
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vært lite utprøvd, men de kan vise seg som svært effektive for luftfart, siden de raskt kan tilpasse seg
markeds- og teknologiendringer.
I denne delen av gjennomgangen tar vi utgangspunkt i tradisjonelle (faste) miljøavgifter, skjønt både
fleksible miljøavgifter og kvoter kan være bedre verktøy for luftfart. Skal man likevel optimalisere slike
faste miljøavgifter, vil første punkt være å slå fast hvilken miljøkostnad utslippene har. Disse er
selvsagt svært krevende å estimere, men basert på den amerikanske regjeringens anslag fra 2015 over
utslippenes kostnader for samfunnet, kan de dreie seg om i størrelsesorden USD 36 pr metriske tonn
CO2-utslipp på bakkenivå8 (NOK 318). En sammenstilling fra ”Update of the Handbook on External
Costs of Transport, Annex E” viser et tilsvarende mediantall for 22 ulike studier på området, nærmere
bestemt EUR 32 pr tonn (NOK 309)9. Beregningene benytter en skadekostnadstilnærming, dvs at man
priser skaden som påføres miljøet dersom utslippet ikke fjernes. Anslaget vil måtte revideres jevnlig
etter hvert som ny kunnskap innhentes, men uansett størrelse, kan prinsippene for avgiftspolitikken
følge den samme røde tråden.
I parentes bemerket er forskningsestimater for marginal begrensningskostnad (”marginal abatement
cost”) – det vil si kostnad for å kompensere for marginale utslipp gjennom miljøtiltak – typisk satt
høyere enn miljøskadekostnad, skjønt det hefter stor usikkerhet ved begge typer estimater. Tall i
størrelsesorden 80–90 euro pr tonn er vanlig i estimater for marginal begrensningskostnad.10 Dette
utgjør om lag 0,015 euro (14 øre) pr personkilometer i gjennomsnitt for all kommersiell luftfart. Den
marginale begrensningskostnaden kan imidlertid ikke brukes som basis for tradisjonelle
drivstoffavgifter, siden det kun er de ”siste” og ikke de ”første” literne med drivstoff som utløser
marginale tiltakskostnader. Etter hvert som de rimeligste miljøtiltakene er ”brukt opp”, er det tenkelig
at de marginale tiltakene blir stadig dyrere. På den annen side kan ny teknologi som vi ikke kjenner i
dag, redusere reduksjonskostnaden. Derfor vil marginalkostnaden hele tiden være et mål i bevegelse. I
et system med faste drivstoffavgifter tar vi derfor utgangspunkt i miljøskadekostnad.
Så snart miljøkostnaden med utslipp pr CO2-ekvivalent er fastslått, må det utvikles et avgiftssystem
som baseres på faktiske utslipp fra en gitt lufttransporttjeneste. Forbruk av fossilt drivstoff er den klart
mest opplagte beregningsbasisen, siden det uten mobil karbonfangstteknologi gir en direkte
indikasjon på utslippenes størrelse.
For luftfartens del må det som nevnt legges inn en faktor som kompenserer for forsterkingseffekten
som skyldes utslipp i stor høyde. Forsterkingseffekten er størst der man flyr høyt, lenge
(langdistansetrafikk). Av rent praktiske grunner kan det trolig være nødvendig å benytte en
sjablongmessig faktor for luftfarten totalt. En faktor på 1,8 er ansett som et mulig gjennomsnitt for
innenlands og utenlands luftfart på kort og lang distanse.11
Luftfartsavgiftene bør videre sees som del av en helhetlig avgiftsomlegging, der prinsippet om at alle
klimagassforurensere skal betale rendyrkes. Det betyr eksempelvis at klimagassutslipp i forbindelse
med utbygging av bakkebasert infrastruktur – herunder produksjon av materialer – avgiftsbelegges
“European Union ETS Update: Aviation Emissions Making Headlines Ahead of Another Important Political
Crossroads”, Jordan R. Labkon, The National Law Review, 2015.
9 ”Update of the Handbook on External Costs of Transport” (Appendix E), Report for the European
Commission: DG MOVE, Ricardo-AEA/R/ED57769, 2014.
10 ”Update of the Handbook on External Costs of Transport” (Table 38), Report for the European Commission:
DG MOVE, Ricardo-AEA/R/ED57769, 2014.
11 “Lag på lag i norsk klima- og energipolitikk”, Bruvoll og Dalen, Økonomiske analyser 5/2008.
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etter beregnet samfunnsmessig skadekostnad. Slik unngår man at luftfarten blir belastet for hvert
gram med utsluppet CO2, mens andre aktiviteter og konkurrerende transportformer forskånes fra
avgifter, helt eller delvis.
Det mest krevende elementet knyttet til det å optimalisere miljøavgiftssystemet for luftfart er at Norge
er bundet av europeiske og internasjonale avtaler som setter rammen for avgiftspolitikken. På
europeisk plan er EU-ETS-kvotesystemet rammen for avgiftsbelegningen. EU har besluttet å utvide
EU-ETS til internasjonal luftfart, men på bakgrunn av stor internasjonal motstand mot EUs plan, har
EU gått med på å skyve på innfasingen av EU-ETS til ICAO presumptivt fatter vedtak om en global
MBM-strategi (GMBM – global market based mechanism) i år. MBM skal opp på ICAO Assembly til
høsten, og det er en forventning om et vedtak som innfører en MBM fra 2020. ICAO har imidlertid
hatt store problemer med å levere på dette området hittil, blant annet pga interessemotsetningene
mellom industrialiserte land og land som står foran stor utvikling. EU kan komme til å innføre EUETS for internasjonal luftfart, dersom ICAO ikke nå konkluderer etter flere års forsinkelse.
En utfordring med EU-ETS er at det europeiske kvotemarkedet flommer over av kvoter.
Kvotesystemet reduserer følgelig ikke utslippene så mye som Paris-avtalen av 12. desember 2015 om
reduksjon av jordens samlede utslipp forutsetter, for å nå målet om maksimalt 1,5 til 2,0 graders
oppvarming. Siden kvotene finnes i overflod og omsettes for mellom 50 og 80 kroner pr tonn, samtidig
som den samfunnsmessige kostnaden for utslipp er anslått til ovennevnte 318 kroner, er det rimeligere
for dem som har utslipp å kjøpe kvoter enn om de faktisk skulle betale for skadene for sine reelle
utslipp.
I lys av dette er det i utgangspunktet ikke urimelig at norske myndigheter – der de har mulighet til det
etter internasjonale avtaler – innfører avgifter som eksempelvis dekker differansen mellom
kvoteprisen og den stipulerte samfunnsmessige kostnaden for utslipp. Avgiftssystemet må imidlertid
være tilstrekkelig elastisk og dynamisk til at luftfarten ikke betaler to ganger for samme utslipp. Og –
systemet må opprettholde prinsippet om at forurenseren betaler.
Chicago-konvensjonen forbyr Norge å innføre drivstoffavgifter for utlandsflyginger.12 Det mest
relevante virkemiddelet Norge kan bruke for karbonutslippsavgift er følgelig utelukket – og det på de
flygningene som er lengst og som gir størst utslipp! Det er å håpe at ICAO Assembly 2016 konkluderer
om en internasjonal bærekraftig GMBM-modell som eliminerer problemet. I motsatt fall vil EU-ETS
kunne dekke deler av utslippskostnadene (både nasjonalt, europeisk og eventuelt internasjonalt), men
så lenge kvotene er så rimelige som de er, vil det fortsatt være et stykke igjen til at ”forurenseren
betaler” for alle flygninger utenfor Norge.
Siden drivstoffavgifter er utelukket for internasjonale flygninger – og siden EU-ETS ikke fullt ut
dekker miljøkostnadene pr i dag13 – kan man se det som besnærende å tenke seg at man går bakveien
via en flyseteavgift, noe denne høringen tar utgangspunkt i. NLF vil imidlertid advare sterkt mot en
énsidig norsk avgift (som også skal gjelde internasjonale flyvninger), blant annet fordi et slikt tiltak
Chicago Convention on International Civil Aviation, artikkel 15 og 24 a). Ref uttalelse fra ICAO Assembly.
“Two approaches to pricing pollution”, Christina van Breugel, Mattias Enggaard, Jes Erik Jessen, Ulrika
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erfaringsmessig fører med seg at lufttrafikk flyttes fra norske til utenlandske lufthavner, noe vi ser fra
nederlandsk innføring av en slik avgift:
The tax has stimulated some Dutch travellers to make use of airports situated in Belgium and
Germany to avoid the tax, resulting in more CO2 emitted by ground transport. The tax is not
transparent and the revenues gained are not reinvested in the industry and so it is not
compatible with ICAO’s cited objectives in respect of emissions charging mechanisms. 14
Risikoen er at eksempelvis Oslo lufthavn Gardermoen som i dag i økende grad har blitt en attraktiv
hub for reisende som har Oslo som transittstopp blir mindre attraktiv pga flyseteavgiften, med det til
følge at det blir færre direkteruter fra Norge til fordel for konkurrerende navflyplasser. Forsøket på å
løse dette problemet ved å unnta transitt- og transferpassasjerer for flyseteavgift, ref utkastets § 3-225, vil ikke kompensere tilstrekkelig, da det:
a) kun omfatter gjennomgående billetter, noe som i seg selv favoriserer ett businesskonsept for
flyselskaper kontra et annet og således også vil virke konkurransevridende
b) ikke demmer opp for lekkasje til utenlandske lufthavner der bakketransport fra Norge til den
utenlandske lufthavnen er en reell mulighet
For internasjonale flygninger må derfor internasjonalt samarbeid og norsk påvirkning til at det
europeiske kvotesystemet forbedres stå i fokus, istedenfor ensidige norske avgifter.
5 – Hva betaler luftfarten i dag i forhold til hva den skulle ha betalt?
Forbrenning av jetdrivstoff og flybensin gir i hovedsak følgende klimagasser: Karbondioksid, metan og
di-nitrogenoksid. Klimagassene summeres som CO2-ekvivalenter basert på ulike faktorer, der CO2 har
faktor 1.
CO2-ekvivalenter pr liter drivstoff15:
CO2 (faktor: 1)
CH4 (faktor 25)
N20 (faktor 298)
Sum CO2-ekvivalenter
Jetdrivstoff
2,54 kg16
0,02 g –> 0,0005 kg
0,08 g –> 0,023 kg
2,56 kg
Flybensin
2,20 kg17
0,81 g –> 0,020 kg
0,26 g –> 0,077 kg
2,30 kg
Innenriks luftfart betaler i dag 1,0818 kroner i CO2-avgift pr liter jetdrivstoff. Én liter jetdrivstoff gir i
henhold til ovenstående tabell et utslipp på 2,56 kg CO2–ekvivalenter.
Korrigert for en forsterkingseffekt på 1,3 for innenriks fart19, blir tallet 3,33 kg. Pr tonn effektivt CO2utslipp er dette en kostnad på 324 kroner. I tillegg betaler luftfarten gjennom EU-ETS-systemet
“Fuel and air transport – A report for the European Commission”, Air Transport Department, Cranfield
University, 2005.
15 ”Update of the Handbook on External Costs of Transport”, Report for the European Commission:
DG MOVE, Ricardo-AEA/R/ED57769, 2014
16 https://www.eia.gov/environment/emissions/co2_vol_mass.cfm
18 https://lovdata.no/dokument/STV/forskrift/2015-12-14-1570/KAPITTEL_6
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mellom 50 og 80 kroner pr tonn CO2. For innenriks luftfart betales det altså mellom 374 og 404 kroner
for en miljøskade som den amerikanske regjeringen anslår til 318 kroner pr tonn. Dersom anslagene er
korrekt, både med tanke på miljøskade og forsterkningseffekt, overbetaler allerede innenriks luftfart
for sine skader. Gitt usikkerheten i tallene, kan man likevel si at innenriks luftfart i grove trekk dekker
sine miljøkostnader. Å avkreve en flyseteavgift på toppen av dette, innebærer da en ren fiskal
belastning for en transportform som allerede betaler sine kostnader. For flygninger som skjer med
biodrivstoff – eller med elektriske fly i framtiden – vil flyseteavgiften være en økonomisk straff for
utslipp som ikke finnes.
For allmennflyging med flybensin – det mest relevante operative scenariet for våre medlemmer i
øyeblikket – er forholdet slik: All allmennflyging, uansett innenriks eller utenriks fart, betaler 97 øre i
CO2-avgift pr liter flybensin. Én liter flybensin (avgas 100LL) gir klimagassutslipp tilsvarende 2,3 kg
CO2-ekvivalenter.20 Korrigering for forsterkingseffekt er mest sannsynlig irrelevant på grunn av
operasjoner i svært lav høyde og ingen cirrusgenererende effekt. Allmennflyging betaler ikke for
utslipp gjennom EU-ETS-systemet, men likevel blir prisen pr tonn CO2-utslipp 421 kroner – altså godt
over ”skadeprisen” på 318 kroner pr tonn. Toll- og avgiftsdirektoratet foreslår da heller ikke en
flyseteavgift for allmennflyging, noe som bare skulle mangle gitt at det overbetales allerede pr i dag
etter det vi kan se av foreliggende tall.
For utenriksfart innenfor Europa, er forholdet annerledes: Én liter jetdrivstoff gir som nevnt
klimagassutslipp på 2,56 kg CO2–ekvivalenter21. Forsterkingseffekt for utenriksfart er anslått til 2,022,
som gir et effektivt utslippsnivå på 5,12 kg pr liter. På bakgrunn av bestemmelsene i Chicagokonvensjonen, kan det imidlertid ikke legges drivstoffavgift for slike flygninger. Det betales kun
indirekte gjennom EU-ETS-systemet, følgelig bare et sted mellom 50 og 80 kroner pr tonn CO2. Én
liter fossilt jetdrivstoff i utenriksfart skulle ha hatt en avgift på 1,63 kroner for å dekke sine
miljøkostnader (sett bort fra kreditt for det som betales gjennom kvoter), men indirekte betales det
altså kun mellom 13 og 20 øre. Underbetalingen er i størrelsesorden 1,40–1,50 kroner pr liter.
For utenriksfart utenfor Europa – hvor det heller ikke betales gjennom EU-ETS-systemet i øyeblikket
– er underbetalingen lik kostnaden for miljøskaden, dvs 1,63 kroner pr liter.
6 – Hvordan rette opp i skjevhetene?
Dersom Norge skal følge forskningsanbefalinger og ICAO-retningslinjer samt egen uttalt politikk om
at ”forurenser betaler”, må det gjøre endringer i avgiftssystemet. Status quo oppsummert:
a) Innenriks luftfart med fossilt jetdrivstoff har trolig et noe for høyt avgiftsnivå pr i dag
b) Innenriks luftfart med biodrivstoff er i dag unntatt CO2-avgifter og kvoter, slik det bør være
c) Allmennflyging med fossil flybensin betaler høyst sannsynlig for høye avgifter pr i dag
d) Utenriks luftfart med fossilt jetdrivstoff innenfor Europa betaler for lave avgifter pr i dag
Utslipp av klimagasser fra flytrafikk”, Arvesen og Hertwig, NTNU Trondheim, 2007.
https://www.eia.gov/environment/emissions/co2_vol_mass.cfm
22 Utslipp av klimagasser fra flytrafikk”, Arvesen og Hertwig, NTNU Trondheim, 2007.
19
20
8
e) Utenriks luftfart med biodrivstoff innenfor Europa er i dag unntatt CO2-avgifter og kvoter, slik
det bør være
f)
Utenriks luftfart med fossilt jetdrivstoff utenfor Europa betaler ingen CO2-avgifter i dag
For å rette opp dette, blir det meningsløst å innføre en flyseteavgift som rammer samtlige flyginger
(dog unntatt allmennflyging), enten de underbetaler pr i dag eller ikke, enten de går langt eller kort
eller enten de bruker karbonnøytralt drivstoff eller ikke.
NLF foreslår isteden følgende strategi:
1.
CO2-avgiften for fossilt jetdrivstoff (innenriks) beholdes inntil videre på dagens nivå, men den
bør revideres etter hvert som kvotepris eller kvotemodell endres. En årlig regulering basert på
gjennomsnittlig samlet kvotepris foregående år kan være en aktuell strategi for og ned/oppjustere CO2-avgiften i takt med kvoteprisen, slik at innenriks luftfarten ikke ender opp
med dobbeltbetaling for utslipp. Det bør også gjennomføres regelmessige revisjoner av
kostnadsanslag for samfunnskostnader for karbonutslipp, ref også pkt 7 nedenfor.
2. Dersom flygninger med biojetdrivstoff vil rammes av framtidige kvotekostnader (EU-ETS eller
ICAOs GMBM) – og der disse overstiger kostnader for eventuelle utslippsskader med aktuell
variant av drivstoff – bør det vurderes å innføre en negativ "avgiftssats" (subsidiering).
Dermed vil man kunne kompensere for utilsiktede effekter av at kvotesystemene ikke
nødvendigvis blir tilstrekkelig finmaskede.
3. CO2-avgift for fossil flybensin (avgas 100LL/UL91) bør reduseres for å reflektere
utslippskostnad. Avgiften bør reguleres årlig etter samme prinsipper som for fossilt
jetdrivstoff, ref også pkt 7 nedenfor.
4. Norge må jobbe aktivt som EØS-medlem overfor EU for å påvirke kvotesystemet (inndragning
av kvoter eller andre virkemidler), slik at EU-ETS gir det nødvendige bidraget til Parisavtalens klimamål. Ikke minst bør alle forurensere som i dag er utenfor kvotesystemet, trekkes
inn i det – alternativt må et FEF-system som beskrevet i pkt 7 nedenfor settes i verk.
5.
Norge må jobbe aktivt som ICAO-tilsluttet stat for å bidra til at et effektivt GMBM-system
settes i verk snarest mulig.
6. I en mellomperiode der pkt 4 og 5 ikke ennå er iverksatt eller gitt nødvendig effekt, kan Norge
vurdere egne tilleggstiltak – men bare dersom de:
a.
ikke rammer flygninger som allerede betaler for høy avgift
b. ikke bryter Norges internasjonale forpliktelser gjennom ICAO-samarbeidet, bilaterale
avtaler, EØS-avtalen mv.
c.
reflekterer faktisk utslippsnivå gjennom at drivstofftype, drivstofforbruk og flygingens
lengde er beregningsparametere
d. er nøye konsekvensutredet
7.
Norge bør bidra aktivt i den internasjonale forskningen og debatten rundt miljøavgifter. Det
bør utredes om luftfarten nasjonalt og internasjonalt kan være en kandidat for en ”flexible
9
emission fee” (FEF): En slik mekanisme kan være bedre egnet til å fange opp kombinasjonen
av et internasjonalt/overstatlig hovedmål og nasjonale gjennomføringsmetoder enn
kombinasjonen med tradisjonelle nasjonale miljøavgifter og overstatlige kvotesystemer. Vi
viser her til rapporten ”Two approaches to pricing pollution”,23 utgitt av Nordisk ministerråds
”Working Group for Sustainable Consumption and Production” i 2014, som beskriver
mekanismen slik:
The main focus of the Flexible Fee Mechanism is the levying of a fee at the point where a
pollution-inducing product enters the economy. The fee is then raised sufficiently (and
sufficiently often) to effectively stimulate the transformation of the economy in a
sustainable direction. At the same time, the revenue from the fee is directed back into the
economy to stimulate alternatives, demand and employment. (…)
The novelties of flexible emission fees include very frequent adjustments of fee, an
independent expert group with operational freedom to manage the mechanism and the
introduction of sufficient volatility in order to produce a new stable equilibrium (via
futures markets). In addition, the price on pollution is only indirect as the flexible
emission fee is meant to reflect marginal abatement costs, which is contrary to the
predominant approach of setting the emission price equal to environmental damage
costs.
8. Alle CO2-avgifter som Norge bringer inn fra luftfarten – uansett om de bygger på kvoter,
tradisjonelle eller fleksible avgifter – bør enten øremerkes til klimatiltak med dokumentert
effekt eller brukes til å påskynde utviklingen av karbonnøytral luftfart gjennom forskning og
utvikling.
En slik re-investering i luftfarten er ikke bare i tråd med ICAOs mål, det bidrar også til økt
effektivitet for sektorer der det i øyeblikket ikke investeres tilstrekkelig i teknologi som kan
begrense utslippene:
(…) the revenue repayment will increase the efficiency of the mechanism if it is
redistributed to, e.g., research that will reduce abatement costs in cases where
underinvestment in abatement technologies exists due to market failure. This is not the
result if revenue is repaid to the public or other purposes. 24
Luftfarten er i en særstilling når det gjelder denne typen underinvestering, blant annet fordi
særdeles tunge, tidkrevende og kostbare sertifiseringsprosedyrer gjør at det tar særdeles lang
tid for investorer å få avkastning på sine investeringer i ny teknologi. En re-investering i
luftfartsteknologi kan både bøte på dette og bidra til at Norge får et nytt høyteknologisk
satsingsområde.
“Two approaches to pricing pollution”, Christina van Breugel, Mattias Enggaard, Jes Erik Jessen, Ulrika
24 “Two approaches to pricing pollution”, Christina van Breugel, Mattias Enggaard, Jes Erik Jessen, Ulrika
23
10
7 – Konsekvenser dersom høringsforslaget vedtas
Dersom høringsforslaget vedtas uten endringer, vil det innebære en rekke negative konsekvenser for
luftfarten, allmennflygingen og Norge som sådan. Vi antar at høringssvar fra andre aktører belyser
disse i detalj, men vi vil særlig peke på følgende:
•
Avgiften slår hardest ut for lavprissegmentet, siden avgiftens andel av total billettpris her vil
være uforholdsmessig stor. Lufthavner som primært trafikkeres av lavprisselskaper, vil derfor
være særlig utsatt. Moss lufthavn Rygge har vært framhevet i det offentlige ordskiftet, og
lufthavnen har allerede kunngjort stengning fra 1. november 2016, dersom avgiften innføres.
At dette er en reell situasjon og ikke bare en tom trussel, er hevet over tvil. NLF viser i den
sammenhengen til BDOs rapport på oppdrag fra Samferdselsdepartementet sommeren
201425, som konkluderer med at lufthavnens økonomi er så svak at konkursrisikoen er høy.
Når dette er bildet et uavhengig konsulentselskap tegner før flyseteavgiften var på tale, bør det
være åpenbart at selv relativt små forskyvninger i konkurransesituasjonen vil kunne bringe
lufthavnen over ende. Basert på Forsvarssjefens Fagmilitære råd som ble presentert høsten
2015, er det ikke gitt at rullebanen på Rygge opprettholdes ene og alene i militær regi. En
avvikling av den sivile lufthavna kan altså bety slutten på flyplassen som sådan.
•
Moss lufthavn Rygge er av avgjørende betydning for norsk allmennflyging generelt og for
denne aktiviteten i hovedstadsregionen spesielt. NLF vil her peke på at småflyplassituasjonen
på Østlandet etter stengningen av Fornebu i 1998 ennå ikke er løst, og at det som er de facto
hovedsmåflyplass for Oslo (Kjeller) har en høyst usikker framtid. Dersom småflyaktiviteten på
Kjeller avvikles eller må reduseres, er det kun Rygge igjen med realistisk kjøreavstand til Oslo
som kan ta denne typen trafikk.
•
Moss lufthavn Rygge er hovedtreningsarena for allmennflyging på Østlandet. Flyplassen
betjener en rekke flyskoler, herunder Norges største flyskoler på Kjeller og Torp, med tanke på
landingstrening. Rygge er også hjem for to egne flyklubber med skolevirksomhet. Dersom
Rygge forsvinner, vil det både operativt og flysikkerhetsmessig slå særdeles uheldig ut.
•
Også en rekke distriktsflyplasser kan rammes hardt av flyseteavgiften. Båtsfjord er en av
dem.26 Flyplasser som trafikkeres av FOT-rutene vil riktignok ha en viss beskyttelse, siden
seteavgiften etter det vi forstår skal kompenseres gjennom innkjøpsprisen for flyrutene. En
rekke flyruter i distriktene trafikkeres imidlertid uten FOT-tilskudd, og dermed kan bunnen
falle ut av de magreste flyrutene. Det er svært uhelidg at de flygningene som skjer innenlands
og hvor passasjerene allerede betaler for sine utslipp avvikles, mens langdistanserutene blir
langt mindre berørt – til tross for at passasjerene på disse i mindre eller ingen grad betaler for
sine utslipp.
•
Siden flyseteavgiften ikke differensierer mellom ulike drivstoff- og framdriftstyper (fossilt,
biologisk, elektrisk), gir den intet insentiv til luftfartsoperatørene til å velge miljøvennlige
framdriftssystemer. Den kan derfor være egnet til å redusere tempoet i den tekniske
utviklingen som på sikt kan gjøre luftfarten karbonnøytral.
“Oppsummeringsnotat: Finansiell analyse private lufthavner”, BDO for Samferdselsdepartementet, 2014
http://www.ifinnmark.no/batsfjord/flyseteavgiften/hans-jacob-bono/frykter-at-ny-avgift-kan-trueflyplasser/s/5-81-180695
25
26
11
•
Siden avgiften ikke tar hensyn til hvor drivstofføkonomiske flyene er, gir den operatørene intet
ekstra insentiv til å velge drivstoffgjerrig materiell. Et slikt ekstra insentiv er særlig viktig i en
tid hvor olje- og drivstoffprisen er lav.
•
Siden avgiften er den samme uansett flygningens lengde, rammer den kortdistanse hardere
enn langdistanse, til tross for at lange flygninger påvirker miljøet mest.
•
Det blir uforholdsmessig dyrt å fly korte strekninger, noe som rammer både flyselskap og
lufthavner som betjener de korte strekningene mer enn de som betjener de lengre
strekningene. Dette går på tvers av norsk uttalt politikk om en spredt bosetning.
•
Flyseteavgiften gjør norske lufthavner mindre konkurransedyktige for internasjonale
flygninger, til fordel for konkurrerende lufthavner i andre land. Det kan i sin tur innebære
lengre flygninger for norske passasjerer, med dertil økt utslipp og tap av inntekt og
arbeidsplasser i Norge som resultat.
8 – Konklusjon
NLF mener på bakgrunn av ovenstående at forslaget til flyseteavgift er dårlig miljøpolitikk og dårlig
luftfartspolitikk. I tillegg er tiltaket i særklasse dårlig timet, bare måneder før ICAO er forventet å
konkludere med sitt GMBM-system. Om ICAO ikke kommer i mål (og EU unnlater å ta internasjonale
flygninger utenfor EØS inn i EU-ETS-systemet), kan det være langt større grunner til å se på
særnorske løsninger – men da i lys av hva som gir en reell effekt på miljøet. Naturligvis må en grundig
faglig konsekvensutredning til – både fra et miljø- og luftfartsperspektiv – før en eventuell særnorsk
ordning innføres.
NLF imøteser at disse innspillene blir vurdert i den videre prosessen og håper vi blir inkludert i
dialogen.
Med vennlig hilsen,
John Eirik Laupsa
Generalsekretær
Vedlegg:
1. Oppsummeringsnotat: Finansiell analyse private lufthavner, BDO for
Samferdselsdepartementet, 2014
2. Two approaches to pricing pollution, Christina van Breugel, Mattias Enggaard, Jes
Erik Jessen, Ulrika Stavlöt, Christopher Sköld og Elina Berghäll, Nordisk ministerråd,
København, 2014
12
Oppsummeringsnotat
Finansiell analyse private lufthavner
Oslo, 6. juni 2014
Rapporten er utarbeidet for oppdragsgiver, og dekker kun de formål som med denne er
avtalt. All annen bruk og distribusjon skjer for oppdragsgivers regning og risiko. BDO vil
ikke kunne gjøres ansvarlig overfor en tredjepart.
Notat
Innholdsfortegnelse
1.
2.
Innledning og mandat ................................................................................... 3
Lønnsomhet og resultater .............................................................................. 4
2.1.
Selskapene har forbedret resultatene over de siste år. .................................... 4
2.2.
Kontantstrøm fra driftsiden har forbedret seg over siste 3 år............................. 5
3. Balanse og soliditet ...................................................................................... 6
3.1.
Selskapene har varierende soliditet ............................................................ 6
3.2.
Selskapenes balanse viser at Rygge har foretatt større investeringer enn Torp ....... 6
4. Øvrige forhold............................................................................................. 8
4.1.
Selskapenes avsetninger til dekning av krav fra Avinor er uklart ......................... 8
4.2.
Selskapenes internhandel er lav ................................................................ 8
4.3.
Eierforhold .......................................................................................... 9
5. Avsluttende kommentarer ............................................................................ 10
Side 2 av 10
Notat
1. Innledning og mandat
Sandefjord Lufthavn AS (Torp) (SHL) og Rygge Sivile Lufthavn AS (Rygge)(RSL) er privateide selskap
med konsesjon fra Samferdselsdepartementet for å anlegge, drive og eie Torp og Rygge lufthavn.
Avinor leverer flysikringstjenester til Torp og Rygge flyplass. BDO har fått i oppdrag av
Samferdselsdepartementet å gjennomføre en overordnet vurdering av de to selskapenes evne til å
betale kostnadene knyttet til flysikringstjenesten. Dette notatet oppsummer kortfattet våre
analyser og vurderinger, basert på en underliggende analyse.
Oppdraget er utført av BDO sin rådgivingsavdeling og innebærer en overordnet gjennomgang og
finansiell analyse av de private lufthavnene i Norge ved hhv. Torp og Rygge. Vårt arbeid er således å
anse som et rådgivningsoppdrag der vi basert på det arbeidet som er gjort oppsummerer, utdyper og
begrunner våre analyser og konklusjoner til oppdragsgiver som er Samferdselsdepartementet.
Vårt arbeid og våre vurderinger bygger på foretakenes årsregnskap og annet kortfattet materialet
som er stilt til vår disposisjon fra Torp og Rygge, og våre analyser er begrenset til denne
informasjonen. I hovedsak dreier dette seg om foretakenes prognose for kommende to år. Vi har
forsøkt å verifisere deler av informasjonen vi har mottatt, men dette er på ingen måte å anse som
en ordinær revisjon eller en begrenset revisjon.
Vårt arbeid er gjennomført innenfor en begrenset tidsramme og tidsperiode, og omfanget og
fullstendigheten av analysene som er foretatt må ses i lys av dette. Vi kan ikke gå god for at alle
relevante forhold er avdekket eller analysert.
BDO finner det riktig å presisere at vi ikke kan påta oss ansvar for fullstendigheten eller riktigheten
i det grunnlagsmaterialet som har vært utgangspunkt for våre vurderinger. BDO har ikke blitt gitt
fullt innsyn i de finansielle forholdene hos de to selskapene. Vi har derfor vært nødt til å basere
analysene på offentlig tilgjenglig informasjon, og den informasjon selskapene har vært villige til å
dele med oss ved forespørsel
Dette medfører at analyser og konklusjoner presenterte i vår rapport vil kunne være beheftet med
vesentlig usikkerhet, og bygger tidvis på forutsetninger som vi ikke har kunnet avklare med
selskapene.
Oslo, 6.juni 2014
BDO AS
Frank Olstad
Director
Side 3 av 10
Notat
2. Lønnsomhet og resultater
2.1.
Selskapene har forbedret resultatene over de siste år.
Inntekter:
En sammenligning av Sandefjord Lufthavn AS (SHL) og Rygge Sivile Lufthavn AS (RSL) viser at begge
selskapene har hatt en god vekst i inntekter i perioden 2011 til 2013.
Driftsinntekter
2010
2011
2012
2013
RYGGE SIVILE LUFTHAVN AS
185 777
230 994
261 368
288 944
SANDEFJORD LUFTHAVN AS
263 908
232 074
290 212
316 506
Tabell 1 - Inntekter i 1.000. Kilde: Selskapenes årsregnskap.
SLH har i denne perioden hatt en betydelig høyere inntekt per passasjerer, NOK 170 i 2013, enn RSL.
RSLs inntjening per passasjerer har i den samme perioden økt kraftigere enn for SHL, men ligger
fortsatt bak med NOK 153 i gjennomsnitt pr. passasjer i 2013.
Driftsmargin
2010
2011
2012
2013
12 %
19 %
25 %
21 %
27 %
25 %
26 %
25 %
Tabell 2 - Driftsmargin i %. Kilde: BDO beregninger basert på selskapenes årsregnskap.
SLH har hatt god lønnsomhet i hele perioden og budsjetterer med fortsatt god driftsmargin i årene
som kommer. Fra SHL sine hjemmesider fremstår selskapet med et bredt inntektsgrunnlag med fem
flyselskap som benytter Torp; KLM, Nextjet, Norwegian, Ryanair, Wizz Air og Widerøe. Ytterligere
flyr 9 charterselskap fra Torp.
RSLs lønnsomhet har blitt betydelig bedre i perioden 2010 – 2012, for deretter å svekkes noe i 2013.
RSL forventer nedgang i omsetning og lønnsomhet de kommende årene, uten at dette er nærmere
spesifisert fra selskapets side. Det rapporteres i ”Boarding.no” 1 at det er registrert en nedgang i
antall passasjerer på 7,4 % i mars 2014 ved Rygge, grunnet at DAT (Danish Air Transport) har lagt
ned sine innenriksruter til Bergen, Stavanger og Trondheim, samt at det var en nedgang i
utenrikstrafikken på fem prosent. RSL fremstår fra hjemmesidene med et mindre antall flyselskap
som benytter Rygge; Ryanair og Norwegian. I tillegg flyr 4 charterselskap fra Rygge.
Det er ikke mulig å bryte selskapenes ytterligere ned på inntektssegmenter innen lufthavnstjenester
basert på de offisielle regnskapene. Selskapene har i denne prosessen ikke ønsket å dele denne
informasjonen med oss og ytterligere analyser har derfor ikke vært mulig.
Kostnader:
Komparativ analyse
(% av inntekter)
Lønnskost %
Andre driftskostnader %
Sum driftskostnader
2010
RSL
2011
SHL RSL
5 % 13 %
2012
SHL RSL
4 % 17 %
2013
SHL RSL
4 % 17 %
SHL
4 % 15 %
83 % 60 % 77 % 58 % 71 % 57 % 76 % 59 %
88 % 73 % 81 % 75 % 75 % 74 % 79 % 75 %
Tabell 3 - Analyse av kostnadsstruktur drift. Kilde: BDO-beregninger baser på selskapenes årsregnskap.
Kostnadene i SLH og RSL er ikke helt sammenlignbare på detaljnivå da blant annet RSL kjøper
tjenester som faktureres fra annet selskap, mens SHL har egne ansatte til produksjon av tilsvarende
tjenester. På aggregert nivå utgjør SHLs driftskostnader (før avskrivninger) 75 % av inntektene,
mens de i RSL utgjør 79 % i 2013.
1
http://www.boarding.no/art.asp?id=57359
Side 4 av 10
Notat
Finanskostnader
2010
2011
2012
2013
26 153
25 547
24 480
11 937
9 160
8 361
8 377
9 142
Tabell 4 - rentekostnader i 1.000. Driftsmargin i %. Kilde: Selskapenes årsregnskap.
En vesentlig forskjell mellom selskapenes kostnadsside er kapitalkostnadene. RSL har en betydelig
høyere investering i eiendeler på nesten 803 millioner kroner, mot SLH 495 Mill kroner. Dette
medfører en noe høyere avskrivingskostnad hos RSL, men forskjellen i mellom selskapene for den
årlige avskrivingskostnaden er imidlertid ganske liten, kun ca. 1 mill kroner i året.
Dette kan indikere at selskapene har en forskjellig tilnærming til vurdering av levetid på
eiendelene. Alternativt kan investeringer i tomt medføre totalt sett lavere avskrivinger, da tomter
ikke avskrives, men i følge RSL sine anleggsnoter har de ikke investert i tomt. Investeringene i
eiendelene er i større grad gjeldsfinansiert hos RSL enn hos SHL, noe som medfører høyere
finanskostnader i RSL.
Det faktum at RSL har lavere inntekter i gjennomsnitt pr. passasjer, kombinert med høyere
driftskostnader og kapitalkostnader enn SHL, medfører at RSL har mindre evne til å takle
svingninger i markedet og økte kostnader. Til vår informasjon er også RSL i diskusjoner med
Forsvaret/Forsvarsbygg vdr. overtagelse og kostnader når Forsvaret fullt ut avvikler sin drift på
Rygge. Dette kan medføre endringer i kostnadsnivået for RSL.
2.2.
Kontantstrøm fra driftsiden har forbedret seg over siste 3 år
Selskapenes kontantstrøm er en indikator på om selskapene er i stand til å generere likviditet fra
driften til å kunne betale sine forpliktelser. I et regnskap vil det være kostnader som ikke medfører
et direkte krav om betaling. Dette er typisk for avskrivinger som er en periodiseringseffekt i
regnskapet.
Kontantstrøm fra drift
2010
2011
2012
2013
(9 313)
20 897
30 976
48 112
34 056
35 118
80 145
80 834
Tabell 5 - Kontantstrøm i 1.000. Kilde: BDO-beregninger basert på selskapenes årsregnskap.
Begge selskap viser en økning i kontantstrømmene fra driften i selskapene. Denne kontantstrømmen
skal bl.a. benyttes til å dekke betalbare rentekostnader og avdrag på lånefinansiering.
Begge selskap viser evne til å generere positive kontantstrømmer til å kunne betale sine
forpliktelser, men da vi ikke har informasjon om forfallsstruktur på lån kan det ikke trekkes noen
endelig konklusjon. Men en svekkelse av RSL sitt resultat, enten ved fallende inntekter og/eller
økende kostnader vil klart påvirke selskapets evne til å kunne håndtere forpliktelsene etter hvert
som de forfaller ved at kontantstrømmen fra drift svekkes.
Side 5 av 10
Notat
3. Balanse og soliditet
3.1.
Selskapene har varierende soliditet
Soliditet er innen økonomi et uttrykk for en bedrifts evne til å tåle tap. En bedrift med høy
egenkapitalprosent, sies å ha god soliditet.
Bruk av lån til finansiering av eiendeler ansees å gi en økt risiko i form av at det må som hovedregel
betales renter på lån uavhengig av selskapets resultat. Dette innebærer at det da foreligger en økt
kostnad for selskapet.
Rygge Sivile Lufthavn AS har balanseførte eiendeler til NOKm 902 per 31.12.2013. Egenkapitalen til
RSL ved samme tidspunkt var NOKm 151 og utgjør 17 % av totalkapitalen, dvs. en relativt lav
egenkapitalandel. Langsiktig gjeld i selskapet beløp seg til NOKm 707. Av dette utgjør NOKm 250
ansvarlig lån fra eierne, og dersom man inkluderer det ansvarlige lånet som en del av
egenkapitalandelen tilsvarer den 44 %.
Innhentet konkursvurdering fra eksternt analysebyrå indikerer en moderat konkursrisiko på
mellom/langsiktig horisont basert på 2012 tall, men er på det laveste vurderingstrinnet før høy
risiko.
Til sammenligning har SHL bokførte anleggsmidler til et beløp av NOKm 495 ved utgangen av 2013
og på samme tidspunkt var SHLs egenkapital NOKm 241 eller 43 % av totalkapitalen. Langsiktig gjeld
i selskapet var 194 NOKM som er NOKm 506 lavere enn RSL.
Innhentet konkursvurdering fra eksternt analysebyrå indikerer en lav konkursrisiko på
mellom/langsiktig horisont basert på 2012 tall.
Oppsummert innebærer dette at selskapenes soliditet isolert sett på siste rapporteringspunkt
31.12. 2013, er relativt like i egenkapitalandel, dersom ansvarlig lån hensyntas. Uten ansvarlig lån
er RSL sin soliditet relativt lav.
3.2.
Selskapenes balanse viser at Rygge har foretatt større investeringer enn Torp
Sandefjord Lufthavn AS (SHL)
Mesteparten av anleggsmidlene til SHL relaterer seg til driftsbygninger (NOKm 155), anlegg på
terminalområdet (NOKm 78) og rullebane (NOKm 57). Ved utgangen av 2013 foreligger det i tillegg
prosjekter i arbeid på NOKm 98, som relaterer seg til nytt terminalbygg som nå var ferdig i april
2014.
Anlegg på terminalområde avskrives med 0 – 15 % per år, og avskrivningstiden på driftsbygginger og
rullebane varierer mellom 20 og 50 år i følge årsregnskapet. Selskapet har ikke ønsket å gi oss
ytterligere detaljer rundt dette slik at det er ikke mulig å gjøre noen nærmere vurdering av
avskrivingskostnadene.
I 2013 kjøpte SLH 100 % av aksjene i eiendomsselskapet Parkeringsplassen AS. I forbindelse med
dette har de gitt selskapet et lån på NOKm 31. Selskapet vil bli innfusjonert med regnskapsmessig
effekt fra 1. januar 2014.
Gjeld til kredittinstitusjoner var ved samme tidspunkt NOKm 194, og beregnet implisitt rentenivå
ligger på ca. 4,6 % pr. år.
Leverandørgjeld beløpte seg til NOKm 61 per 31.12.2013, en økning med NOKm 45 sammenlignet
med foregående år. Selskapet har ikke spesifisert hvilke poster som inngår i leverandørgjeld
Side 6 av 10
Notat
Selskapet opplyser at annen kortsiktig gjeld, NOKm 32 per 31.12.2013, relaterer til periodiseringer.
De største postene er påløpte utgifter til vintervedlikehold, flysikringstjeneste, sikkerhetstjenester,
avsetninger til lønn, feriepenger og skattetrekk.
Egenkapitalrentabiliteten de siste to årene er 16 %. Totalkapitalrentabiliteten for 2013 var 7 %.
Dette indikerer (forenklet) at selskapets aksjonærer har hatt en ”middels” avkastning på investert
kapital.
Rygge Sivile Lufthavn AS (RSL)
Selskapet har bokførte anleggsmidler til et beløp av NOKm 803 ved utgangen av 2013. Mesteparten
av dette relaterer til tomter og bygninger (NOKm 669) og driftsløsøre og inventar (NOKm 134)
Driftsløsøre og inventar avskrives over 3 til 5 år, og avskrivningstiden for bygg er mellom 7 og 50 år i
følge årsregnskapet. Selskapet har ikke ønsket å gi oss ytterligere detaljer rundt dette slik at det er
ikke mulig å gjøre noen nærmere vurdering av avskrivingskostnadene.
Gjeld til kredittinstitusjoner var ved samme tidspunkt NOKm 450. Som sikkerhet er det gitt 1.
prioritets pant i terminalbygg, parkeringsplasser, flyoppstillingsplass og tilkjørselvei, samt tinglyst
festerett mellom lånetaker og Forsvarsbygg.
Selskapet har i tillegg ansvarlige lån på 250 millioner fra eierne. Vilkår for nedbetaling og
renteberegning for denne er ikke oppgitt
Vi har ikke mottatt noen spesifikasjon av annen kortsiktig gjeld, NOKm 35 per 31.12.2013
I tillegg til høyere finanskostnader vil større nedbetalinger på gjelden kunne gi en utfordrende
likviditetssituasjon for RSL. RSL opplyser i sine noter at gjelden til kredittinstitusjoner på NOKm 450
skal refinansieres i løpet av 2014.
Egenkapitalrentabiliteten det siste året er 8 %. Totalkapitalrentabiliteten for 2013 var 1 %. Dette
indikerer (forenklet) at selskapets aksjonærer har hatt en lav avkastning på investert kapital
Oppsummert innebærer dette at RSL har en svakere soliditet enn SHL, men det ansvarlige lånet vil
i praksis utjevne denne forskjellen. Faktum er likevel at RSL har investert mer enn SHL og har
samtidig har en betydelig lånefinansiering av investeringene, som medfører rentekostnader. Årlige
avskrivingskostnader er relativt like for begge selskap, på tross av vesentlige forskjeller i
investeringsnivå. Dette innebærer implisitt at RSL forventer at anleggsmidlene vil vare lenger enn
hos SHL. Men uten ytterligere detaljinformasjon fra selskapene er det vanskelig å kunne fastslå
hvorfor selskapene vurderer at relativt like typer investeringer skal avskrives over forskjellig
tidshorisont. En mulig hypotese kan være at RSL har en mer konservativ tilnærming til
avskrivingstakten slik at selskapet kan vise bedre (positive) resultat fra virksomheten2.
2
Jfr. Dr. Oecon Finn Kinserdals artikkel i tidsskriftet Magma, 1/2014 vdr. usikre poster i regnskapet.
Side 7 av 10
Notat
4. Øvrige forhold
4.1.
Selskapenes avsetninger til dekning av krav fra Avinor er uklart
Selskapene ble til vår informasjon pålagt økte kostnader i 2012 fra Avinor AS for betaling av
innflygningskostnader. Begge selskap bestrider kravet fra Avinor og har bedt om en rettslig
behandling av kravet.
I denne forbindelse er det stillet spørsmål ved om selskapene har tatt høyde for disse kostnadene i
sine regnskap.
Vi legger til grunn at dersom disse kostnadene er medregnet i selskapenes resultatregnskap vil de
være en del av selskapets kortsiktige gjeld, grunnet at det ikke er betalt, og vil medføre en merkbar
økning av denne posten i regnskapet.
Annen kortsiktig gjeld
2010
2011
2012
2013
38 266
38 418
34 898
35 038
29 499
20 682
44 435
31 699
Tabell 6 - Annen kortsiktig gjeld i 1.000. Kilde: Selskapenes årsregnskap.
I SHL øker ”annen kortsiktig gjeld” i 2012 betydelig fra 2011, mens den igjen faller i 2013. Selskapet
oppgir i sin årsrapport at posten kortsiktig gjeld inneholder flysikringstjenester uten at dette
spesifiseres nærmere. Og om dette omhandler normale periodiseringer eller er en avsetning basert
på usikkerhet rundt utfalles av en rettslig behandling av Avinors krav. En akkumulering av
tilbakeholdt betaling over flere år vil normalt medføre en økning av kortsiktig gjeld tilsvarende,
uten at dette klart kan observeres i regnskapene. Da selskapet ikke har ønske å utdype dette
forholdet kan ingen klar konklusjon trekkes i forhold til om selskapet allerede har tatt høyde for de
økte kostnadene i regnskapet.
Gitt eksisterende informasjonsnivå foreligger det en viss sannsynlighet for det er tatt høyde for
deler eller hele kostnaden i SHL.
I RSL er det liten bevegelse i ”Annen kortsiktig gjeld” i perioden 2011- 2013, og det foreligger ingen
informasjon i selskapets årsregnskap om innholdet eller bakgrunn for denne posten. Selskapet har
heller ikke ønsket å gi ytterligere informasjon om dette forhold.
Basert på manglende bevegelse er det ikke urimelig å anta at RSL ikke har tatt høyde for økte
kostnader med flysikringstjenester i sine regnskap.
Vi har i denne sammenheng ikke foretatt noen vurdering av om dette forholdet og manglende
omtale i årsregnskapet er i tråd med kravene i Regnskapsloven eller Norsk regnskapsstandard. Ved
selskapets egen rettssak, skal det kun avsettes i regnskapet dersom det vurderes at det er
sannsynlighetsovervekt (>50 prosent) for at den usikre forpliktelsen kommer til oppgjør. Da skal
beste estimat eller vektet sannsynlighet av utfallene avsettes.
4.2.
Selskapenes internhandel er lav
VI har i denne analysen også foretatt en overordnet vurdering av om selskapenes resultat kan være
påvirket av handel med nærstående selskap, såkalt internhandel.
Basert på den offentlige tilgjengelige informasjonen fremstår selskapene med svært liten andel
internhandel, og det ansees derfor at det er begrenset risiko for at selskapenes regnskap er
vesentlig påvirket av dette forholdet.
Side 8 av 10
Notat
4.3.
Eierforhold
Sandefjord Lufthavn AS (Torp)
Torp er i all hovedsak eiet av offentlige aktører i form av kommuner/fylkeskommune (totalt 86,5 %)
Eier:
Vestfold Fylkeskommune:
Sandefjord Kommune:
Vestfold Flyplass Invest (private investorer)
Stokke kommune
Eierandel:
43,3 %
35,7 %
13,5 %
7,6 %
Tabell 7 – Eierstruktur SHL. Kilde: Proff.no
Rygge Sivile Lufthavn AS (Rygge)
Rygge er i all hovedsak eiet av private aktører (80 %), med Østfold Fylkeskommune som deleier (20
% direkte og indirekte)
Eier:
Thon Holding AS
Orkla Eiendom AS
Østfold Energi AS (majoritetseier er Østfold FK)
Østfold Fylkeskommune
Eierandel:
40 %
40 %
15,02 %
4,98 %
Tabell 8 - Eierstruktur RSL. Kilde: Proff.no
Side 9 av 10
Notat
5. Avsluttende kommentarer
Innledningsvis vil vi presisere at begge selskap vil være avhengig av konjunkturer og markedsutsikter
på linje med andre aktører i denne bransjen, i tillegg de selskapsspesifikke fremtidsutsikter, og våre
konklusjoner inneholder ingen selvstendige vurderinger av disse forhold.
Sandefjord Lufthavn AS (SLH) har en solid egenkapitalandel og lønnsom drift. Selskapet har flere
flyselskap som operer på Torp, og selskapets ledelse legger opp til investeringer i økt kapasitet de
nærmeste årene. Dette indikerer at selskapet sannsynligvis vil få et kapitalbehov i årene fremover,
men gitt at dette er lønnsomt bør det være mulig å få finansiert dette hos en ekstern
finansieringsinstitusjon, slik at selskapet vil kunne opprettholde solid drift også i fremtiden.
I forhold til det omstridte kravet fra Avinor kan det foreligge indikasjoner på at det er avsatt noe
kostnader knyttet til dette forholdet i regnskapene, men dette kan ikke fastslås med sikkerhet. I
tillegg vil det være uklarheter om eventuell størrelse på en eventuell avsetning.
Indikasjonene er derfor at SHL vil kunne økonomisk sett kunne takle et avgiftsnivå som skissert i
mandatet, selv om dette vil gi eierne en lavere avkastning og derved gjøre investeringen mindre
attraktiv ut i fra et rent finansielt synspunkt.
Rygge Sivile Lufthavn AS (RSL) har lav egenkapitalandel og svak drift. Selskapet har avhengige av få
flyselskap som opererer på Rygge, og dette kan gi utfordringer for selskapet. Selskapets ledelse
budsjetterer med en reduksjon i inntekter og lønnsomhet i tiden som kommer. I tillegg har
selskapet høy gjeld fordelt mellom eiere og finansieringsinstitusjoner. Dette indikerer at det vil bli
vanskelig for RSL å møte sine forpliktelser gitt at de pålegges ytterligere kostnader, og fremtidlig
drift vil kunne være truet. En betydelig andel av selskapets gjeld er utstedet av eierne som
ansvarlig lån, og reduserer konkursrisikoen noe, da eierne vil ha tap utover egenkapital dersom de
begjærer selskapet i konkurs.
Ytterligere usikkerhet foreligger i form av at Forsvaret avvikler sin aktivitet ved Rygge, og dette kan
innebære at RSL må dekke høyere kostnader selv i forhold til at de tidligere antas å ha hatt en viss
kostnadsdeling med Forsvaret.
I forhold til det omstridte kravet fra Avinor foreligger det ikke indikasjoner på at det er avsatt noe
beløp til kostnader knyttet til dette forholdet i regnskapene, men dette kan ikke fastslås med
sikkerhet.
Indikasjonene er derfor at RSL økonomisk sett vil kunne ha store utfordringer med å takle et
avgiftsnivå som skissert i mandatet, og at det foreligger en risiko for konkurs, og/eller at eierne vil
avvikle driften ved RSL grunnet manglende lønnsomhet.
Side 10 av 10
TemaNord 2014:512
Ved Stranden 18
DK-1061 Copenhagen K
www.norden.org
Two approaches to pricing pollution
This report compares the Cap and Trade method with an alternative
method, the Flexible Fee Mechanism. The Flexible Fee Mechanism was
created as a response to political and other practical obstacles often
preventing the efficient application of other methods.
The main focus of the Flexible Fee Mechanism is the levying of a fee
at the point where a pollution-inducing product enters the economy.
The fee is then raised sufficiently (and sufficiently often) to effectively
stimulate the transformation of the economy in a sustainable direction.
At the same time, the revenue from the fee is directed back into the
economy to stimulate alternatives, demand and employment.
Still, key questions remain unanswered in this report. This project was
launched by the Working Group for SCP (HKP) in collaboration with the
Working Group on Environment and Economy (MEG) under the Nordic
Council of Ministers.
TemaNord 2014:512
ISBN 978-92-893-2722-0
ISBN 978-92-893-2723-7 (EPUB)
ISSN 0908-6692
TN2014512 omslag.indd 1
27-03-2014 08:53:34
Two approaches to
pricing pollution
Christina van Breugel, Mattias Enggaard, Jes Erik Jessen,
Ulrika Stavlöt, Christopher Sköld and Elina Berghäll
TemaNord 2014:512
Christina van Breugel, Project Manager, COWI, Mattias Enggaard, COWI. Jes Erik Jessen, COWI,
Ulrika Stavlöt, FORES, Christopher Sköld, FORES and Elina Berghäll, QA responsible, VATT
ISBN 978-92-893-2722-0
http://dx.doi.org/10.6027/TN2014-512
TemaNord 2014:512
ISSN 0908-6692
© Nordic Council of Ministers 2014
Layout: Hanne Lebech
Cover photo: ImageSelect
This publication has been published with financial support by the Nordic Council of Ministers.
However, the contents of this publication do not necessarily reflect the views, policies or recommendations of the Nordic Council of Ministers.
www.norden.org/en/publications
Nordic co-operation
Nordic co-operation is one of the world’s most extensive forms of regional collaboration, involving Denmark, Finland, Iceland, Norway, Sweden, and the Faroe Islands, Greenland, and Åland.
Nordic co-operation has firm traditions in politics, the economy, and culture. It plays an important role in European and international collaboration, and aims at creating a strong Nordic
community in a strong Europe.
Nordic co-operation seeks to safeguard Nordic and regional interests and principles in the
global community. Common Nordic values help the region solidify its position as one of the
world’s most innovative and competitive.
Nordic Council of Ministers
Ved Stranden 18
Phone (+45) 3396 0200
www.norden.org
Content
Preface ................................................................................................................................................................. 7
Summary...........................................................................................................................................................11
Definitions........................................................................................................................................................15
1. Introduction ............................................................................................................................................17
2. Description of the project – methodology ................................................................................19
2.1
Analytical focus .......................................................................................................................19
2.2
Approach ....................................................................................................................................23
2.3
Criteria for economic efficiency ......................................................................................25
3. Economic instruments for pricing pollution ...........................................................................31
3.1
Introduction ..............................................................................................................................31
3.2
Tradable emission permits ................................................................................................32
3.3
Flexible emission fees ..........................................................................................................35
3.4
Repayment mechanism .......................................................................................................45
3.5
Description of analytic cases.............................................................................................50
4. Analysis .....................................................................................................................................................53
4.1
Evaluation on the general level .......................................................................................53
4.2
Evaluation of analytical cases...........................................................................................63
5. Results........................................................................................................................................................69
6. Recommendations ...............................................................................................................................73
Dansk sammenfatning ...............................................................................................................................75
7. Appendix ...................................................................................................................................................79
7.1
Independence of governmental agencies and public acceptability ...............79
Preface
Most people agree that we need to solve our major environmental problems. The question is which methods are most effective and politically
viable and will they work in practice?
This project aimed to develop a foundation for better decisionmaking and policies through increasing the understanding of the opportunities and drawbacks of various approaches to setting a price on pollutant emissions.
This report gives political leaders the opportunity to take advantage
of the knowledge available in the area today by presenting and analysing
comparisons of two approaches from different disciplines. The target
group includes political representatives, government officials, consumers and environmental agency officials as well as other stakeholders −
primarily in the Nordic region.
One of the most common methods today is the Cap and Trade approach, currently used for trading carbon emissions permits in the EUETS. The way this method is implemented in the EU-ETS, mainly due to
political restrictions and obstacles, has been criticized by many in light
of the falling prices on emission permits in this system contrary to the
obvious need for more powerful economic driving forces.
preventing the efficient application of other methods. The main focus of
the Flexible Fee Mechanism is the levying of a fee at the point where a
pollution-inducing product enters the economy. The fee is then raised
sufficiently (and sufficiently often) to effectively stimulate the transformation of the economy in a sustainable direction. At the same time, the
revenue from the fee is directed back into the economy to stimulate alternatives, demand and employment.
Earlier studies, headed by adjunct professor Magnus Enell, showed
that the Flexible Fee Mechanism, also known as the Höglund Mechanism,
opens up new alternatives concerning the political and practical implementation of economic and environmental control mechanisms.
That report was published by the Nordic Council of Ministers Working Group for Sustainable Consumption and Production (SCP). This
study is a continuation based on the conclusions in that report.
Flexible Fees work by:
Levying a Fee which is sufficiently high and adjusted sufficiently
often for a Fee – induced Futures Market to emerge.
Letting the Futures Market and other hedging and insurance
instruments indicate the price (the average abatement cost) which
can be levied without harming the economy.
Securing a repayment of a sufficiently large fraction of the revenue
from the Fee so that a majority of voters will clearly benefit from the
Flexible Fee Mechanism and investors will put money into
environmentally sustainable (cheaper) alternatives.
These three parts or components are all essential to the mechanism. If
one or more of them are lacking, then the viability and economic control
function of the mechanism will be impaired.
Due to circumstances and limitations, only the first part or component of the Flexible Fee Mechanism was studied and to reduce complexity the study kept to a more high level comparison of the approaches in
general with reference to the European ETS scheme.
The original assignment called for a comparison of the practical application of the two approaches to nitrogen and phosphorus. One factor that
was possibly under-estimated in framing the assignment was that each
approach is aimed at different objectives, views pollution differently and
handles the revenue from the fee differently. Furthermore, the two approaches view the role of the market differently, as well as the role of economic incentives in the building of political support.
That the study became narrower than intended, however, does not diminish the importance of this report. On the contrary, it makes it even
more important as a source and starting point for further discussion and
research, which, based on what arises from this report, is urgently needed.
This “Two Approaches to Pricing Pollution” project was launched by
the Working Group for SCP (HKP) and conducted in collaboration with
the Working Group on Environment and Economy (MEG) under the
Nordic Council of Ministers.
The project was carried out by a consortium with COWI as lead in cooperation with FORES and VATT.
8
The project has been carried out by:
Christina van Breugel, Project Manager, COWI
Mattias Enggaard, COWI
Jes Erik Jessen, COWI
Ulrika Stavlöt, FORES
Christopher Sköld, FORES
Elina Berghäll, QA responsible, VATT.
The steering group appointed for the project consisted of:
Stefan Nordin, Swedish Agency for Economic and Regional Growth
Fredrik Granath, Swedish Environmental Protection Agency
Øyvind Lone, Norwegian Ministry of the Environment
During the project, a number of stakeholders were interviewed, and we
would like to take this opportunity to thank the following contributors:
Anders Höglund and Stephen Hinton, The Swedish Sustainable
Economy Foundation
Jørgen Schou, Danish Environmental Protection Agency
Jørgen Birk Mortensen, University of Copenhagen
Jens Holger Helbo Hansen and Mette Gravesen, Danish Ministry of
Taxation
And the many others who have been willing to discuss and develop
the topic of this report.
The project was undertaken from October 2012 to January 2013.
Sigurbjorg Saemundsdóttir
Chair of the Nordic SCP Working group (HKP gruppen)
Ministry for the Environment, Island
9
Summary
The report analyses economic mechanism for pricing pollution in a practical setting.
Based on a set of criteria (efficiency, transaction cost, acceptability
and others) the analysis compares of proposed flexible emission fees
and tradable emission permits. The aim is to clarify advantages and challenges of the respective mechanisms that are important in the practical
process of the regulator deciding what regulation to impose on polluters.
Tradable emission permits are well described and broadly used.
However, the application has not been without difficulties, which is the
current case for the permits-based European Emission Trading System
for CO2. In the analysis, tradable emission permits are included as a
mean to highlight differentiators of the flexible emission fee mechanism.
The functioning of the flexible emission fee concentrates around an
independent expert group that sets a fee on emissions and varies the fee
often to ensure proper reductions emissions. In consequence, the polluters will insulate themselves against the varying fee on a futures market.
The price of futures reflects the market expectations for tomorrow’s fee
based on e.g. development in marginal abatement costs due to technological change. Information feedback from the futures market can be
used by the expert group to adjust the fee.
The novelties of flexible emission fees include very frequent adjustments of fee, an independent expert group with operational freedom to
manage the mechanism and the introduction of sufficient volatility in
order to produce a new stable equilibrium (via futures markets). In addition, the price on pollution is only indirect as the flexible emission fee
is meant to reflect marginal abatement costs, which is contrary to the
predominant approach of setting the emission price equal to environmental damage costs.
These novel elements could to some extent be adopted by other types
of regulation and may correspond more or less to the paradigms of today’s environmental regulation. Still, key questions remain unanswered:
are the benefits of flexibility and induced stability by means of a volatile
fee greater than costs incurred? This question requires a formal economic analysis that can test assumptions.
The flexible emission fees have been described both with and without
a specified environmental target. The implications of this range from a
question of cost effectiveness – where different mechanisms can be assessed on their ability to reach a target at lowest cost – to a fundamentally different perspective on environmental regulation than the prevailing. If there is no specified target the flexible emission fee will in effect
drive emissions down at a rate comparable to the change in polluters’
abatement costs, but without explicit consideration of environmental
damage costs. This can potentially minimize abatement costs, but not
optimize costs and benefits of reaching an environmental target.
On the question of where the mechanism has its potential strengths,
consideration in the analysis are with characteristics as shown in the
table below.
Table 1. Potentially the flexible emission fee has strengths in cases with these four characteristics
Where high levels of low cost information on effects are available as many adjustments requires much
information.
Where objectives are long term and where environmental damages are small and minimization of abatement
costs is the top priority.
Where the typical alternative is a ban and transaction costs are not prohibitive (e.g. very sensitive environmental challenges where regular monitoring and adjustments by an expert group are necessary to make sure
emissions stay within narrow thresholds).
Where there is a time lag between the political decision of the overall environmental legislative framework
and the actual setting of targets (e.g. policies that originates from the EU and where the Member States
subsequently are to design the national implementation) the flexible emission fee would allow regulators to
quickly to initiate a fee without a specified target for the relevant emission, substance or resource and only
later determine the national target with a knowledge of the cost of abatement which have been reflected at
the futures market.
The flexible emission fee is presented as an alternative to current environmental legislation. A change of regime is suggested that will favour
consumers through repayment of fee revenues, reduce polluters’ abatement costs, and phase out unwanted substances as well as promote recycling. In this study, however, the current environmental regulation
based on national and international legislation and the corresponding
set of policies is unchanged and flexible emission fees is regarded as a
stand-alone mechanism comparable to others such as taxes, command
and control etc. This will allow an analysis of the use of the mechanism
within the limits of the current regulation and to compare the mechanism with others being implemented.
This is also the case in relation to repayment of fee revenues to consumers that is proposed as part of flexible emission fees. The present
study argues that the flexible emission fee remains an economic mecha-
12
nism for environmental regulation comparable to other which has analogue options for repayment.
It is recommended that further development and communication of
the mechanism focuses on the economic core and not the broader motivations for environmental regulation nor the spending of revenue. Only
this way can the mechanism win broader acceptance among regulators.
In addition, the economic reasoning has to be substantiated and tested
and an obvious next step is contact to academia and publication in peerreviewed economic journal.
13
Definitions
Actions
Polluter’s actions that affect emission levels, e.g. input substitution and
technology adaptation.
Flexible emission fees
An expert group sets a fee on emissions and adjusts the fee often to ensure proper reductions in emissions. The polluters will hedge themselves against the varying fee on a futures market. The price of futures
reflects the market expectations to tomorrow’s fee based on, e.g., technological and environmental trends; this information can be used by the
expert group to adjust the fee. Revenue is suggested to be redistributed
to consumers.
Futures market
A derivatives market where future expectations to the flexible emission
fee can be traded. It is assumed to emerge if fee fluctuates sufficiently
and enables polluters to hedge against this volatility.
Mechanisms
Regulator’s economic-based policies to combat pollution.
Polluter
The entity that is the source of the targeted emission and is included
under the mechanism.
Regulator
The public authority that governs the mechanism, sets environmental
targets, monitors and enforces legislation.
Tradable emission permits
A mechanism where a fixed number of emission permits are auctioned
or given to polluters that can choose to trade permits on the market, use
permits when emitting or abate emissions. The number of permits can
gradually decrease over time.
1. Introduction
In an economic system where finite resources (in the long run) are being
depleted – rather than recycled – and harmful substances are discharged/emitted beyond sustainable levels through economic activities
and thereby in the long term undermining the system, it becomes increasingly evident that this development calls for the application of
mechanisms to support sustainable ways of production and consumption. Such mechanisms to be applied should be environmentally and
economically effective as well as socially and politically acceptable. In
our view, the overall background for the present project “… aimed at
developing a better basis for policy on sustainable production and consumption through developing practical pricing approaches to pollution.”
Policy action must be seen from the perspective of both consumers and
industries as both are part of causes, solutions and will bear the positive
and negative consequences of environmental regulation.
The present project should be considered as a follow-up to the recent
report “Flexible emission fees: an incentive for driving pollution reduction
and sustainable production and consumption” released by the Nordic
Council of Ministers,1 which sets out five areas for further exploration,
especially in relation to the practical application of flexible emission fees
compared with a cap and trade (tradable emission permits):
A rigorous comparison between the two main pricing approaches:
cap and trade vs. flexible emission fees with a repayment mechanism.
An investigation of the conditions necessary for the emergence of
flexible emission fees futures markets.
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According to the call for tenders, the report concludes “… that by increasing fees until the market responds
and by redistributing a sufficient fraction of the income from the fees, to make the solution politically and
democratically viable, market forces may well be able to respond by seizing this opportunity to supply relatively
cheaper, non-polluting goods and services whilst older, more polluting alternatives retain financial stability
during their phase-out period. … The report is optimistic that both growth and environmental goals can be
reconciled if fees are managed in this way.”
1
A study of the repayment mechanism and its effect on the political
and democratic acceptance of sufficiently high fees to achieve
sustainability.
Looking at a range of pollutants that accumulate in nature to include
those that are abundantly available, i.e. nitrogen, recyclable, i.e.
phosphorus and non-renewable, i.e. carbon dioxide from burning
fossil fuels.
Comparing the two approaches both in general and for the same
pollutants to generate valuable knowledge, perspective and
understanding.
The purpose of this project is therefore to investigate and compare effective design and implementation of the practical application with the
concrete environmental challenges of two main approaches to pollution
pricing, namely a flexible emission fee with a repayment mechanism and
a tradable emission permit mechanism. In doing so, the focus should be
on the advantages and disadvantages of the various approaches to pricing pollution in a practical setting, thus contributing to enhancing the
basis for decision-making and political solutions.
18
2. Description of the project –
methodology
This report will further the discussion of flexible emission fees by means
of a comparison with tradable emission permits. Focus will be on the practical applicability of the mechanism discussed upon theoretical criteria.
The analysis explores the usefulness of flexible emission fees as an
economic policy instrument for pricing pollution, and it can be seen as a
step towards testing and maturing the idea of flexible emission fees. The
flexible emission fee can be used as a policy instrument in line with other
market-based instruments. The analysis will explore the similarities and
differences compared with other instruments, especially cap and trade.
The overall aim of the flexible emission fee is to set the correct price
on pollution, thereby achieving a fair payment from the users of the
environment.
A Nordic perspective is maintained in the establishment of cases. The
analysis does not carry out any formal analysis, modelling nor consider
legal aspects. It is outside of the scope of the analysis to examine legal
obstacles and related considerations. The analysis will be based on the
interviews conducted during the project phases and the theoretical considerations already made in previous analyses.
2.1 Analytical focus
Flexible emission fee (FEF) is presented as both an economic mechanism and as an element in shifting our economic system towards a
sustainable path.
The Swedish Sustainable Economy Foundation contextualises the
mechanism in its argumentation, which covers “closing element cycles to
promote full recycling,” “cradle to cradle” and “repayment of revenues
directly to citizens in order to create public acceptance of higher retail
prices resulting from a game changing fee.” In this analysis, the scope is
narrower and the analytical focus is on flexible emission fees as an economic mechanism vis-a-vis tradable emission permits (TEP). Both
mechanisms are highly relevant to discuss in a broader context, but to a
large extent they coincide in their ability to tackle environmental concerns and generate revenue that can be repaid.
The inspiration for the mechanism is found in control engineering
where engines can be designed to improve the congestion by getting
continuously feedback. The FEF (flexible emission fee) differentiates
itself from the tradable emission permits by influencing the price on the
market instead of the quantity.
2.1.1
Where do the mechanisms differ: from input to
emission?
To guide the reader in the proceeding analysis, we will give a few comments on the report’s overall distinction between the two mechanisms.
In the descriptions of FEF (see section 3.3), it is presented as an approach to putting a price on pollution and correcting marked failure, but
also as part of a political ambition to transform society (a closed, circular
economy based on recycling of resources) and to redistribute fee revenue to consumers.
This compares to TEP which is part of mainstream environmental regulation and economics and where distinction is made between the “economic core” of the mechanism and its role in politics and economic policy.
However, as the table shows this distinction is not necessarily a challenge when comparing FEF and TEP. TEP can in many ways be parallel
to FEF depending on the actual design and context of the mechanism
application. In consequence, this report aims a highlighting the points
where the mechanisms differ and the potential advantages and draw
backs of these differences.
In the view of this report’s authors, the innovative elements of FEF lie
within the functioning of the mechanism ifself. The emissions to which
FEF can be applied or how revenue is spent are very much parallel to
TEP and are therefore given less attention in this report.
20
Table 2. Some differences and similarities between the flexible emission fees (FEF) and tradable
emission permits (TEP), respectively
Topic
FEF
TEP
Type of
emission
Can be applied to a range of emissions (or inputs) both up- and downstream in the value chain
Set quantity
or fee
Sets an initial fee that is changed reflecting market
signals (but also on ambition for future emission
quantity)
Market
correction
Sets a future emission quantity based
on political choice
Puts a price on pollution
Adjustments
Based on new info, the price can be adjusted with
small time intervals. Adjustment decided by
independent expert group
Quantities adjusted after trading
period, which in principle can be long
or short. Adjustment decided politically or other policy makers (could also
be an independent expert group)
Use revenue
Redistribute to consumers
Redistribution to polluters, via public
budgets or directly to consumers*
*Cases where TEP uses grandfathering of permits (permits are given to polluters for free), no revenue will be generated and nothing redistributed. The analytical focus in this report is primarily on
the mechanisms, narrowly speaking. This line of thought is illustrated below.
Figure 1. Analytical focus on mechanisms rather than broader context
21
2.1.2
What is implied by “practical”?
In this context, the term practical aims at the matters that need to be
dealt with when applying economic regulation to environmental problems. This involves questions such as:
What is the right level of regulation?
Who will bear the cost?
How can the administration, enforcement and monitoring be designed?
However, in the case of FEF and TEP a very high degree of both general
definitions and case specifications has to be in place before these practical questions can be subject to analysis.
In the view of this report’s authors, the detailed information on FEF is
not available to an extent that allows answering of practical questions
such as those above. A crude illustration of the knowledge base for FEF
shows the mechanism can be further developed and studied on various
levels. In comparison, TEP has been subject to much scientific scrutiny
and application both to emissions and to other matters. Nonetheless,
TEP has given many challenges when applied (as evident in the present
debate on the EU Emission Trading System) and is still being developed.
Figure 2. Crude illustration of levels of knowledge development for flexible emission fees (FEF) and tradable emission permits (TEP), respectively
FEF
1. Idea
2. Definition
3. Detailed study
(theoretical and
simulations)
4. Application
TEP
1. Idea
2. Definition
3. Detailed study
(theoretical and
simulations)
4. Application
22
Explanation
Well developed
Some development
No development
In the absence of comparable information, comparing the two mechanisms is attached with difficulties both in general and when applied to
specific cases. Thus, a comparison of practical elements including administrative costs, transaction cost, environmental and economic efficiency
is presently not feasible.
This report approaches its title – “practical approaches to pricing pollution” – in a pragmatic way. In the following chapters, the report discusses and applies theory to components of practical application of the two
mechanisms. At this stage, the outcome is recommendations for topics
that need to be developed further in order to practically apply FEF.
2.2 Approach
The method used in this analysis contains the following steps:
Defining the criteria necessary for assessing and comparing different
market-based instruments.
Assessing flexible emission fees and comparing them with the cap
and trade from a theoretical perspective.
Testing the practical possibilities of the instrument through
interviews.
The report will first set up a number of general criteria for discussing
efficiency requirements of economic instruments. The criteria are general and could be applied to any kind of instrument. Next, a short introduction to flexible emission fees and tradable emission permits will be
given. Finally, the instruments will be combined with the established
criteria – both at the general level but also in relation to specific cases.
The overall analytical approach is illustrated in the figure below.
Figure 3. Analytical approach
Flexible emission fees
Tradable emission permits
Evaluation at the general level
Evaluation of application to analytical cases
23
Alongside the comparison of the two mechanisms, a general introduction is given to the options for spending the revenue that the fees or auctioning of emission permits generate. Basically, revenues can be regarded as contributions to government budgets or be repaid to either companies or consumers; nonetheless, the choice of how to spend revenues
can have an effect on the political acceptance of the policy suggested.
The two instruments together with many other market-based instruments are parallel in this respect, and the topic will be presented as an
additional perspective in a separate section.
The analysis combines existing knowledge from literature and experts into an analytical framework established to discuss theoretical and
practical aspects of the flexible emission fees. As no application of flexible emission fees exists, the analysis will remain hypothetical but the
framework allows a discussion of opportunities and drawbacks of potential applications. Interviews with practitioners will support the evidence to conclude on these issues.
The discussion proceeds at two levels; a general evaluation of the instruments characteristics and requirements for economic efficiency and
a case-based evaluation. The analysis establishes analytical cases for
various pollutions, market characteristics and stakeholders involved
upon which the instruments are applied. This allows a practically oriented but hypothetical discussion of practical pollution pricing under
varying circumstances.
To qualify the discussion of practical application of the instruments,
the project has drawn upon expert interviews. The interviews have been
conducted in order to gather information, test analytical frameworks
and arguments.
The results are a synthesis of the general and case analyses shedding
light on the two practical approaches to pricing pollution.
24
2.3 Criteria for economic efficiency
The optimal mechanism would be one that ensures target fulfilment
within a specified timeframe,2 by choosing the actions that can be implemented at the lowest possible cost (while stimulating development of
actions with even lower marginal reduction costs), and without causing
adverse distributional effects deemed to be political and democratic
unacceptable. Ideally, such an optimal mechanism should at the same
time be characterised by full and certain knowledge of the interplay
between pressure and impact3 as well as actions and their cost, and by
incurring no kinds of transaction costs.
Although no mechanism fulfils this ideal, it seems to be a good point
of departure for assessing the features and practical applicability of different mechanisms.
Thus, for comparing the practical applicability (to counter a specific
pollution problem) of the flexible fees4 mechanism against the more
well-known cap-and-trade mechanism, i.e. comparison of the two different main approaches to “pricing pollution”, the following four main categories of criteria could be developed and applied:
Efficiency.
Acceptability.
Uncertainty.
Transaction costs.
These four main categories of criteria will be defined below.
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Ideally, such target should be set as to reflect equilibrium where the marginal abatement cost equals the
marginal environmental cost, to be socially cost effective.
3 This terminology refers to the DPSIR framework used by the European Environment Agency (EEA), to
structure thinking about the interplay between the environment and socio-economic activities. DPSIR stands
for: Driving forces – Pressures – State – Impact – Responses. The DPSIR framework represents a systems
analysis view:- social and economic developments exert pressure on the environment and, as a consequence,
the state of the environment changes. This leads to impacts on e.g. human health, ecosystems and materials
that may elicit a societal response that feeds back on the driving forces, on the pressures or on the state or
impacts directly, through adaptation or curative action.
4 According to literature, it is important to distinguish between “tax” and “fee”: A tax generates general
government revenue to be used in principle for general purposes, while a fee is revenue neutral to government as the revenue generated should be re-distributed back to the sectors where the fee is levied The
classic example is a fee levied on pollution, that is re-distributed back to the sectors where the fee is levied to
e.g. stimulate the development and use of cleaner technologies.
2
25
2.3.1
Effectiveness and efficiency
For analytical purposes, efficiency is divided into various subcategories:
Environmental effectiveness of mechanisms ensures certainty of
target fulfilment (desired level of pollution reduction) – within a
given time frame. By environmental efficiency, we understand the
potential of the mechanism for reaching the desired level of pollution
reduction targeted – within the desired time frame.
Economic efficiency of mechanisms ensures pollution reduction at the
lowest cost and largest environmental gains to society. By cost
effectiveness of a mechanism, we understand the potential/ability of
the mechanism to reach a given level of pollution reduction at the
lowest possible cost (to society) – or alternatively to achieve the
highest possible level of pollution reduction at a given cost (to
society) – through its potential to provide incentives for
implementing the “cheapest” actions, i.e. the actions that can be
implemented at the lowest possible cost.5
Dynamical efficiency of mechanisms ensures lowering of marginal
reduction cost over time. By dynamical efficiency, we understand the
potential of the mechanism to provide incentives for the
development of new actions over time, e.g. by stimulating
technological development that can reduce pollution at lower cost
than hitherto, thus lowering the overall marginal reduction costs
over time.
Distributional efficiency or efficiency of redistribution of revenue,
ensures that the revenue is redistributed efficiently. By efficiency of
redistribution of revenue, we understand the redistribution of
revenue in a way that achieves the highest possible level of pollution
reduction – through its potential to provide incentives for pollution
reduction – e.g. as direct subsidies to stimulate development of
environmental technology by the industry, or e.g. in a way to
stimulate environmentally sound spending by the public.
Predictability/stability of mechanisms ensures predictability about
cost of pollution and/or alternative cost of emissions reduction. By
predictability, we thus understand predictability about cost of
pollution and/or alternative cost of emissions reduction that is of
importance to polluters in deciding on their investments.
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5
Transaction costs not included.
26
2.3.2
Acceptability
Acceptability ensures avoidance of adverse distributional effects
deemed to be politically and democratically unacceptable. We will distinguish between two main categories of acceptability:
Acceptability of division of burdens, ensures that the imposition of
costs is politically and democratically acceptable. Thus, by
acceptability we understand the imposition of costs, which is
acceptable, politically and democratic, in the sense that it affects
pollution reduction without leading to (political and democratic)
unacceptable and/or adverse effects on e.g. business sectors
operating in markets characterised by strong international
competition (from competitors in other countries or regions not
facing such costs).6 Another example of such unacceptable and/or
adverse effects could relate to placing too heavy economic burdens
on low-income groups. Who ultimately bears the costs of pollution
reduction will thus be of importance to the degree of political and
democratic acceptance of the mechanism.
Acceptability of redistribution of revenue, ensures that the
redistribution of revenue is political and democratic acceptable. I.e.,
that the revenue is redistributed in a way that is perceived as
acceptable or even to promote acceptability – whether this would be
achieved by redistribution of the revenue e.g. as direct subsidies to
stimulate development of environmental technology by the industry,
or e.g. as a general refund to compensate for the specific fee imposed
and/or stimulate spending. Thus, the redistribution of revenue will
clearly also be of importance to the degree of political and democratic
acceptance of the mechanism.
──────────────────────────
This could ultimately lead to increased pollution if home market production (one way or another) is relocated to another country or region without regulation – especially in the case of transboundary pollution.
6
27
2.3.3
Uncertainty
Uncertainty and/or (lack of) information, hereunder the interplay between the three major types of uncertainty defined below:
1. Environmental (or scientific) uncertainty concerns uncertainty about
the connection between driving forces (e.g. economic activity) and
pressures (e.g. discharge/emissions of pollutants) as well as
uncertainty about the connection between pressures and
state/impacts (i.e. environmental effect), hereunder natural
variations (in biological, geological, chemical and physical conditions
of the recipients) – and thus uncertainty about the actual effect of
implementing specific actions.
2. Economic uncertainty concerns uncertainty about the costs of pollution
reduction by implementation of specific actions, including informational
asymmetry about actual costs between “regulator” and “polluter”, where
the latter often possesses the best information about costs.
3. Technological uncertainty concerns uncertainty about the
technological ability/capacity of a specific action for pollution
reduction – that is of major relevance not least when implementing
(almost) unproven technologies.
2.3.4
Transaction costs
Transaction costs of applying the mechanism, including informational
transaction costs that concern the regulating authority’s costs of communicating necessary information about the mechanism to relevant
players, i.e. “polluters”, as well as these players’ costs of obtaining and
processing information on the mechanism and its requirements.
Administrative (administrational) transaction costs that concern the
administrative costs of the regulating authority responsible for
implementing and enforcing the mechanism, as well as the
administrative costs to those players targeted by the mechanism. The
distribution of costs between the public and private sector and the
magnitude of costs to regulating authority and players, depend
among other things on the degree to which the mechanism
differentiates itself according to certain environmental criteria, or the
polluters costs of trading emission permits or futures contracts
and/or costs to the regulating authority of e.g. providing a platform
for trading emission permits or futures contracts.
28
Monitoring (transaction) costs concern the costs of monitoring the
state/condition of the environment, as well as costs of monitoring
compliance with the regulating authority’s requirements. The
intensity of monitoring of compliance will ultimately be of
importance to the effectiveness of the mechanism.
Juridical transaction costs that concern the costs of the parties’
involvement/engagement in legal disputes when monitoring has shown
lack of compliance by one (or more) of the players, or alternatively when
one (or more) of the players claim to be treated unjust.
The criteria are applied to the analysis of the mechanism in section 4.
29
3. Economic instruments for
pricing pollution
3.1 Introduction
The purpose of this analysis is to evaluate approaches to setting a price
on pollution. Environmental legislation is introduced to protect the environment, create incentives to develop new technologies, create national
strongholds and implement the polluter pays principle (PPP).
The price on pollution expresses the cost and benefits that are connected with the change of behaviour or action according to the objective
and belonging target of the environmental policy. This includes the valuation of the externalities. These externalities are seldom traded on a
market and need to be assessed by using valuation methods which are
likely to be uncertain.
The second-best alternative is to estimate or reveal the avoidance
cost or, in other words, the abatement cost of reducing emissions. This
can be done through gathering information directly from companies or
be revealed as a willingness to pay at the market place. The most pragmatic way to estimate or determine the price on the pollution is through
the creation of a market. Two different approaches to creation of markets will be investigated in the following.
3.1.1
The two mechanisms
This analysis operates with two mechanisms: the flexible emission fee
and the tradable emission permits.
Tradable emission permits: A mechanism where a fixed number of
emission permits are auctioned or given to polluters that can choose
to trade permits on the market, use permits when emitting or abate
emissions. The number of permits can gradually decrease over time.
The permits are also traded on a marked where the prices on the
permits express the expected future abatement costs. In that way, the
market is a market place for futures.
Flexible emission fees: An expert group sets a fee on emissions and
adjusts the fee often to ensure proper reductions emissions. The
polluters will hedge themselves against the varying fee on a futures
market. The price of futures reflects the market expectations to
tomorrow’s fee based on, e.g., technological and environmental trends;
this information can be used by the expert group to adjust the fee.
Tradable emission permits are a well described mechanism with many
practical applications. Flexible emission fees have been the topic of a
number of policy reports, but have not been applied to date. The two
mechanisms are described in the following.
3.2 Tradable emission permits
An emission permits market is an economic volume-based policy instrument7 with the primary aim to achieve an environmental objective at the
lowest cost possible for its participants. Compared to an emission tax, a
permit market is particularly effective when the amount of emissions is
seen as important and there is a risk of reaching a critical tipping point.
In an emission permits market, the quantity of emissions is directly
controlled. Emitters included in the system eventually have to cover
their emissions by a corresponding number of permits. In case of excess
emissions, participants need to offset their excess by acquiring permits
from other sources that are able and willing to emit below their established share of permits. A company in need of more credits can purchase
them on the market. Conversely, a company that has a surplus of credits
can sell the excess. The permit price therefore reflects the scarcity of the
right to emit, set by the agreed permit volume, which in turn depends on
the stringency of the environmental policy. This is the most common
feature of an emission permit market; the “cap-and-trade”. Policymakers
choose a cap of how much emission is allowed, and within that cap, the
right to pollute is traded among the market’s participants. The trade is
conducted with emission permits, which are controlled and certified by
an administrative authority. In that way, the amount of emission given
by one permit will be given a market price, thus creating economic in-
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7
In contrast to a price-based instrument such as a tax, where price is fixed but the level of emissions are not.
32
centives to decrease emissions by putting an extra cost into investment
and production decisions.
The cost of reducing green house gases emissions varies significantly
within different sectors but if the market works well, the abatement cost
will be reduced as the various sectors and participants are exposed to
the same marginal cost of emitting greenhouse gases. This enables the
achievement of the desired emissions reductions at the lowest cost. In
this way, permit markets create a cost-efficient sharing of the emission
constraint among emitters. In conclusion, emission permit markets are
regarded as decreasing the emissions at the lowest cost, creating a general price (overarching countries, and sectors) and guarantees that the
emissions stay within a cap.
EU ETS
The European Union Emissions Trading System started in January 2005 and
comprises around 13,000 installations in industry sectors and energy production. From 2013, the EU ETS encompasses half of the greenhouse gas emissions
in the EU, not only including carbon dioxide but also N2O and perfluorocarbons
from several industrial sectors. The cap is set so that the carbon dioxide emissions of the included sectors will have decreased by 21%, year 2020, relative to
the 2005 levels.
Initially, all emission permits were allocated for free with just a small share
(0.13–3 per%) being auctioned, but starting from 2013 energy production installations will have to buy all their allocations through auctioning, while the
industry sector will see a decrease in the share of their free allocations until
2020, when all their shares will be auctioned. Hence, the emission permits are
estimated to be more frequently traded from 2013 onwards.
Between 2005 and 2012, the EU ETS has seen emissions decrease by 10%.
Even though the carbon price is seen as a contributor to this, the major cause of
the emission reductions so far is the economic crisis. Since the beginning of the
crisis in 2008, the ETS market has experienced a surplus of allowances and
international credits; by the end of 2011, the total number of allowances added
up to 8.720 million tons of carbon dioxide while the verified emissions were
only 7.765 millions tons of carbon dioxide – creating a surplus of 955 million
allowances. Many has considered the surplus the main reason for the sharp
decline in the share price, falling to below EUR 10 in mid-2011, causing a real
risk of seriously disrupting the functioning of the carbon market, and undermining the incentives to promote investments in clean-tech. In order to decrease the
surplus and stabilize the carbon price, the Commission has suggested a ‘backloading’, or ‘set aside’, of the permits. This would mean a temporarily, or
33
permanent, removal of an amount of emissions from the market. The conditions
for such market interference are, however, still discussed and highly uncertain.
The states’ income from the auctioning of emission permits does not have to
go to any specific purpose.
In the first phase of the European Union emission trading system (EU ETS),
starting in 2005, carbon emission permits (known as European Union Allowances (EUA)) were traded at prices ranging from €30 to below 10 Euro cents. In the
second phase, starting in 2008, prices fluctuated between €30 and €8. A range of
derivatives has developed for trading on a growing market dominated by a few
large players. Researchers have attempted to assess the main drivers of the price
of an emission permit. Several studies have found that carbon credits are highly
dependent on policy and regulatory interferences. Other factors that influence
the price of permits include the price of natural gas, oil and coal, the variability of
weather, fluctuations in the level of GDP and the occurrence of the global financial crisis.
In theory, the price of permits under a cap-and-trade should establish the
marginal abatement cost sufficient to meet the cap set in the scheme. In reality,
price volatility has been substantial. Research shows that price volatility was
mainly caused by fuel prices, weather and policy developments. In addition, the
EU ETS is a relatively new market that in general requires time to realise real
price discovery. Other researchers argue that the market will never produce a
right carbon price, since assets must be owned and they must be divisible with
appropriate legal and institutional frameworks in place.
A futures market established for a flexible emission fee will also be based on
artificial scarcity. The future price is likely to be influenced by fundamentals and
it is reasonable to believe that futures prices will be as volatile as EUA.
34
3.3 Flexible emission fees
The flexible emission fee8 mechanism is based neither on volume nor on
price explicitly, and in that respect it differs from both a tax or a cap-and
trade system. Instead, it relies on three pillars; a flexible fee, a futures
market and a repayment mechanism.
The flexible emission fee mechanism is basically a continuously adjusted tax pricing targeted emissions. Initially, this fee is set and adjusted by
policymakers or a panel of experts the same way the control interest rate
is set by a board in a central bank. Changes in the flexible emission fee are
made in response to various indicators, e.g. the rate of emissions reductions or the rate of green technological development, to keep the market
on track towards achieving the long-term environmental objectives. Unlike tradable emission permits, the environmental objective is flexible
rather than fixed and can be adjusted over time (see also section 3.3.1 on
environmental targets).
Largely, the flexible emission fee mechanism works as a traditional
environmental tax. Emitters facing a marginal abatement cost lower
than the flexible emission fee will benefit by choosing to abate, whereas
emitters facing a marginal abatement cost that is higher will benefit by
choosing to pay the fee. However, the flexible emission fee mechanism
also encompasses a third alternative; the possibility to hedge against
emission fee fluctuations on a futures market.
As the costs of risk and uncertainty have been acknowledged for centuries, policy makers have faced the challenge of balancing policy effectiveness and policy transparency. Whereas an emission tax optimally
would change with fluctuating marginal damage costs, policy makers
also have to target stable long-run market conditions for market participants. The idea behind the flexible emission fee mechanism is quite the
opposite. Instead of aiming for stability, the policy makers would increase the risk by stochastic changes of the emission fee. By increasing
instability, a futures market would be established where emitters can
insulate hedge against uncertainty. Thus, increasing risk and uncertainty
would result in more stability on the market and not in less stability.
The prices on the futures market would reflect the emitters’ expectations of the level of future emission fees, which would be affected by the
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Presented by Anders Höglund, who initially suggested the idea, and the Swedish Sustainable Economy
Foundation.
8
35
markets’ assessment of future emission levels, green technological development, political risk, etc. The futures market could thereby work as
a pollution abatement price discovery function, providing the fee-setters
with important information on the emitters’ expected future abatement
costs, risk assessments, etc. An important vision aspect of the flexible
emission fee concept suggests that this information can be reprocessed
into the decision rule of the fee-setters. This hypothetical feedback
mechanism would then assist the fee-setters in discovering the optimal
fee level, adjusted to the true costs of emitters and society. Given sufficiently rational expectations and sufficent information for a functional
market to emerge, the flexible emission fee mechanism would have the
potential to result in an optimimized trajectory of emissions given technological development, marginal damage and marginal abatement costs.
The third notion of the flexible emission fee mechanism involves a reimbursement mechanism, which may be designed as a budget neutral
repayment of the fee revenues. With uniform refund shares for all individuals and budget-neutrality, the interference of an additional fee/tax
in the economy is assumed to be politically and publicly accepted. The
reform is, however, also believed to have redistributive effects since
low-income households by assumption will, on average, be compensated
by more than they spend on emission fees. These progressive income
effects are assumed to give positive general equilibrium effects on the
economy, under most conditions, by increasing aggregate demand and
employment in a beneficial way.
Although the optimal level of the flexible emission fee is considered
to be substantial, the fee is suggested to initially be set at a symbolical,
low level, insufficient to curb the emissions, but sufficient to enable and
encourage the establishment of a futures market. Once the futures market has been established and the policy reform has been generally accepted, the fee will be raised to the level seen as needed by the feesetters. At the same time, polluters will expect the fee to rise from the
initial level motivating the emergence of a futures market.
It is assumed that rapid fee adjustments can best be managed by a
panel of experts. The expect group considers factors such as the following when setting the fee:
36
Price information from the futures market, including trends in the
cost of abatement.
Expected environmental impact of the use of resources or the
activities causing emissions.
Trend in the environment/status on reaching the target.
Prevailing fluctuations in the economy, weather, energy prices and
other activity determinants.
Trends in bottom lines of polluters.
Below, the elements of flexible emission fees are summarised and described.
Figure 4. Elements of the flexible emission fee mechanism
1) Politicians set environmental targets.
2) The expert group makes sure that target is met by managing the fee based on available information.
3) The fee is set and adjusted repeatedly to promote desired emission reductions at least abat ement costs.
4) Due to fee variations a futures market will emerge giving the polluter the possibility to insulate
against variations and providing information to the expert group on average abatement costs.
5) Repayment of fee revenue to the public in order to ensure acceptability of mechanism.
An additional point to make is that a flexible fee, that is easy to adjust,
could in theory promote more opportunistic behaviour among politicians for short run electoral reasons, which could sacrifice environmental progress. But in practice the opposite could also be true.
Flexible emission fees can be regarded in relation to three types of
environmental targets: fixed, flexible and unspecified target. Here, we
define an environmental target as specified in time and quantity. For
37
example, a 60% reduction by 2025 as compared to today’s level of emissions. Hence, the three types of targets are:
1. Fixed: y reduction by year x
2. Flexible; y ± a% reduction by year x ± b%
3. Unspecified: y reduction by year?
The latter could also be phrased as an environmental objective indicating the desired direction of change, rather than a quantitative target at
some point in time.
If flexible emission fees operate under a fixed environmental target, it
will basically be a quantitative mechanism.9 The flexibility of the mechanism is hence limited to the path of reductions, because a given reduction has to be made at a given point in time. Whether this is of societal
importance will rely on the emission in question (e.g., is time a major
factor for environmental consequences?) and on the mechanism’s time
horizon (short-term or long-term).
If the target is flexible, there is no point in time when a given environmental target has to be met. However, there is an objective of reaching the target within a flexible time span. The path of emission reduction
is therefore a function of a dynamic weighing of marginal abatement
costs and marginal environmental benefits. Information of industry’s
response to regulation can be incorporated along the way for cost to be
minimized while a steady reduction of emission reductions will occur.
This interpretation shares similarities with a price-based mechanism.10
In situations with an unspecified target, the emissions will be driven
down by a steady increase in the fee, but there is no goal indicating
when a given reduction should be made. This situation is the topic of the
box below.
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I.e. having a quantitative target on a specified date like in the case of tradable emission permits.
An environmental tax is a price on pollution. The tax makes environmentally harmful activity more costly
and emissions are therefore reduced. However, contrary to a quantitative mechanism there is no guarantee
that a tax will lead to the desired reduction.
9
10
38
Flexible fee without a target
It has been argued that emission reductions occur gradually when the fee is set
to equal average abatement cost.* The fee is thus determined by the development in abatement costs and, in turn, the rate of reduction is determined on the
market itself. Without a specified environmental target, there is no exogenous
factor that can accelerate the emission reduction beyond the market rate of
abatement.
This can be exemplified by energy efficiency taxes on cars. The regulator
knows the population of vehicles and the individual energy consumption expressed as kilometres per litre of petrol. Furthermore, the markets of new and
used cars provide plentiful information on the cost of increasing efficiency (marginal abatement costs). These conditions imply that the regulator can set a fee on
energy consumption and know in fair detail what rational agents will choose to
do and how the shift in vehicle populations will occur under gradually increasing
fees that reflects the development of average abatement costs. Nonetheless, as
there is no specified target, the shift will not be controlled, but only cost minimizing from the perspective of car owners; for instance, a car owner will not be
forced to buy a new car prematurely when considering abatement costs. The car
owner will postpone buying a new car as long as it is better budget-wise to keep
the old one.
Without a target, there is no weighing of abatement costs and benefits
(avoided damage costs) in order to make the change in energy efficiency of cars
follow a socially optimal path, but focus is instead on minimizing car owners’
costs of reduction. Hence, the fee is on poor technology rather than environmentally damaging emissions.
* Höglund, A. (2012): “A new method to reduce the emissions of greenhouse gases”, Appendix 3 in
Enell, M. (2012): “Flexible Emission Fees – An incentive for driving sustainable production and
consumption”, TemaNord 2012:511, and Sanctuary & Höglund (2005): “A Flexible Pollution Tax –
Preliminary Research Investigation”, Cargine and Swedish Environmental Research Institute.
The fixed environmental target was introduced in the Swedish Sustainable Economy Foundation’s briefing paper on phosphorous and nitrogen,
which is presented in section 3.5. In other presentations of flexible emission fees, there is no specified environmental target.11 The notion of a
──────────────────────────
Höglund, A. (2012): “A new method to reduce the emissions of greenhouse gases”, Appendix 3 in Enell, M.
(2012): “Flexible Emission Fees – An incentive for driving sustainable production and consumption”, TemaNord 2012:511, and Sanctuary & Höglund (2005): “A Flexible Pollution Tax – Preliminary Research
Investigation”, Cargine and Swedish Environmental Research Institute.
11
39
flexible goal is introduced in this project through discussions with the
Swedish Sustainable Economy Foundation and it forms the basic idea
underlying the description of flexible emission fees in section 3.3 above.
3.3.1
Futures markets
The uncertainty generated by the flexibility of the fees would – it is argued – stimulate the development of futures markets. This would be so,
as a futures market might represent a way to hedge against the risk created by a flexible fee. At the same time, a futures market may represent a
way of achieving price or cost revelation.12
3.3.2
Functioning of futures markets for flexible emission
fees
Regarding the development and functioning of the futures market in
flexible emission fees, the originators of the flexible fees mechanism
reason as follows:13
If the (initial) fee for emission of a certain substance is set significantly above the cost of emissions reduction, there will be a clear incentive
for reducing emissions substantially. However, the resulting environmental improvements might be achieved by an economic loss to society
that very well could be above the environmental gain to society, if e.g.
capital destruction14 is assessed to be necessary/worthwhile as an element of the effort to reduce emissions.
──────────────────────────
A traditional futures contract is an agreement to buy or sell a specific quantity of some asset at some time
in the future at a price agreed upon at the time the agreement is made.
Any asset whose future price is uncertain could be a candidate for a futures contract. There must be enough
consumers and producers who want to diminish the price uncertainty (hedgers) and enough other traders
willing to take on that risk (speculators) in order for the contract to be successful, i.e., worthwhile for the
contract to be listed on a futures exchange.
Actual delivery of the underlying asset of a traditional futures contract is not usually expected – contracts are
“offset” or cleared. However, if necessary, contracts are ultimately legally enforceable.
Each contract has different specifications because the underlying assets are different. The contract specifies
the asset, the amount of the asset, and the date of expiration. The advantage to having exchanges is that the
contracts are standardized and therefore much more attractive to both hedgers and speculators. In futures
trading the two parties doing the trading are actually making the contract with the exchange’s clearinghouse,
which guarantees performance of both sides of the transaction. So a trader wishing to offset a contract does
not have to find the other party to the original transaction; the clearinghouse will substitute any other party.
13 This section is to a large extent following the reasoning in the paper “A new method to reduce the emissions of greenhouse gases” by Anders Höglund.
14 For example premature shutdown and scrapping of otherwise well functioning equipment.
12
40
Figure 5. Functioning of futures market
Imagine two polluters both facing individual marginal abatement costs as represented by the marginal abatement costs (MAC) curve above. Polluter A produces at a level causing emissions at level
QA and with marginal abatement costs equalling cA, while polluter B produces at a level causing
emissions at level QB and with marginal abatement costs equalling cB. If a pollution tax/fee is introduced t, where cB >> t >> cA then polluter A will have a clear incentive to reduce emissions to a
level equalling Q (rather than pay the fee for the quantum of emissions QA-Q), and thus only pay
the fee for the remaining quantum of emissions Q. Further, once polluter A decides to abate and to
invest to bring emissions down to level Q, polluter A will like to hedge against future increases in the
pollution tax/fee that would alter the optimal investment decision (to abate to a level below Q). On the
other side, polluter B will have no incentive to reduce emissions, with a pollution fee at level t.
However, continuing excessive emissions could conversely also lead to
substantial costs to society. This could be the result, if the fee for emitting the substance is set significantly below the cost of emissions reduction, leaving no incentive for reducing emissions.
Thus, the level of an emissions fee that minimizes polluters’
abatement costs is expected to be correlated to the average cost of
reducing emissions – that, however, will in general be unknown (at
least to the regulator).
Therefore, a so-called “flexible emissions fee futures market” is introduced as a price and cost insurance market that elicits price and cost revealing behaviour of the polluters as well as expectations of other actors.
The “flexible emissions fee futures market” provides information to the
41
regulator about the polluters’ cost of reducing emissions as well as different actors’ expectations to future costs of reducing emissions. In turn,
information about the “current” cost minimizing level of the emission fee
is disclosed by means of the “flexible emissions fee futures market.” In this
market, the “emissions fee futures contract” is a binding agreement between buyer and seller about the “delivery” of the emissions fee, for the
stated amount, for the stated substance, for the stated time period, to a
determined price (the price of the futures contract at the time of agreement), including a clearing procedure at the date of expiry.15
When introducing such an emissions fee futures market, “polluters”
facing reduction/abatement costs below the current future emissions
fee, “set” by the price of the emissions fee futures contract on the market, will in principle find it worthwhile to abate and to sell emissions fee
futures contracts16 to reduce their risk, while polluters facing reduction/abatement costs above the current future emissions fee will in
principle find it worthwhile to pay the fee and to buy such contracts to
reduce risk.
Speculators can also engage in the market, whose activities can reduce fundamental errors in the pricing of the contracts. However, speculators might also increase errors in the pricing of contracts, as speculators might have different agendas.
Contracts can cover one or – more likely – more emission fee periods.
On the expiry date, the contracts are then cleared between sellers and
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Thus, it is presupposed that trade in emission futures contracts on an emission fee futures market can be
established according to the same principles as trade in traditional commodity futures contracts on a traditional
commodities futures market, that is claimed to have proven to be able to provide good liquidity and low transaction costs, applying the same rules and regulations as are established on a traditional commodities futures
market. In continuation hereof, an emissions fee futures contract is defined by the following terms:
– The emissions fee futures contract is a binding agreement between buyer and seller about the delivery of
the emissions fee, a) for the stated amount, b) for the stated substance, c) for the stated time period, d) to a
determined price – that is set as the price of the futures contract at the time of agreement.
– By delivery is meant a clearing procedure on the day when the contract expires – thus on the expiry date
the contract is cleared between seller and buyer based on the difference between the contracted price and
the expiry price, i.e. the price/fee set at expiry date.
16 The seller of the contract is facing costs below the current fee and will find it worthwhile to abate as long
as the marginal abatement cost is below or equals the current emission fee, but would also like to insure
against increasing fees that would alter the optimal investment decision, and would therefore like to fix the
future cost (at least for the investment period), by selling a contract that in principle on expiry date entitles
the buyer to a payment, at the agreed price on contracting date, of the emission fee for the specified substance, in the specified amount (that is not abated), during the specified time period. Thus at expiry date the
buyer in principle receives a payment equalling the agreed price on contracting date, and then pays the
actual fee for the period following after expiry date – in practice payments are cleared based on the difference between the contracted price and the expiry price.
15
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buyers, based on the difference between the contracted price and the
expiry price, i.e. the price/flexible emissions fee set at expiry date.17
During each emission fee period, all “polluters” pay the emission fee
determined by the market, on the expiry date the payment is made to
the regulator.
The emissions fee futures market should thus serve to facilitate/provide a sufficient number of contracts for a certain period, to
enable a polluter to fix the cost at the current cost/price for the futures
contract for emissions during the same period whenever the polluter
wants to do so!
Fulfilling this, the trade in emissions fee futures contracts on the futures market, will – due to the differences in costs and risks between
polluters – contribute to moving the price of the emissions fee futures
contracts towards the overall average cost of emissions reduction, and
thus (in the long term) contribute to moving the emissions fee towards
the same level.18
The possibility for polluters – and other actors – to fix the cost at the
current cost/price for the emissions fee futures contract, and thereby to
insure against changes in the emissions fee, facilitates the opportunity to
develop and invest in e.g. (new) abatement technologies as it enhances the
predictability of investment decisions and thereby promotes development
at a rate that minimizes abatement costs. Price on futures market.
The price on the futures market is expected to reflect expectations to
the future fee. In turn, however, the futures market expectations are
influences by a number of factors and will entail a dynamic feedback as
the expert group incorporates information from the futures market
when setting the fee (see illustration below).
The many factors influencing expectations will also influence the polluter’s abatement costs; or say, for a polluter to make a decision to install a cleaning device attention must be given not only to the fee level,
installation and operating costs, but also factors such as sales protects,
input prices etc.
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The trade on the futures market will therefore generate a gain or a loss exactly covering the difference in
the emission fee cost.
18 This cost-revealing feature is considered central to the idea behind the introduction of the flexible emissions fee futures market.
17
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Figure 6. Factors influencing price on futures market
If no environmental target is set (or only a loosely formulated target along
the lines of a gradually declining level of emissions), the market will not
consider the “environmental trend”, but rather the “technological trend” –
or, say, the expectations for the development of abatement costs.
3.3.3
Emergence of futures market
Fluctuations in the flexible emission fee are the basic condition for the
emergence of a futures market.
It is unclear what market characteristics and what level of fluctuation
are needed for the agents to opt for futures. One fundamental aspect is
the polluters’ ability to pass on the fee to consumers. If the polluter is a
price taker of international market prices, he cannot pass on fees to consumers. If the polluter is a price-setter and able to pass on fees, it is less
likely that a futures market will emerge.
Acting on a speculative futures market requires a high level of resources
and insight. However, as the polluter can trade via middlemen, the speculative part can be left for those willing to engage. In spite of this, an extensive
number of agents is necessary for a well functioning market to emerge.
44
3.4 Repayment mechanism
Repayment of revenues from flexible emission fee or auctioning of tradable permits can be spent in various ways. The options include (i) fiscal
recycling to non-climate related programs, (ii) recycling to emission
reduction expenditure or incentive programs, (iii) recycling to reduce
inefficiencies in the tax system, (iv) recycling to reduce distributional
effects, and (v) recycling to reduce competitiveness impacts. Also, the
lattertwo options could be an important factor for consumers and/or
polluters to accept new taxation.
Repayment can to a large extent be discussed independent of it
source. Money can be spent in a beneficial way, irrespective of whether
it is generated via a fee or permit auctioning. This is the reason why the
subsequent analysis focuses on the mechanism narrowly, and not on the
repayment mechanism. Still, an overview of the repayment mechanism
is given below as it is an element of major relevance both in general and
in relation to flexible emission fees.
3.4.1
Background
All emission abatement policies are likely to add to the distortions in the
economy created by the tax system. Traditionally, economists have argued that the costs of reducing emissions are significantly lower under
economic, incentive-based, policy instruments, such as emission taxes
and tradable emissions permits, than under administrative methods,
such as technological standards or direct regulations. However, there is
also research emphasizing the difference between policy instruments for
controlling emissions that raise revenues for the government and those
that do not. Revenue-raising instruments include emission taxes and
tradable emission permits that are sold or auctioned to firms. Nonrevenue-raising instruments include tradable carbon permits that are
distributed free of charge.
There are different ways the revenues can be recycled to the economy that benefit the society. The revenues can be recycled to households,
to firms or to the government. On the household level, the revenues
raised can be used to reduce marginal tax rates that discourage work
effort and investment. Revenues can also be repaid in a lump-sum transfer with the purpose of increasing aggregate demand in general. On the
firm level, revenues can be reimbursed directly to the emitters to compensate for increasing costs and lost competitiveness or indirectly by
cutting distorting taxes. If revenues are spent on governmental level, the
45
revenues could be used to reduce the federal budget deficit, which
would mean fewer distortions on employment, investment and consumer spending in the future. Revenues could also be used to finance additional public spending or long-run investment in public goods or in research and development, which only in the latter case would give an
efficiency gain to society.
Regulations that increase production costs also tend to reduce the
level of employment and investment in the economy. The costs of these
spillover effects in the labour and capital markets are called the tax interaction effect. On the other hand, the revenue-raising instruments can
give potential economic gains if the revenues are used to reduce other
distortions in the economy. This revenue-recycling effect can offset some
of the costs of the tax interaction effect.19 Research suggests that with
second-best environmental taxation, i.e. a setting with pre-existing distortionary taxes, the presence or absence or revenue-recycling effects
are important to the choice of environmental policy instrument.
Among economists, there has been a debate whether revenue-neutral
substitution of environmental taxes for other distortionary taxes such as
personal income tax, might offer a double dividend, i.e. improve the environment as well as reduce the welfare costs of a distortionary tax system. For policymakers the no-cost idea of a green tax swap is especially
appealing, as the values of environmental benefits are uncertain. A consensus has, however, emerged in the literature arguing that the revenuerecycling effect cannot offset the tax interaction affect since environmental taxes typically aggravate labour market distortions even if revenues
are employed to cut pre-existing distortionary taxes.
The presence of the tax-interaction effect makes indeed the revenuerecycling effect more fundamental to overall efficiency gains. Research
show that in the presence of distortionary taxes, environmental instruments that fail to exploit the revenue-recycling effect, as in the case
where revenues are returned to the economy through lump-sum tax cuts
rather than through cuts in marginal tax rates, cannot improve economic
efficiency.20, 21 To summarize, using tax revenue for any of these uses –
funding distortive marginal tax cuts, reduction of government deficit, or
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Parry, I.W.H., 2001, “Revenue Recycling and the Cost of Reducing Carbon Emissions” in Climate change:
economics and policy: an RFF anthology, edited by Michael Toman, Resources for the Future, Washington.
20 Goulder, L.H., I.W.H. Parry and D. Burtraw, 1997, “Revenue-raising versus other approaches to environmental protection: The critical significance of pre-existing tax distortions”, RAND Journal of Economics,
28(4), 708–731.
21 Bovenberg and De Mooij, 1994, Environmental Levies, AER 94(49), 1085–1089.
19
46
productive government investing – could promote growth. However, if
revenue is not recycled in an efficient way, the costs of a carbon tax
would be substantially higher
Equity aspects often dominate the tax-reform discussions. Many
studies indicate that environmental taxes are regressive and disproportionately affect low-income groups.22 Equally distributed tax revenues
would more than compensate these groups for any regressive effects
experienced from the tax itself. If the equity dimension is included in the
analysis of alternative recycling options, the results might change also in
efficiency terms. If society holds income-inequality aversive preferences,
i.e. when people think income inequality is unfair, theoretical analysis
shows that equity effects can dominate the efficiency effects of recycling
under certain labour market regimes. Then increasing lump-sum welfare payments can be more appropriate than reducing distortionary
taxes mainly borne by the rich, even if the latter strategy involves clear
efficiency gains.23 This result depends on the assumed income distribution, distribution of carbon production and distribution of carbon consumption and is ultimately an empirical question.
Efficiency and equity arguments notwithstanding, revenue recycling
also gives political benefits. Budget-neutral and distribution-neutral
environmental reform schemes are key to political support and public
acceptability. In particular, distributive effects are often a large part of
the difficulty of reaching national or multilateral agreements on environment. Economics wisdom says that the policymakers should use policy instruments to get the price of emission right to induce efficient behaviour and then use the income tax or transfer schemes directly to produce the aimed distribution. If an environmental tax or permit scheme
raises the price of energy, which is consumed disproportionately by the
low-income households, lower taxes or higher transfer programmes
could balance the difference. If environmental gains are disproportionately concentrated to the high-income households, income taxes might
be raised to offset the redistribution effects.
Certain emitters, such as energy-intensive industry or the automotive
industry, could be more intensely affected by an environmental tax. To
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For a summary, see Melfcalf, G.E., S. Rausch and J. Reilly, 2011, “Distributional impacts of carbon pricing: A
general equilibrium approach with micro data for households”, downloaded from
http://www.voxeu.org/index.php?q=node/6629# on 2011-06-16 12:05.
23 Proost and Van Regemorter, 1995, The Double Dividend and the Role of Inequality Aversion and Macroeconomic Regimes, Int. Tax and Public Finance 2, 207–219.
22
47
avoid massive lobbying efforts for support to avoid the impact of environmental taxes, reimbursements of revenues such as free emission
permits to these special-interest groups could be necessary.
In the analysis above, efficiency, equity and political arguments could
be rationalised as expressions of economic self-interest. Rational individuals, firms and governments are assumed to have well-defined preferences, profit or welfare functions that they seek to maximize under full
information on the economic consequences of various policies. Economists are generally aware that such assumption only provides a benchmark, which may be more or less suitable as an approximation of reality.
The approximation is less appropriate the more complex the policy issues
are and the more they are influenced by sentiments. Environmental policy
would seem to qualify as such an area where it may be difficult to understand how attitudes are formed and actions are taken with the help of
traditional economic theory only. Instead, there could be a lot to gain from
drawing on psychological research and behavioural economics.
Recent studies show that consumers’ economic decisions are strongly
affected by perception. Research shows that a larger, direct visibility of a
tax gives stronger behaviour-inducing effects.24 Timing also plays an
important role in regulatory efficacy. Research show that economic benefits that are immediate, such as sales tax incentives, have a much greater behavioural effect than benefits that are delayed, such as income tax
incentives, despite equal economic value.25 Thus, these kind of psychological effects could also be of importance for the decision on how to
spend collected revenue wisely.
To summarize, evidence from the economic literature show that the
most efficient and growth-promoting way of spending revenue would be
to remover other, distortive, taxes in the economy. It could also be efficient to invest in research and development, if the market tends to underinvest in theses activities due to market imperfections. In addition,
psychological research shows that the economic behaviour under some
circumstances could be described as irrational. Equivalent economic
policy options could be judged differently due to different perception
biases. This implies that other factors than theoretic efficiency, such as
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Getty, R., A. Looney and K. Kroft, 2009, “Salience and Taxation: Theory and Evidence”, American Economic
Review, 99(4), 1145–1177.
25 See for example Gallagher, K.S. and E. Muehlegger, 2008, “Giving Green to Get Green: Incentives and Consumer Adoption of Hybrid Vehicle Technology”, KSG Working Paper No. RWP08–009 or Jaffe A.B, R.G. Newell
and R.N. Stavins, 2000, “Technological Change and the Environment”, NBER Working Paper 7970.
24
48
policy visibility, should be considered when designing optimal policy.
Lastly, to increase political support and public acceptability, it could also
be relevant and necessary to encompass distributive effects in the policy
decision, to counteract regressive income and competitiveness effects
that are considered unfair by voters and firms.
3.4.2
Flexible emission fees and tradable emission
permits
According to the initiators, the concept of flexible emission fees encompasses revenue recycling by means of a uniform lump-sum transfer to all
households in a nation. As already argued this trait is not unique to this
mechanism but it can be applied to all revenue-raising instruments. It
can, however, be valuable to relate the notion of the benefits of lumpsum transfers to relevant research in the area, as summarized above.
Without support of the public, the introduction of emission fees
would be difficult. Therefore, lump-sum transfers of emission fee revenue equal per capita are believed to increase public acceptability. Furthermore, the redistribution of economic resources, in particular to lowincome households, is believed to increase aggregate demand and through
the multiplier effect result in increasing output and employment.
In general, distributing funds lump sum has a higher efficiency cost
than using funds to reduce distorting marginal tax rates. Whether the lowincome households are net gainers or net losers from this kind of scheme,
with emission fees and lump-sum transfers, is an empirical question, depending on the income distribution as well as on the distribution of emission production and consumption. Although there are studies showing
that lump-sum transfers of fee revenues in some cases for equity reasons
might be the preferred recycling option, it does not seem reasonable to
believe that lump-sum transfers also give positive macroeconomic effects.
Since environmental taxes, as all other taxes, distort the choice between
work and leisure and between consumption and savings, the initial deficiencies in distribution must be substantial for lump-sum transfers to
offset these costs. To conclude, a lump-sum transfer of emission fee revenues could be the best policy option with regard to political support and
public acceptability, however it is unlikely that lump-sum transfers are
more efficient than a marginal income tax reduction.
Ideally, a more thorough analysis of the welfare effects using a formal
model would be warranted. This is, however, outside the scope of this
evaluation.
49
Example of repayment mechanisms
In the Nordic countries, Denmark introduced carbon taxes in 1993, Finland in
1990, Norway in 1991 and Sweden in 1991. Three of these countries, Finland,
Norway and Sweden allocate the revenues from their carbon taxes to the general
government budget. Hence, there is no specific offsetting of other taxes against
the carbon taxes. I Denmark, the carbon tax revenues from industry are recycled
back to industry through reduced social security contributions and through
investment incentives. In addition, in 2009, a per capita deduction was introduced in Denmark to counteract the effects of increases in energy taxes. Due to
its lump sum nature, “the green check” has equity effects in the sense that
households with high energy consumptions tend to have high income and will
thus pay relatively more in energy taxes compared to low-income, lowconsuming households. All tax payers receive a deduction of DKK 1,300 plus
DKK 300 per child. However, taxpayers with incomes above a given threshold
receive no “green check” at all.
Another example of revenue recycling is in the Netherlands, where the revenues are recycled back to households and industry through personal and corporate tax relief.
3.5 Description of analytic cases
This section describes literature cases where flexible emission fees and
tradable emission permits, respectively, have been applied to nitrogen
and phosphorous emissions.
The cases were both developed for a Swedish context, but are very
different in nature, which makes direct comparison difficult. However,
the introduction of the two analytical cases is a useful way to bringing
forward the differences and similarities between the proposed applications of the mechanisms.
3.5.1
Permit fee system for nitrogen and phosphorus
In attempt to decrease eutrophication of the Baltic Sea, the Kattegat and
the Skagerrak, the Swedish Environmental Protection Agency has proposed a fee-system aiming at decreasing emissions of nitrogen and
phosphorus in a cost-efficient manner. The system overarches a set of
different sectors and regulates their activities by setting obligatory
emission caps. If an organization’s emissions exceed its cap, the organization has the choice either of decreasing its emissions or of paying a fee.
50
The fee income is then used by the regulatory authority to pay for compensatory measures – reducing phosphorus or nitrogen elsewhere – in
organizations excluded from the fee system (p.7). Instead of letting the
market supply and demand set the price of emissions, the fee will be set
with regard to the costs of acquisition of compensatory measures. The fee
is aimed to finance compensatory measures, rather than to guide the participants’ behaviour (Naturvårdsverket, p. 102). Whether or not the point
sources will be allowed to trade with emissions permits, as in a “cap and
trade”, is not yet decided, but will be further investigated (p. 102).
Initially, the distribution of the individual caps will be guided by what
is technically achievable. Initially, the Swedish Environmental Protection
Agency proposes the fee system to assign emission caps to point
sources, such as wastewater treating plants as well as pulp and paper
industries, but to later on to incorporate diffuse sources such as agriculture, iron and steel industries as well as chemical industries, as these are
also major nitrogen and phosphorus polluters. The nitrogen and phosphorus fee is still only a proposal by the Swedish Environmental Protection Agency.
3.5.2
Flexible import tariff and fee scheme for nitrogen
and phosphorus
Phosphorus is an indispensible nutrient, finite and scarce, but also recyclable. Threats of peak-phosphorus notwithstanding, the current overand misuse of phosphorus cause serious over-fertilization of water.
Since phosphorus mainly enters the national supply chain through
imports of fertilizers and food, the flexible emission fee proposal26 for
controlling phosphorus mismanagement involves a flexible import tariff
on phosphorus-containing commodities. By increasing the price on
phosphorus, the intention is to stimulate a market for phosphorus recycling. If this up-stream measure is insufficient, the next policy step involves an end-user fee. Phosphorus leaks into waterways mainly from
water treatment plants and agriculture, and by levying a fee on phosphorus emission, a market for phosphorus-rich products like urine could
be promoted.
Nitrogen is another indispensible nutrient causing over-fertilization
of water, although abundant and non-recyclable. The main sources of
──────────────────────────
26
Hinton, S (2013): Briefing Paper – Flexible emission fees applied to phosphorous (P) and nitrogen (N).
51
nitrogen pollution are industry, combustion engines and agriculture. The
flexible emission fee proposal for nitrogen diffusion encompasses a flexible fee on combustion engines, industrial processes and artificial fertilizer production. As for phosphorus, the proposal also suggests an adjustable tariff on food imports.
The proposed phase-out time for phosphorus imports is assessed to 20
years, whereas the zero emissions target for nitrogen is assessed to be
achieved in 30 years. The proposal suggests that the import tariffs would
be adjusted if the level of imports was not falling in sufficient pace.
To compensate households for increasing food prices, the flexible
emission fee proposal advocates a fee revenue redistribution, as suggested by means of a general reduction of personal taxes. Revenue income is also suggested to be directed towards investments in infrastructure for phosphorus recycling.
This proposed policy scheme is believed to restrict imports of phosphorus and nitrogen and stimulate a market for phosphorus recycling.
52
4. Analysis
Based on the four categories of criteria and the description of flexible
emission fees and tradable emission permits presented above, this chapter evaluates the two mechanisms on the general (theoretical) level and
when applied to analytical cases.
4.1 Evaluation on the general level
The general comparison of flexible emission fees (FEF) and tradable
emission permits (TEP) revolve around the four topics:
Efficiency
Acceptability
Uncertainty
Transaction costs.
Each topic is subdivided and evaluated in the comparison of the two
mechanisms. The table below highlights the differences identified in the
analysis. Each element is elaborated subsequently.
Table 3. Evaluation of flexible emission fees (FEF) as compared to tradable emission permits (TEP)
on the general level
Topic
Characteristics of FEF
Efficiency
If no pre-set environmental target, risk of very slow emission reduction, but also opportunity to steepen reduction path given new information. However, also prone to continuous lobbying
FEF allows the polluters to minimize costs of reducing emission parallel to TEP
FEF does not ensure socially optimal emission reductions, but a cost minimizing approach
Market information that can be used to adjust fee and reduce abatement costs is
provided via futures markets, but at the cost of increasing market variability and risk
An expert group with operational freedom makes continues fee adjustments, based on
available information. This is believed to improved decision making, but is not clear how
the expert group weighs conflicting elements.
Acceptability
FEF revenue is proposed to be redistributed to consumers benefiting public support to
the mechanism. This could be done for TEP as well.
An expert group without full democratic control could prove difficult to accept.
Uncertainty
Fee fluctuations are a source of uncertainty which, however, is thought to be mitigated
by a futures market. Uncertainty and fluctuations are nonetheless also inherent to TEP.
Transaction cost
Futures markets involve cost. It is not clear to what extent transaction costs will increase, but it is to be expected that the related costs will be relatively smaller in an
extensive market with many polluters.
It has been argued that flexible emission fees “does not exist to put a
price on the environmental damage caused by pollutant…it is…meant to
put a price on the pollutant emissions so that the underlying causes to
the damage can be eliminated.”27 This statement reveals a fundamentally different approach than mainstream environmental economics, where
the objective is typically not to eradicate an emission but to reach a socially optimal level of emissions (that can be zero). In this approach it is
necessary to conduct a valuation of damages and not just to phase out
costs at least cost.
──────────────────────────
Höglund, A. (2012, p. 18): “A new method to reduce the emissions of greenhouse gases”, Appendix 3 in
Enell, M. (2012): “Flexible Emission Fees – An incentive for driving sustainable production and consumption”, TemaNord 2012:511.
27
54
Environmental effectiveness
Flexible emission fees are identical in providing emission reduction in
cases where both have parallel long term environmental targets and
time frame. This is opposed to a traditional tax in which there is a fixed
price but an uncertain quantitative endpoint.
However, the endpoint as well as the path of emission reduction may
differ between flexible emission fees and trade emission permits mechanisms. That is e.g. in cases where flexible emission fees have no fixed
target (cf. section3.3.1), as compared to tradable emission permits that
always will operate with fixed targets.28
Both the path and speed of emission reductions and the endpoint can
be of importance in situation where damage costs accumulate over time
or in cases with irreversible consequences of continued emissions. From
an environmental point of view the temporary aspect of emissions are
often central, which implies that the specific type of pollution and design
of flexible fees is important in this respect.
Tradable emission permits ensures that the target is met, whereas
flexible emission fees can loosen or strengthen targets along the way.
This has the consequence that tradable emission permits offer greater
certainty of reaching a pre-set target, which is relevant in cases where
you have – politically – fixed targets to which the regulation has to ensure compliance. In other cases, the flexible fees system may correspond
well to indicative, reduction targets (e.g. “good ecological status”, “reducing waste generation”).
It remains unclear precisely on what basis the expert group will continuously set the flexible emission fees; one element in their decision
rule appears to be the degree of fulfilment of environmental goals. Also
the fact that there are often major lags between a change in behaviour
and the impact to be detected in the environment will make the changing of targets and the setting of taxes very complex. However, the setting
of the flexible emission fee can also be taken to be affected by speculation, level of investment in abatement technology but possibly also elements of public, stakeholder and political pressure. The creation of environmental policies and the setting of environmental targets is a political
process, but the continuous fee setting may introduce an additional risk
of eroding the environmental ambitions along the way.
──────────────────────────
28
The targets under tradable emission permits will be gradually reduced from one trading period to the next.
55
Economic efficiency
Both instruments allow the polluter to act in a cost minimising way to
the benefit of both mechanisms’ economic efficiency.
Flexible emission fees have been presented in a rightful context,
where the difficulties of assessing costs and benefits of environmental
policy leads to inefficient decision making of regulators and in turn polluters and consumers.29 Planning for optimality is impossible, which is
the reason why markets are left to allocate. However, in mainstream
environmental economics the regulator puts up a framework to correct
for externalities under which the market can operate. This framework is
established based on available information of both costs and benefits.
The cost revealing aspect of futures markets is seen as a way to overcome these informational problems and guide emission reduction. However, two questions arise:
If abatement costs are not compared to environmental benefits of
abating, it is not possible to determine whether a change is socially
desirable.
Is the information revealed on futures markets an smart approach to
improve regulation; basically you choose to introduce risk, which is
typically regarded as a bad thing, in order to reach a new level of
stability (and information).
The search for optimality is a basic economic approach to policy making.
However, when a target is politically agreed, economics turn to finding
the most cost effective way of reaching it. Managing the flexible emission
fee without a specified target – quantitative and in time – is thus neither
an efficient nor cost-effective approach. Without a specified targets the
approach is to minimize abatement costs disregarding environmental
damage. In practical terms, this is some times the way politics work: let’s
solve this problem and phase out the substance slowly. Most often politicians set specified goals that range from bans to quantitative targets
both of which are fixed in time.
When making the choice of introducing risk to a market, the regulator must be confident that the benefits of doing so outweigh the costs.
The information gains and possibility of hedging on a futures market –
──────────────────────────
E.g. Höglund, A. (2012): “A new method to reduce the emissions of greenhouse gases”, Appendix 3 in Enell,
M. (2012): “Flexible Emission Fees – An incentive for driving sustainable production and consumption”,
TemaNord 2012:511.
29
56
that on exist as a consequence of volatility – are benefits that can reduce
abatement costs. On the other hand, risk is not free. The introduction of
volatility implies a risk premium on top of a comparable risk-free choice
of abatement. And speculators will need return on their investments.
These pros and cons of the flexible emission fees are not possible to assess and less so quantify within this analysis. It is nonetheless key in
determining the attractiveness of flexible emissions fees as a mechanism
to reduce emissions.30
Irrespective of these aspects, flexible emission fees and tradable
emissions permits are in principle parallel if they have the same environmental target and intervals between adjusting fee/number of permits. Other examples of mechanisms that have been discussed that have
the abilities to reveal a price on a market or stimulate stability include a
flexible cap and trade and Pigouvian taxes. Most of these mechanisms
are new combinations of old instruments.
──────────────────────────
A future question for investigation is to determine the nature of information that is produced on a flexible
emission fee futures market. And how much more useful is this information for the purpose of regulation
compared to e.g. the information that lies in the change in emissions as response to a regular tax?
30
57
A comment on macroprudential policy in the finance sector
When analysing the flexible emission fee mechanism, it could be useful to get
some insights into parallel problems and analyses in other economic areas and
literatures.
In the aftermath of the financial crisis, a substantial number of macroprudential reforms have been suggested. Economists and policymakers are focusing
on systemic risks in the financial system and various instruments to address
them. One example includes the risk of banks issuing too much short-term debt
(excessive money creation) in a socially non-optimal way, leaving the system
excessively vulnerable to costly financial crises. Hence, the banks do no internalize its social costs, which is the definition of a fundamental market failure.
Among the variety of ways for a regulator to address this externality, two, for
environmental economists, classical instruments are suggested.
Stein (2012) suggests a flexible “cap-and-trade” system in which banks are
granted tradable permits, each of which allows them to do some amount of
money creation. The author claims that the market price of the permits reveals
information about banks’ investment opportunities to the regulator, which can
then adjust the cap accordingly. When the price of the permits goes up, this
suggests that banks in the aggregate have strong investment opportunities, so
the regulator should loosen the cap by putting more permits into the system.
Another proposal by Kashyap and Stein (2012) and others suggests that with a
reserve requirement on the banks’ short-term liabilities, changes in the quantity
of reserves can be used to implement a socially efficient, time-varying regime of
Pigouvian taxes.
Both cited articles emphasise that optimal Pigouvian taxes are likely to be
time-varying, and to depend on information that is not available to the regulator.
In order to obtain this information, the authors state that it helps to have a market price, as in a cap-and-trade system.
Sources: Kashyap, A.K. and J.C. Stein, 2012, “The Optimal Conduct of Monetary Policy with Interest
on Reserve”, American Economic Journal: Macroeconomics, 4(1), 266–282.
Stein, J. 2012, “Monetary Policy as Financial Stability Regulation”, The Quarterly Journal of Economics, 126(1), 57–95.
Dynamic efficiency
Both mechanisms increase costs of pollution and give incentives to abate
emissions and introduce new technology. However, stability could lead
to a higher level of investment in abatement reducing cost via innovation. This is one of the things that flexible emission fee with a futures
market aims at by giving an opportunity for polluters to insolate against
fluctuations giving security in the life span of investments.
58
The EU ETS market for carbon emission permits has suffered from
high fluctuations which proposedly has let to inoptimal decisions of both
over and under investments in abatement. Also, it has been argued that
technological diffusion is stronger with a tax than with a permit system,
regardless if it is auctioned or handed out for free. Popp et al. say “Under
tradable permits, technology diffusion lowers the equilibrium permit
price, thereby reducing the incentive for participating firms to adopt.
Thus, a permit system provides a lower adoption incentive than a tax,
assuming the two instruments are equivalent before diffusion occurs”.31
It has been argued that flexible emission fees reduces capital destruction as the fee will reflect marginal abatement costs via the futures market allowing polluters to phase out pollutants or yesterday’s technology
at their preferred speed. This contributes to minimizing abatement
costs. However, the fee and therefore the incentive to adopt new technology can be lowered due to a lower fee to the extent that environmental damages are disregarded in the setting of the fee.
Efficiency of redistribution of revenue
Given that both mechanisms generate revenue from fee or permits auctioning, the same possibilities for efficiency improvements in redistribution exist. The spending of revenue cannot be seen disregarding the way
they have been collected. However, when the revenue is generated the
mechanisms in question can thus be regarded as parallel to the extent
that revenues can be generated to the same degree and spent on e.g.
development of emission technologies or reducing distortive taxes.
Regarding the efficiency of revenue recycling, economic theory shows
that emission tax revenue optimally should be used to decrease existing
distorting taxes. Emission taxes should be levied to correct for an externality and not for revenue collection purposes, even if revenue would
pay for additional emission reduction. Furthermore, the tax base will be
decreasing and the governmental investments in additional emission
reduction must be finances by other means.
Following the criteria definition above (section 2.3), the revenue repayment will increase the efficiency of the mechanism if it is redistributed to, e.g., research that will reduce abatement costs in cases where underinvestment in abatement technologies exists due to market failure
This is not the result if revenue is repaid to the public or other purposes.
──────────────────────────
Popp, Newell and Jaffe, 2009, “Energy, the Environment, and Technological Change”, NBER Working Paper
14832.
31
59
However, there can be many other reasons than efficiency for choice of
repayment mechanism.
Tradable emission permits can be allocated with no cost to polluters
(grandfathering) and thus without generation of revenue that can be
redistributed. However, auctioning of permits allows redistribution of
revenues parallel to the flexible emission fee. The case for many Nordic
environmental taxes is, however, that they are regarded as a source of
government revenue in line with income taxes. Financing government
budget is a part of any taxation be it environmental, income or company
taxes, which should be considered when designing mechanisms that are
politically feasible.
Predictability
It is argued that the flexible emission fee with a well-functioning futures
market will bring about a way to ensure predictability of costs and thus
investment decisions. However, if the futures market is very volatile it could
have the unwanted side effect that futures market option for polluters to
insulate against fee fluctuation comes at elevated costs due risk levels.
The first period of time after introducing the flexible emission fee it
will be difficult for the agents to create realistic and reliable expectation
to the level of the fee. This lowers predictability, but is analogue in a
tradable permit system.
It is noteworthy that the possibility to hedge against fluctuation is also a likely consequence of fluctuating markets – also a market for tradable emission permits. However, one of the advantages of a regular tax is
that is constant and therefore only prone to more or lees frequent
changes by regulator (policy or political risk). Since predictability can be
an asset of multiple mechanisms to varying degree, the question is as
much what losses are provoked to attain it. These aspects cannot be
clarified within this analysis.
Acceptability
Redistribution of revenues has been presented as essential in promoting
acceptance. Yet, as both mechanisms have the same opportunities for
revenue generation, they also have the same options for redistribution
and in turn acceptability via spending of revenues.
One central point, in flexible emission fees is the pivotal expert group
that could be difficult to accept. For the flexible emission fees to work
and new decisions on fee levels taken continuously, a devoted expert
group make swift decision making more likely than when relying on
Parliament negotiation. Technocracy with no or little democratic control
has appeal as a way to ensure decisions based on knowledge and long
60
term perspective. Parallels of the functioning of an expert group to that
of a central bank are drawn in the appendix.
For expert groups to become broadly acceptable many changes have
to occur in the way we regulate our economy and make decisions generally speaking. An independent expert group with operational freedom is
far from today’s situation and many decisions have to be made before a
body is likely.
In the UK, legislation has been adopted that set targets for reductions
of climate change emissions and the establishment of a Committee on
Climate Change.32 The committee reports to Parliament on legally binding carbon budgets and related issues. In spite of the fact that all decision are still in the hands of politicians, the UK example represents the
first steps in the direction of what could become an expert group in line
with the ideas of the flexible emission fee mechanism. This includes a
legal framework for ensuring that Government meets its commitments
by means of legally set targets and an independent body of experts.
Setting the fee is no tedious task: informational demands can be huge
and trade offs difficult. In principle the expert group will have to consider multiple objectives at once, which makes it necessary to democratically develop a decision rule before the expert group is set to manage the
fee and given responsibility of solving an environmental problem in a
balanced way.
Uncertainty
A strong argument in favour of flexible emission fees is that it lowers uncertainty. A wellfunctioning futures market is assumed to reduce uncertainty of abatement cost implying that the flexible futures fee potentially
can promote a reduction path where abatement costs are minimized and
the destruction of capital due to abrupt changes is reduced. When a target
is set without including environmental damage cost or there is no target at
all,33 the environmental uncertainty is removed from the decision making
(not from the environment-economy interrelation).
On the other hand, mainstream environmental economics see decision making on uncertain basis (uncertain knowledge about present and
future environmental and abatement costs) as a necessary evil. In order
──────────────────────────
www.theccc.org.uk
The former could be no phosphorous imports in 30 years and the latter phase out of phosphorous imports
without a specified goal in time, see also section 3.3.1.
32
33
61
to move the emission reductions towards an optimal target policy decisions must be made based on best available information.
This fundamental distinction – not between mechanisms as much as
between economic reasoning is not possible to evaluate on present
grounds.
Lastly, the expert group will be setting and adjusting the fee according to a set of attributes that are – more or less – known to the agents.
The knowledge will provide that companies with a tool to generate expectation for the fee in the coming period. It is not clear precisely on
what basis the expert group will make decision, but assuming that the
process is transparent can lower uncertainties.
Rapid adjustment is a way to timely incorporate updated information, which can reduce risk of off target policies. The current debate
on the EU ETS34 reflects the difficulties in adjusting regulation based
new information and changed conditions. The flexible emission fees are
inherently adjusted which potentially reduces risks of malfunctioning.
However, tradable emission permits could in principle also be adjusted
much more frequent than in the current setup of EU ETS.
Transaction costs
In comparison with tradable emission permits, flexible emission fees
require a well-developed futures market with a full set of financial middlemen. Although trading can be performed by a limited number of people and not all polluters have to engage in trading, it has to acknowledge
that a futures market is not free of costs. Speculations – for instance on
futures markets – can be regarded as beneficial as it evens out fluctuations and increases liquidity. Even if the transaction costs are low,
speculators still need return on their investment, which everything
equal shifts the cost curve upwards. Introducing volatility and risk is not
free of cost.
In addition, a given polluter only knows own abatement costs and not
that of other agent’s; this implies that the single polluter is willing to pay
an additional risk premium reflecting the likelihood that tomorrow’s
prices are likely to be both above and below the polluter’s own cost. In
other words, that polluter expresses his expectation for the future price
on the market and what the price at the futures market is above his
abatement cost. It should be seen as that insurance premium that he is
──────────────────────────
European Commission (DG Climate Action) on structural reform of the EU ETS:
http://ec.europa.eu/clima/policies/ets/reform/index_en.htm
34
62
willing to pay to avoid uncertainty. It is not clear to what extent transaction costs will increase, but it is to be expected that the related costs will
be relatively smaller in an extensive market with many polluters.
If the expert group has to adjust the flexible emission fee several
times a year, it calls for a high level of information on actual emission
levels, which is costly to attain. It will depend on the specific emission
characteristics, but it could be a disadvantage for flexible emission fees
compared with tradable emission permit mechanisms where stock of
emissions can be taken at the end of multiannual periods.
On the other hand, when the fee or permit system is levied on imports, extraction or production of an unwanted substance information
levels are generally high. Import statistics are available, which lowers
monitoring costs. Furthermore, only few agents tend to be involved in
imports compared to potentially many more agents down stream, which
lowers administration costs. However, upstream taxation removes focus
from environmental damages. It will thus be an import fee or permit
system, rather than an emission system, which could lead to the same
emission reduction but there will be no incentive to install a range of
technologies (e.g. end of pipe filters and remediation technologies) potentially increasing costs of reaching an environmental goal.35
This report does not include analysis of legal aspects of the mechanisms; neither whether flexible emissions fees are legally possible within existing framework nor if it will augment risk of too costly legal disputes between e.g. polluter and regulator.
4.2 Evaluation of analytical cases
The Swedish Environmental Protection Agency propose a combined a
non-tradable cap and fee system to control phosphorus and nitrogen
emissions. Emitters are assigned an emission cap, and if this cap is exceeded, a fee will be levied on the excess emissions. The fee revenues
will be used to finance additional reduction actions.
The flexible emission fee proposal involves flexible import tariffs on
food and fertilizer containing phosphorus and nitrogen as well as enduser fees on phosphorus and nitrogen emission fees on industry, com-
──────────────────────────
35
If these technologies are applied the polluter could be given permit allowances or exemption from import fees.
63
bustion engines and agriculture. The fee revenues will be used for
household compensation and infrastructure investments.
In general, the former proposal is focused on a narrow set of polluters and a specific environmental problem. The latter, on the other
hand, suggests a set of different mechanisms to regulate the full value
chain; or in other words the aim is to alter the way the nutrients flow
through the economy.
Environmental effectiveness
Although both proposals are based on quantitative environmental targets a cap is a more environmental effective approach. A cap sets a legal
limit on pollution, and even though a flexible fee can adjust according to
observed emission reductions, the fee-setter still has to guess how much
it will need to reduce emissions. When initially setting a fee, tax or cap,
the same considerations will have to be made. The advantage of the flexible emission fee is that this can be adjusted regularly in response to the
measured impact of the fee on the environment. However, in the Swedish EPAs suggestion, a cap is combined with a fee on excess emissions,
which implies that neither of the suggested policy schemes give environmental guarantees.
As the flexible emission fee is levied upstream, it has high coverage of
the down stream value chain.36 Since the tradable emission permit proposal only involves a limited number of point sources the coverage is
lower. This distinction has consequences for the ability of the proposed
mechanisms to reduce emissions.
Another distinction is time horizon and target characteristics. The
flexible emissions fee is aimed at full import phase out over a rather long
time span as opposed to the tradable emission permit proposal that has
a more pragmatic ambition of reducing excess emissions over a shorter
horizon in time. The former is a price on imports that incentivises recycling (from reducing leaching and evaporation from manure to recollection of nutrients in water bodies), whereas the latter gives incentive for
reducing point source emissions (more effective sewage cleansing but
also remediation actions in water bodies). The differences in approach
have consequences for the environment; the outcome of regulation
could, in theory, be the same, but the paths to reach it and technologies
applied are quite different.
──────────────────────────
36
In addition, the flexible emission fee proposal.
64
Economic efficiency
The analysis covering economic efficiency might be more clear-cut. The
Swedish EPAs proposed policy scheme does not, at its current form,
involve a true cap-and-trade system. The suggested instrument is rather
a combination of a traditional regulation and an emission tax. Thus, the
proposed policy scheme does not result in any economic efficiency if the
cap is a binding constraint, i.e. when the actual emissions are lower than
the cap. The FEF on the other hand involves double-taxation if both upstream and end-user emitters are levied by a fee. Increasing food prices
and household rebates drive inflation, which the FEF also recognises.
In addition, the upstream levying in the flexible emission fee proposal, cuts off a number of end pipe or remediation actions that could be
more cost effective, such as increasing process effectiveness or recycling.
A flexible emission fee on both imports, but also on combustion engines and potentially end point emissions, are in reality different mechanisms. In terms of economic theory, policy diversity could be an adequate way to address the overall objective, which can be more cost effective than a universal approach. However, the tradable emission permit
system could also be extended with other mechanisms in the same way.
According to economic wisdom, or rather tax incidence analysis, the
choice of upstream versus downstream carbon tax or cap-and-trade is of
no significance since the behavioural change should not depend on
where in the production process the regulation is levied. Proponents of
upstream cap-and-trade point to the much lower administrative costs of
upstream regulation due to fewer entities to regulate. Behavioural economists criticise upstream cap and tax because the price signal from the
cap is removed from the the pollution point and the one who is in control of the emission. Although the imposition of a cap or a tax are argued
to travel through the system to affect consumer prices, the lack of clear
tax salience lead to less behavioural change.
An emission tax levied upstream closely resembles an upstream capand-trade system, where the price of allowances is passed forward to
consumer prices. However, whereas a tax well could be levied on relatively few operations, a cap-and-trade requires the creation of new markets and a new set of openly traded commodities. It seems likely that
this type of policy scheme would need to include more entities, and possibly a more downstream approach, to induce trade with allowances and
thus result in an economic efficient outcome.
65
Dynamic efficiency
The policy scheme in the Swedish EPAs proposal consists of a non-trade
cap with a fee levied on top. This means that the emissions regulated by
the cap will be free for polluters. Emission levels exceeding the cap will
be subject to a fee. This implies that the proposed policy will have the
same effect on technological change as a traditional regulation as long as
the cap is binding, i.e. actual emissions are lower than the cap. Hence, the
dynamic effects will be negligible. If the actual emissions are higher then
the cap and a fee will be levied on top, then the proposals by the Swedish
EPA vs. the Foundation will give the same incentives to technological
development.
Efficiency of redistribution of revenue
The two proposals differ in terms of spending (and generation) of revenues. The flexible emission fee is proposed in relation to redistribution
to the public (but also for investments in sewage infrastructure). On the
other hand, the tradable emission permits proposes to spend revenue on
remediation actions. These two alternative ways of recycling fee revenues lead to different efficiency results, but also to different kinds of
incentives of technology diffusion and in turn dynamic efficiency effect.
Predictability
A fixed cap and a long-term set emission tax would give more predictability than a flexible fee, despite the possibility to hedge against fluctuations on a futures market.
Acceptability
A green tax shift by financing decreasing personal income taxes with
import tariffs could possibly be more public accepted than an intraindustry redistribution of fee revenues. However, import tariffs on food
and fertilizers will most likely be claimed to be protectionism and render protests from WTO as well as from the EU. Furthermore, it will be
difficult to differentiate between ecological and traditional food imports
in terms of phosphorus and nitrogen, which also would affect the analysis on environmental efficiency as well as on transaction cost.
Transaction costs
Both policy schemes involve substantial transaction costs for set-up and
monitoring etc. The monitoring of end of pipe emissions and recipient
environmental concentrations etc. is costly, but it is not clear how the
mechanisms distinguish themselves, as both suggest environmental
monitoring.
66
The flexible emission fee based primarily on imports is not wholly
dependent on environmental information, but if it expected that environmental trends is an important component of the decision to change
fee several times a year, the monitoring costs would be substantial. Import statistics do, furthermore, report nutrients content of goods – it
could be calculated for every single fertilizer and food, but this is not
trivial task.
67
5. Results
The report compares flexible emission fees and tradable emission permits based on a set of criteria. The latter is used analytically to highlight
differences between the proposed flexible emission fee mechanism and
a well described and broadly applied mechanism. However, tradable
emission permits faces challenges as expressed in the current debate on
the future of the European Emission Trading System. The pros and cons
of flexible emission fees are in focus, and efforts have been made to
point out the particular advantages and disadvantages in comparison
with tradable emission permits.
The results of the analysis of flexible emission fees are summed up in
the following questions:
Are flexible emission fees at par with the framework for environmental
regulation? A major driver of current environmental policy and legislation are challenges that require action to avoid irreversible damage or
threats to human health. The polluter’s pay principle is central in this
environmental regulation. In cases where flexible emission fees operate
without a specified target, it can be argued that the fee is a price on
poorer than average technology rather than on pollution. The polluter
will still pay, but there is only a very indirect price on pollution itself as
damage costs of emissions are not priced. On the other hand, if a target is
specified for the flexible emission fee, a price on pollution will be the
consequence and, in this case, also be part of the futures market price.
Will flexible emission fees be preferred by consumers and polluters?
The risk of increase in consumer prices and options for repayment are
analogue for economic mechanisms for environmental regulation. Repayment of revenue is possible, irrespective of the mechanism that generates revenues. It is therefore to be expected that consumers have no
general preference for one mechanism over the other. Polluters are said
to opt for stable market conditions, but the argumentation that flexible
emission fees with a future market will in fact lead to predictability at
low cost has to be scrutinised formally for this to be substantiated. To
the extent that flexibility reduces abrupt changes in fee, it will most
probably be preferred by polluters. It can, furthermore, be expected that
polluters are in favour of a fee that moves with average abatement costs,
as this minimize their costs and leaves out accelerated action on envi-
ronmental grounds (emission reduction will occur at a market’s preferred speed – disregarding externalities – when there is no specified
environmental targets to reach). However, it is not clear whether polluters will be in favour of mechanism management by an independent expert group; it can potentially reduce their say in the process, but it can
also reduce abrupt changes due to, e.g., political risk.
Case-specific factors of mechanism design and market structure are
likely to influence the response by consumers and polluters. For instance, if the revenue is redistributed to development of new technology,
it will increase the acceptance with some polluters. On the other hand, if
the revenues are paid to the citizens as a lump sum transfer, it will create a positive opinion in the population. In addition, if the polluter is a
price-setter, it can pass the burden on to the consumer, but if the producer is a price-taker, it will bear the loss and the consumer will experience a budget increase.
What elements are new? In many aspects, the flexible emission fee
combines well known elements. The mechanism does, nonetheless, differentiate itself on some aspects: (1) a flexible emission fee without a
specified environmental target differs from the general paradigm within
environmental economics that optimal regulation reflects the intersection between the marginal abatement costs and the marginal damage
cost to the environment; (2) introduction of volatility via fluctuating fee
level in order to reach a new equilibrium opposes traditional regulation
that aims at minimizing instability. At the present stage, it is not clear
whether this dynamic is beneficial or not; and (3) the introduction of an
expert group is also an innovative element that has some potentials in
making qualified decisions with a long-term perspective, but it is also a
major step away from present day political control. Any advantage of an
expert group could also be found if applied to the management of other
mechanisms.
With a specified environmental target (e.g., quantitative reduction at
point in time), the FEF sends a clear quantitative signal to the market in
spite of the fact that prices are used to regulate or interfere on the market. Nonetheless, this case shares extensive similarities with quantitative
regulation (e.g., tradable permits) where small intervals of adjustments
(of the number of permits) could be applied as well. However, this has
not be prevalent in actual application of quantities mechanisms – one of
the reasons being the difficulties in political decision-making that will
only increase at greater frequencies; a matter which an expert group
with operational independence could reduce.
70
With a flexible environmental target (some buffer as to quantitative
reduction and point in time of achievement), the flexible emission fee
resembles price regulation (a tax). During the period of regulation, new
information from polluters, on the environment and so forth can be incorporated in the adjustments of price, which makes it continuously
possible to optimize benefits and minimize cost. The benefits of flexibility in regulations have been presented often in economic literature.
However, flexibility can come at elevated cost, not only to decisionmaking but also transaction, monitoring and administrative costs.
In which cases are flexible emission fees most attractive? The mechanism has potential strengths in cases (1) with high levels of low-cost
information on effects as many adjustments require much information;
(2) with long-term objectives where environmental damage is small and
cost minimization is the top priority; (3) where the typical alternative is
a ban and transaction costs are not prohibitive (e.g., very sensitive environmental challenges where regular monitoring and adjustments by an
expert group are necessary to make sure emissions stay within narrow
thresholds) and also (4) where there is a time lag between the political
decision of the overall environmental legislative framework and the
actual setting of targets (e.g., policies that originate in the EU and where
the Member States subsequently are to design the national implementation), the flexible emission fee would allow regulators to quickly implement a fee without a specified target for the relevant emission or resources and only later determine the national target where the
knowledge of the price for abatement which have been revealed at the
futures market.
71
6. Recommendations
Following the results of the analysis and the process to reach them, several suggested recommendations for further development and assessment of flexible emission fees have surfaced. The list below can be regarded as progressive steps for future work.
Structured communication: In discussions, communication and
further analysis, it is of great importance to create a stringent
framework for discussions. This implies that broader motivations for
policy action (e.g., environmental concern, repayment to citizens,
economic stimulus) have to give way for focused analysis of the
isolated mechanism. Albeit important, the other aspects must be
dealt with separately in order to maintain focus on the points where
the flexible emission fee distinguishes itself from other mechanisms.
It is recommended that the next step in communication and future
development focus on flexible emission fees in a rather narrow sense.
Strict definition: We regard it important to formalise the definition of
flexible emission fees. This project has provided a structure and
analysis that can be explored to a greater extent, and we recommend
that contact be established to academia for formalisation in order to
clarify argumentation. Furthermore, it seems reasonable to believe
that a thorough literature study could result in additional insights
into the efficiency of the instrument. Although flexible emission fees
might be a uniquely used term in the literature, there is a lot of
research along the same line such as “endogenous tax rates”,
“dynamic corrective taxes”, “flexible pigovian corrections”, “discrete
tax reform”, “dynamic taxation schemes” etc. A major step forward
will be publication in a peer-reviewed journal.
Efficiency analysis: A formal, theoretical analysis of the efficiency of
futures markets in relation to flexible emission fees. It is crucial to
establish a clear basis for assessing the trade-off between, e.g.,
efficiency losses of hedging on a futures market in terms of volatility
of futures prices, risk premium, transaction cost etc. versus gains in
flexibility and information revelation.
Cases: Continue the development of the flexible emission fee on
selected cases, e.g. based on the initial effects thoughts on the
nitrogen and phosphorous applications (TSSEF, 2013).37 The
development could aspire to reach the same level of detail as the
work of the Swedish Environmental Protection Agency on tradable
permits for nitrogen and phosphorous (e.g., Naturvårdsverket,
2012).38
Empirical simulations: Tests of flexible emission fee and futures
market efficiency on given markets can show efficiency gains and
losses and redistribution effects. The simulation should be calibrated
with data from and the structure of selected markets.
Assessment of barriers: An assessment of barriers for implementation
must be carried out; this includes legal aspects, current
environmental regulation, and consequences for trade and industry.
Convince politicians to set legally binding environmental goals and to
establish an expert group with operational freedom that can handle
an environmental problem effectively and decide upon proper policy
initiatives, be it taxes, tradable permits or flexible fees.
──────────────────────────
TSSEF, 2013: “Briefing Paper – Flexible emission fees applied to phousforous (P) and nitrogen (N)”, The
Swedish Sustainable Economy Foundation.
38 Naturvårdsverket, 2012. “Styrmedel för ökad rening från kommunala reningsverk”, Rapport 6521.
37
74
Dansk sammenfatning
Denne rapport analyserer økonomiske virkemidler til at sætte pris på
forurening.
Med udgangspunkt i et sæt af kriterier (økonomisk efficiens,
transaktionsomkostninger m.fl.) sammenligner analysen et forslag til
fleksible miljøafgifter med virkemidlet omsættelige kvoter. Formålet er
at afklare fordele og ulemper ved virkemidlerne, som er vigtige i den
praktiske proces, der leder til valg af miljøregulering.
Omsættelige kvoter er velbeskrevne og anvendt i mange sammenhænge. Samtidig er anvendelsen forbundet med udfordringer, hvilket for
indeværende ses på det europæiske marked for CO2-kvoter. Analysen
inkluderer omsættelige kvoter for at fremhæve forskelle og ligheder
med fleksible miljøafgifter.
Fleksible miljøafgifter er bygget op omkring en uafhængig ekspertgruppe, der pålægger forurening en afgift, som varieres hyppigt nok til at
opnå den ønskede reduktion i forurening. Som følge af variationen vil
forureneren beskytte sig med fremtidige udsving i miljøafgiften på et såkaldt futures-marked.39 Prisen på futures vil afspejle markedets forventninger til morgendagens afgiftsniveau eksempelvis baseret på udviklingen
i de marginale omkostninger ved at reducere forureningen. Ekspertgruppen kan efterfølgende anvende information om prisudviklingen på futures-markedet i sin beslutningen om at fastsætte afgiftsniveauet.
Fleksible miljøafgifter bibringer nye elementer, der omfatter meget
hyppig variation i afgiftsniveau, en uafhængig ekspertgruppe med operationel frihed til at forvalte miljøafgiften og indførslen af tilstrækkelig
afgiftsvolatilitet til at afstedkomme en ny ligevægt (via futuresmarkedet). Ydermere er afgiften kun en indirekte pris på forurening
eftersom fleksible miljøafgifter er tiltænkt at afspejle de marginale
reduktionsomkostninger.
Disse elementer kunne i nogen grad indarbejdes i andre former for
virkemidler og matcher i større eller mindre grad paradigmerne i da-
──────────────────────────
En future er en kontrakt mellem parter om køb og salg af et værdipapir til en fastsat pris på et fastsat
fremtidigt tidspunkt.
39
gens miljøregulering. Der er dog fortsat nøglespørgsmål, som står ubesvarede: Er gevinsterne ved fleksibiliteten og afledt stabilitet via en
stærkt fluktuerende afgift større en omkostningerne derved? Dette
spørgsmål kræver en formel økonomisk analyse, som kan afsøge de underliggende antagelser.
Fleksible miljøafgifter er blevet beskrevet både med og uden et fastlagt miljømål. Konsekvenserne af dette spænder fra et spørgsmål om
omkostningseffektivitet – hvor forskellige virkemidler kan vurderet i
forhold til deres evne til at nå et miljømål med færrest omkostninger –
til en grundlæggende anderledes opfattelse af miljøregulering. Hvis det
ikke er et fastlagt miljømål vil fleksible miljøafgifter drive forureningsreduktionen i en takt, der er sammenlignelig med udviklingen i forurenerens reduktionsomkostninger, og dermed uden skelen til de skadesomkostninger som forureningen medfører. Denne tilgang kan potentielt
minimere reduktionsomkostningerne, men den kan ikke optimere omkostninger og gevinster forbundet med et miljømål.
Overvejelser i analysen om de potentielle styrker ved virkemidlet er
vist i tabellen herunder.
Table 4. Fleksible miljøafgifter kan have potentielle styrker i tilfælde med disse fire karakteristika
Høj grad af let tilgængelig information, da hyppige variationer kræver store mængder information.
Meget langsigtede målsætninger og lave skadesomkostninger som følge af forureningen, hvor minimering af
reduktionsomkostninger har førsteprioritet.
Det typiske alternativ er et forbud og transaktionsomkostningerne ikke er uforholdsmæssige (fx meget følsomme miljøudfordringer, hvor hyppig monitorering og tilpasning fra ekspertgruppens side kan holde forureningen inden for et snævert spænd).
Lang periode mellem den politiske beslutning om rammeværket og den faktiske målfastsættelse (fx EUregulering hvor medlemsstaterne efterfølgende skal designe den nationale implementering) kan fleksible
miljøafgifter give mulighed for hurtigt at pålægge afgifter uden fastsatte miljømål og kun derefter fastsætte
nationale mål baseret på bl.a. den viden om reduktionsomkostninger, der er opnået med fleksible miljøafgifter
og afspejlet på futures-markedet.
Fleksible miljøafgifter er fremsat som et alternativ til den nuværende
miljøregulering. Et regimeskifte foreslås både til fordel for forbrugere
via tilbageføring af provenu, mindske reduktionsomkostninger for forureneren og udfase uønskede stoffer samt fremme genanvendelse. På
trods af dette antager denne analyse, at den nuværende miljøregulering
baseret på national og international lovgivning samt tilhørende politikker er uændret. Derfor anskues fleksible miljøafgifter som et uafhængigt
virkemiddel på linje med andre eksempelvis skatter, administrative styringsmidler mv. Dette muligør sammenligning af virkemidlet med andre
anvendte virkemidler inden for den nuværende regulering.
76
Denne sondring er også gældende med hensyn til tilbageføring af
provenu til forbrugerne, hvilket er foreslået som del af fleksible miljøafgifter. Analysen fremfører, at fleksible miljøafgifter ses snævert som et
økonomisk virkemiddel, der kan sammenlignes med virkemidler med
samme muligheder for tilbageføring.
Det anbefales at videre arbejde og formidling af virkemidlet fokuserer på den økonomiske kerne og ikke på den bredere motivation for
miljøregulering eller anvendelsen af provenu. Kun ad denne vej kan virkemidlet vinde accept blandt lovgivere. Ydermere bør de økonomiske
ræsonnementer underbygges og testes og et oplagt skridt er at etablere
kontakt til forskningsmiljøer med henblik på publicering i fagfællebedømte, økonomiske tidsskrifter.
77
7. Appendix
7.1 Independence of governmental agencies and
public acceptability
Public choice theory and historical evidence show that some governmental institutions can cause large damage on the economy if abused by governments. In addition, theoretical and empirical research show that governments indeed might have strong incentives to abuse these institutions.
Whereas there is a trend to make some of these institutions independent
of the government it is also argued that independence creates new problems regarding the accountability, responsibility, and legitimacy.40
A central bank is a typical example of this type of institution. Research show that governments face strong incentives to interfere with
monetary policy for own short-run political gain, which can be harmful
for society. It is argued that an independent central bank can run a more
credible monetary policy, making market expectations more responsive
to signals from the central bank. Since the 1990s, there has been a trend
towards increasing the independence of central banks. The configuration and political say vary between countries, but generally central
banks have to ensure stable prices and long-term stability in the economy. Central banks do not necessarily set their own goals, but they often
have far-reaching operational freedom.
Trust in the institution is critical for the functioning of central banks;
they are expected to deliver trustworthy decisions to the benefit of the
whole economy. The public acceptability of a central bank will depend
crucially on how well it defines and performs over time. The financial
crisis and the bad performance of the independent central banks vs. the
less-independent central banks have fuelled the debate regarding the
efficiency and legitimacy of independency.
Another type of institution facing the same challenges, involves Fiscal
Policy Councils. Albeit not commonly implemented, various forms of
──────────────────────────
Kvasnicka, M., 2005, “Independence and Responsibility of Central Banks”, New Perspectives on Political
Economy, 1(2), 50–75.
40
Fiscal Policy Councils have been advocated by economists in recent
years. It is argued that that the councils should advice, monitor and constrain government policy, and in some proposals even be delegated
parts of fiscal decision making. A common proposal has been to delegate
the right to adjust specific tax rates within pre-determined margins
around some politically determined base level in order to stabilise the
business cycle. The aim has been to increase effectiveness of stabilisation policy by reducing time lags and the risk that stabilisation motives
are dwarfed by other objectives.
Not unexpectedly, technocratic influence on fiscal policy is controversial. Whereas critics have argued that the freedom of action of democratically elected politicians would be circumscribed in a non-acceptable
way, others argue that distortions in the political process, such as political rent seeking, would be counteracted and policies more aligned with
public preferences would be promoted.41
The some extent the above reasoning can be paralleled with a flexible
fee-setting expert group. Monetary, fiscal or environmental policymaking could all to a varying degree be distorted by self-interested politicians, lobbying, excessive discounting of the future and time inconsistency problems. Under some conditions technocratic decision-making
by independent expert could be more efficient. Whereas the advantages
of independent central banks seem generally accepted, delegating fiscal
policy to independent experts are highly controversial. Whether delegating decision-making on environmental taxes would be accepted or considered provocative remains to be seen, but it seems likely that a proposed reform would be subject to intense discussion.
Notwithstanding the unwillingness for politicians to give away power
to influence fundamental economic decisions, such as employment, inflation,and industry framework conditions, there are also other issues that
should be considered. Whereas a central bank not is established to generate revenue for government budgets, a fee-setting expert group, and
some forms of fiscal councils, has a direct effect on revenue. This could
possibly make the latter experts more subjective to outsider pressure. In
addition, whereas the interest rate has economy-wide implication, could
the effects of emission fees be concentrated on a very limited number of
stakeholders. For pollution concentrated to a smaller industry fraction,
the fee-setting expert group’s decision could have significant influence
──────────────────────────
41
Calmfors, L, 2005, “What remains of the stability pact and what next?”, Sieps 2005:8.
80
on bottom lines. In these cases, it is likely that industry will not accept
giving a full mandate to the expert group.
Finally, whereas an unfavourable monetary policy for national competitiveness could be motivated by national inflation or stability reasons
it is harder to motivate an industry-harmful emission fee when environmental benefits are global and the fee opens for international distribution of burdens.
81
TemaNord 2014:512
Ved Stranden 18
www.norden.org
preventing the efficient application of other methods.
The main focus of the Flexible Fee Mechanism is the levying of a fee
at the point where a pollution-inducing product enters the economy.
The fee is then raised sufficiently (and sufficiently often) to effectively
stimulate the transformation of the economy in a sustainable direction.
At the same time, the revenue from the fee is directed back into the
economy to stimulate alternatives, demand and employment.
Still, key questions remain unanswered in this report. This project was
launched by the Working Group for SCP (HKP) in collaboration with the
Working Group on Environment and Economy (MEG) under the Nordic
Council of Ministers.
TemaNord 2014:512
ISBN 978-92-893-2722-0
ISBN 978-92-893-2723-7 (EPUB)
ISSN 0908-6692
TN2014512 omslag.indd 1
27-03-2014 08:53:34

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