Energy Taxation and Competitiveness: Special Provisions for Business in Germany's Environmental Tax Reform

Environmental taxation very often comprises special provisions for parts of the business sector in order to attenuate effects on competitiveness of emissionintensive activities. This paper discusses motives, alternative designs and criteria for the evaluation of such safeguards and analyzes if such provisions can reconcile environmental and economicobjectives. It looks at theoretical aspects as well as practical issues of implementation and evaluates special provisionsthat have been discussed or implemented in the framework of the environmental tax reform (ETR) introduced in Germany in 1999. This reform is characterized by two features: Firstly, it aims at the reduction of greenhouse gases and thus at a global environmental problem. Secondly, environmental taxes are embedded in the framework of a revenue-neutral tax reform, where the additional tax revenue is recycled to the tax payers by a reduction of social security contributions. The reform should finance "non-insurance-related benefits" of the pension insurance system in order to reduce labor costs and spur employment.environmental taxes, competitiveness, tax shift.

Energy taxation and competitiveness: Special provisions for business in Germany's environmental tax reform

Environmental taxation very often comprises special provisions for parts of the business sector in order to attenuate effects on competitiveness of emissionintensive activities. This paper discusses motives, alternative designs and criteria for the evaluation of such safeguards and analyzes if such provisions can reconcile environmental and economic objectives. It looks at theoretical aspects as well as practical issues of implementation and evaluates special provisions that have been discussed or implemented in the framework of the environmental tax reform (ETR) introduced in Germany in 1999. This reform is characterized by two features: Firstly, it aims at the reduction of greenhouse gases and thus at a global environmental problem. Secondly, environmental taxes are embedded in the framework of a revenue-neutral tax reform, where the additional tax revenue is recycled to the tax payers by a reduction of social security contributions. The reform should finance ?non-insurance-related benefits? of the pension insurance system in order to reduce labor costs and spur employment

The Environmental and Economic Effects of European Emissions Trading

In 2005, the EU introduced an emissions trading system in order to pursue its Kyoto obligations. This instrument gives emitters the flexibility to undertake reduction measures in the most cost-efficient way and mobilizes market forces for the protection of the earth's climate. In this paper, we analyse the effects of emissions trading in Europe, with some special reference to the case of Germany. We look at the value of the flexibility gained by trading compared to fixed quotas. The analysis will be undertaken with a modified version of the GTAP-E model using the latest GTAP version 6 data base. It is based on the national allocation plans as submitted to and approved by the EU. We find that, if the NAP is combined with a regional emissions trading scheme, then Germany, Great Britain, and Czech Republic are the main sellers of emissions permits, while Belgium, Denmark, Finland, and Sweden are the main buyers. The welfare gains from regional emissions trading - for the trading sectors only - are largest for Belgium, Denmark, and Great Britain; smaller for Finland, Sweden, and smallest for Germany and other regions. When we take into account the economy-wide and terms of trade effects of emissions trading, however, the (negative) terms of trade effects can offset the (positive) allocative efficiency gains for the cases of the Netherland and Italy, while all other regions ended up with positive net welfare gains. All regions, however, experienced positive increases in real GDP as a result of regional emissions trading.

Learning-by-Doing in the Renewable Energy Equipment Industry or in Renewable Electricity Production: Why Does It Matter to Differentiate? A Case Study of Germany

In economic models of energy and climate policy, endogenous technological change is generally introduced as the result of either investment in research-and-development or of learningby-doing. In this paper, we analyze alternative ways of modeling learning-by-doing in the renewable energy sector in a top-down CGE model. Conventionally, learning-by-doing effects in the renewable energy sector are allocated to the production of renewable based electricity. We build on the observation that learning-by-doing also takes place in sectors that deliver capital goods to the renewable electricity sector, in particular in the production of machinery and equipment for renewable energy technologies. We therefore implement learning-by-doing alternatively in the renewable energy equipment industry and in renewable electricity production and show why it matters to differentiate between these two approaches. The main differences originate from effects on international trade, since the output of the machinery and equipment sector is intensively traded on international markets unlike renewable electricity

Economic, Environmental and International Trade Effects of the EU Directive on Energy Tax Harmonization

In October 2003, the European Union introduced a Directive which widens the scope of the EU's minimum taxation system from mineral oils to all energy products including coal, natural gas and electricity. It aims at reducing distortions that currently exist between Member States as well as between energy products. In addition, it increases previous minimum tax rates and thus the incentive to use energy more efficiently. The Directive will lead to changes in the energy tax schemes in a number of countries, in particular some southern Member Countries (Greece, Spain, Portugal) and most of the Eastern European EU candidate countries. In this paper, we analyze the effects of the EU energy tax harmonization with GTAP-E, a computable general equilibrium model. Particular focus is placed on the Eastern European countries which became new members of the EU in May 2004. We investigate the effects of the tax harmonization on overall economic growth and sectoral development. Special attention is paid to international trade in order to analyze if competitiveness concerns which have been forwarded in the context of energy taxation are valid. Furthermore, the effect on energy consumption and emissions and thus the contribution to the EU's climate change targets is analyzed.

Modellgestützte Analyse der ökologischen Steuerreform mit LEAN, PANTA RHEI und dem Potsdamer Mikrosimulationsmodell

Eine erste systematische, modellgestützte Untersuchung der ökologischen Steuerreform in Deutschland kommt zu moderaten bis positiven Effekten auf Wirtschaftswachstum, Beschäftigung, Energieverbrauch und CO2-Emissionen. Für die Analyse wurden zwei gesamtwirtschaftliche Modelle - ein ökonometrisches Simulations- und Prognosemodell sowie ein empirisches allgemeines Gleichgewichtsmodell - eingesetzt. Die Wirkungen auf die personelle Einkommensverteilung wurden mit einem Mikrosimulationsmodell abgeschätzt. Die Ergebnisse weisen überwiegend positive Effekte der Reform aus. Der Einfluss auf das Wirtschaftswachstum ist sehr gering; die Beschäftigung nimmt zu, Energieverbrauch und CO2-Emissionen nehmen ab. Auch die Verteilungswirkungen sind moderat. Die sektorale Entwicklung weist kein durchgängiges Muster für einen Strukturwandel zu Lasten energieintensiver und zu Gunsten arbeitsintensiver Bereiche auf. Die ökologische Steuerreform könnte eine größere Rolle im Klimaschutz spielen. Dazu müssten Schwächen des bisherigen Konzepts schrittweise beseitigt werden.A first systematic, model-based analysis of the environmental fiscal reform in Germany indicates moderate but slightly positive effects on employment, energy consumption and CO2 emissions. Two macro-sectoral models ? an econometric model and an empirical general equilibrium model ? were applied; the effects on the personal income distribution were estimated with a micro simulation model. The influence on economic growth is very low; employment is growing slightly, while energy consumption and CO2 emissions are decreasing. The sectoral development shows no universal pattern for a structural change to the disadvantage of energy intensive industries and to the benefit of labour intensive branches. The distributive effects are moderate. The environmental fiscal reform could play a larger role in climate protection. Weaknesses of the previous concept should be removed gradually

Economic, Environmental and International Trade Effects of the EU Directive on Energy Tax Harmonization

In October 2003, the European Union introduced a Directive which widens the scope of the EU?s minimum taxation system from mineral oils to all energy products including coal, natu-ral gas and electricity. It aims at reducing distortions that currently exist between Member States as well as between energy products. In addition, it increases previous minimum tax rates and thus the incentive to use energy more efficiently. The Directive will lead to changes in the energy tax schemes in a number of countries, in particular some southern Member Countries (Greece, Spain, Portugal) and most of the Eastern European EU candidate countries. In this paper, we analyze the effects of the EU energy tax harmonization with GTAP-E, a computable general equilibrium model. Particular focus is placed on the Eastern European countries which became new members of the EU in May 2004. We investigate the effects of the tax harmonization on overall economic growth and sectoral development. Special atten-tion is paid to international trade in order to analyze if competitiveness concerns which have been forwarded in the context of energy taxation are valid. Furthermore, the effect on energy consumption and emissions and thus the contribution to the EU?s climate change targets is analyzed

The Environmental and Economic Effects of European Emissions Trading

In 2005, the EU introduced an emissions trading system in order to pursue its Kyoto obligations. This instrument gives emitters the flexibility to undertake reduction measures in the most cost-efficient way and mobilizes market forces for the protection of the earth?s climate. In this paper, we analyse the effects of emissions trading in Europe, with some special reference to the case of Germany. We look at the value of the flexibility gained by trading compared to fixed quotas. The analysis will be undertaken with a modified version of the GTAP-E model using the latest GTAP version 6 data base. It is based on the national allocation plans as submitted to and approved by the EU. We find that, if the NAP is combined with a regional emissions trading scheme, then Germany, Great Britain, and Czech Republic are the main sellers of emissions permits, while Belgium, Denmark, Finland, and Sweden are the main buyers. The welfare gains from regional emissions trading – for the trading sectors only - are largest for Belgium, Denmark, and Great Britain; smaller for Finland, Sweden, and smallest for Germany and other regions. When we take into account the economy-wide and terms of trade effects of emissions trading, however, the (negative) terms of trade effects can offset the (positive) allocative efficiency gains for the cases of the Netherland and Italy, while all other regions ended up with positive net welfare gains. All regions, however, experienced positive increases in real GDP as a result of regional emissions trading

Modellgestützte Analyse der ökologischen Steuerreform mit LEAN, PANTA RHEI: und dem Potsdamer Mikrosimulationsmodell

A first systematic, model-based analysis of the environmental fiscal reform in Germany indicates moderate but slightly positive effects on employment, energy consumption and CO2 emissions. Two macro-sectoral models - an econometric model and an empirical general equilibrium model - were applied; the effects on the personal income distribution were estimated with a micro simulation model. The influence on economic growth is very low; employment is growing slightly, while energy consumption and CO2 emissions are decreasing. The sectoral development shows no universal pattern for a structural change to the disadvantage of energy intensive industries and to the benefit of labour intensive branches. The distributive effects are moderate. The environmental fiscal reform could play a larger role in climate protection. Weaknesses of the previous concept should be removed gradually. Eine erste systematische, modellgestützte Untersuchung der ökologischen Steuerreform in Deutschland kommt zu moderaten bis positiven Effekten auf Wirtschaftswachstum, Beschäftigung, Energieverbrauch und CO2-Emissionen. Für die Analyse wurden zwei gesamtwirtschaftliche Modelle - ein ökonometrisches Simulations- und Prognosemodell sowie ein empirisches allgemeines Gleichgewichtsmodell - eingesetzt. Die Wirkungen auf die personelle Einkommensverteilung wurden mit einem Mikrosimulationsmodell abgeschätzt. Die Ergebnisse weisen überwiegend positive Effekte der Reform aus. Der Einfluss auf das Wirtschaftswachstum ist sehr gering; die Beschäftigung nimmt zu, Energieverbrauch und CO2-Emissionen nehmen ab. Auch die Verteilungswirkungen sind moderat. Die sektorale Entwicklung weist kein durchgängiges Muster für einen Strukturwandel zu Lasten energieintensiver und zu Gunsten arbeitsintensiver Bereiche auf. Die ökologische Steuerreform könnte eine größere Rolle im Klimaschutz spielen. Dazu müssten Schwächen des bisherigen Konzepts schrittweise beseitigt werden.environmental fiscal reform, computable general equilibrium model, econometric model, microsimulation model