ISSN 1977-8449
EEA Report No 17/2016
Environmental taxation and
EU environmental policies
EEA Report No 17/2016
Environmental taxation and
EU environmental policies
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Luxembourg: Publications Office of the European Union, 2016
ISBN 978-92-9213-755-7
ISSN 1977-8449
doi:10.2800/296823
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3
Contents
Environmental taxation and EU environmental policies
Contents
Authors and acknowledgements............................................................................................... 4
Executive summary..................................................................................................................... 5
1	Introduction............................................................................................................................ 6
2	 Market-based instruments in EU environmental legislation	������������������������������������������ 7
3	 Definitions and rationales for environmental taxes....................................................... 13
3.1	 Definitions of environmental taxes......................................................................................13
3.2 	 Rationales for environmental taxation................................................................................15
4	 Implementation of environmental taxes in EEA member countries	���������������������������� 17
4.1	 Current status of implemented environmental taxes	������������������������������������������������������19
4.2	 Analysis of selected developments in environmental taxation	���������������������������������������22
5	 Overall findings and reflections......................................................................................... 34
5.1	 Overall findings on environmental taxation.......................................................................34
5.2	 Reflections on future challenges..........................................................................................36
References.................................................................................................................................. 41
Annex 1 	EU environmental targets and objectives............................................................ 47
Annex 2	Overview of environmental taxes in EEA member countries............................ 64
Environmental taxation and EU environmental policies4
Authors and acknowledgements
Authors and acknowledgements
The European Environment Agency (EEA) and its
European Topic Centre on Waste and Materials in the
Green Economy (ETC/WMGE) prepared this report.
The EEA gratefully acknowledges contributions from
European Environmental Information and Observation
Network (Eionet) members in Germany, Latvia, Poland,
Slovakia and Turkey, from the European Commission,
Directorate-General Environment and Eurostat and
from EEA colleagues.
The authors would also like to express thanks to
Margit Schratzenstaller-Altzinger, Olinka Gjigas,
Viire Viss, Xavier Labandeira, Roberto Zoboli
and Anil Markandya (member of EEA's Scientific
Committee), who provided valuable suggestions and
comments during the work on this report.
Authors
Stefan Speck (EEA) and Susanna Paleari (ETC/WMGE)
Editorial support
Bart Ullstein and Peter Saunders (ETC/WMGE)
ETC/WMGE task manager
Roberto Zoboli
EEA project manager
Stefan Speck
5
Executive summary
Environmental taxation and EU environmental policies
Executive summary
EU environmental policies address a range of
environmental and resource use challenges, including
air pollution and transport, climate change and energy
use, freshwaters, marine waters, chemicals, biodiversity
and land use, waste, and sustainable consumption and
production.
Overall, there are currently 82 binding targets and
84 non‑binding objectives established in response to
these challenges for the period 2013–2050, with several
of them addressing environmental and socio-economic
considerations together. Achieving them cost-effectively
often requires the use of market‑based instruments
(MBIs) in tandem with regulations. The main MBIs in
use include tradable permits and quotas, producer
responsibility schemes, tariffs and environmental taxes.
Currently 18 binding and 24 non‑binding MBIs are in
place based on current EU environmental legislation in
force.
Environmental taxation and in particular tax-shifting
programmes, also known as environmental tax reform
(ETR), are high on the political agenda, as illustrated in
the Europe 2020 strategy and several other EU policy
documents. The current application of environmental
taxes in European Environment Agency (EEA) countries
shows that energy, carbon and transport (vehicle)
taxes are by far the most commonly used, while
waste‑related instruments exist in the majority of these
countries. The use of taxes for addressing air and water
pollution and resource use is rather less widespread.
The primary objectives and benefits of environmental
taxes are to reduce pollution and resource use. They
are also several secondary benefits: for example, such
taxes contribute to a healthier society and hence lower
health-related costs, they trigger eco-innovations that
generate wealth and jobs, while the broad diffusion
of environmentally friendly technologies support
sustainable systems of production and consumption.
Environmental taxes, eco-innovations and their
diffusion are key enabling factors in the transition to a
green economy alongside investment instruments.
A further benefit of environmental taxes is their fiscal
function. Well-designed taxation systems should be
efficient as well as enhance economic growth and help
achieve important social objectives e.g. better health.
Environmental taxes can achieve non‑environmental
goals and thereby contribute to a holistic, all-inclusive
policy approach. Studies show that environmental
taxes are less distorting towards economic behaviour
than labour and corporate taxes. Evasion is also much
lower than for other taxes, while administrative costs
are lower than for income and value-added taxes (VAT).
The fiscal outlook in Europe has heightened political
interest in the potential of revenue-neutral tax‑shifting
policies whereby the revenues resulting from
environmental taxes are used to reduce labour taxes.
Such environmental tax reforms have been beneficial
and can continue to be in the short- to medium‑term
as shown by several EEA member countries.
Environmental taxes have a role to play in the overall
fiscal system. Although their revenue potential is well
below those of labour and consumption taxes, such as
value added tax, they are of the same order as those
levied on the income of corporations.
Longer-term developments including demographic
changes and technological breakthroughs on energy
and transport in the transition to a low-carbon, green
economy will contribute to the erosion of the current
tax bases in European countries. These expected
trends challenge the overall basis of current thinking
on tax-shifts. Some countries have already developed
new environmental tax instruments but much more
needs to be done on the design of resilient, long-term
tax systems in Europe in the face of such systemic
challenges.
Environmental taxation and EU environmental policies6
Introduction
1	Introduction
This report does three things. It provides an overview
of market‑based instruments (MBIs) established by
EU environmental legislation. Then it explains the
established definitions and rationales for the application
of environmental taxes and discusses their current
design and application in EEA member countries (1
). It
concludes with overall findings and some reflections
on the potential for long-term tax-shifting programmes
in the context of policy targets as well as technological
innovation and demographic changes.
The overview of MBIs and the assessment of
environmental taxation schemes follows previous
reports by EEA over the past 20 years. These include:
Environmental taxes — Implementation and environmental
effectiveness (1996); Environmental agreements —
Environmental effectiveness (1997); Environmental taxes
— Recent developments in tools for integration (2000); and
Using the market for cost-effective policy — Market-based
instruments for environmental policy in Europe (2006)
which is a condensed version of Market-based instruments
for environmental policy in Europe (2006) (2
).
Chapter 2 provides an overview of the MBIs established
by EU environmental legislation in force. This part of the
report analyses how the legislation supports, at an EU
level, the application of different types of MBIs. A set of
criteria clarify the scope and coverage of the review, with
regard to the policies/legislation examined and the MBIs
selected.
Chapter 3 clarifies the definitions of environmental
taxation and highlights the economic, social and
environmental rationales for their use in support of
environmental policy objectives.
Chapter 4 presents an overview of the current situation
concerning environmental taxation in EEA member
countries and reviews recent developments in their use.
(1
)	 EU‑28, Iceland, Liechtenstein, Norway, Switzerland and Turkey.
(2
)	 The EEA published other reports in this area but these focus on a more detailed analysis of different taxation schemes: Environmental tax reform
in Europe: opportunities for eco-innovation (2012); and Environmental tax reform in Europe: implications for income distribution (2012); Assessment of
cost recovery through pricing of water (2013); Resource-efficient green economy and EU policies (2014). Additionally, research assessing the potential
of natural resource or primary materials taxes, as well as implications of different design schemes, can be found in reports published by the
European Topic Centres on Sustainable Consumption (ETC/SCP), Waste and Materials in a Green Economy (ETC/WMGE) and the EEA: Eckermann
et al., 2012 and 2015.
(3
)	 See for more information including the background reports for the four EU Member States: http://www.eea.europa.eu/highlights/fiscal-reform-
can-create-jobs.
(4
)	 See the reports at http://ec.europa.eu/environment/integration/green_semester/studies_en.htm.
The analysis focuses on the design and application of
carbon/energy taxes and transport taxation schemes.
The report closes with overall findings and a more
reflective analysis that addresses wider considerations
around the application of environmental taxes. It
considers the prospects for ETR in the long-term
(2030–2050) in the context of technological innovation,
changing demographics, climate change, and energy
reduction targets.
Two annexes contain further information relevant to the
discussion of MBIs. Annex 1 provides an overview of the
targets and objectives agreed since autumn 2012 under
EU environmental policy and legislation across nine
areas. This applies the same methodology and criteria in
the 2013 EEA report Towards a green economy in Europe —
EU environmental policy targets and objectives 2010–2050,
and updates that analysis.
Annex 2 provides a more detailed breakdown of the
overview table presented in Chapter 4 on the application
of environmental taxes in EEA member countries.
The report draws on established data sources at the
EU level. It also benefits from work the EEA started
in 2010 with four EU Member States (Ireland, Italy,
Spain and Portugal) to study the revenue potential
of environmental taxation based on established and
proven practice. The outcome of this new orientation
was closer cooperation, through co-organised workshops
and conferences with the relevant governments and
producing background reports on environmental
taxation potentials (3
). Following this initiative, the
Directorate-General Environment of the European
Commission has undertaken an analysis of the future
potential for environmental tax developments in the
EU‑28 up to 2025 (4
) using elements of the methodology
developed by EEA.
7
Market-based instruments in EU environmental legislation
Environmental taxation and EU environmental policies
2	 Market-based instruments in EU
environmental legislation
This chapter provides an overview of selected
categories of market‑based instruments (MBIs) shaped
by the EU environmental legislation in force.
It covers the nine environmental policy areas in which
the EU environmental targets and objectives are set
out (see Annex 1), namely: energy; greenhouse gas
emissions and ozone depleting substance; air pollution
and air quality; transport (greenhouse gas emissions
and air pollutants) and noise; waste; water; sustainable
consumption and production; chemicals; biodiversity
and land use (5
).
There are both binding and non‑binding MBIs. Those
that Member States are required by legislative
provisions to adopt and implement are binding, all
the others are non‑binding. When MBIs are set out
in very generic terms (for example, 'Member States
shall apply the "polluter pays" principle to waste
management'), when they are only one of a number of
possible measures that Member States are required
to implement, or when Member States 'shall facilitate'
or 'encourage' their adoption, the provisions are
non‑binding.
The following five categorisations of MBIs cover the
aims and focus of this chapter:
•	 General and mixed instruments: provisions that
refer to MBIs and economic instruments in generic
terms or to a set of MBIs belonging to different
categories.
•	 Taxation and environmental tax reform: provisions
related to taxes and/or promoting the shift from
taxation of labour to environmental taxation.
•	 Tariffs, fees, charges (6
) and pricing policies: for
example, external-cost-charge for heavy goods
vehicles; visible fees to finance waste electrical and
electronic equipment management; provisions on
the recovery of costs for water services, etc.
•	 Tradable permits and quotas: for example,
greenhouse gas emissions trading scheme (mainly
used in the greenhouse gas emissions and ozone
depleting substances policy area).
•	 Producer responsibility schemes: mainly used for
the collection and management of specific waste
streams.
These categories are not mutually exclusive as MBIs
may belong to more than one category. As a result,
assigning an MBI to a specific category may involve a
certain degree of subjective judgment.
The generic provision of measures aimed at achieving
environmental objectives or addressing environmental
problems, but not qualified in economic terms, is not
considered as an MBI, even if MBIs can be included
among such measures (7
).
Finally, the review addresses a broad analysis of all
MBIs shaped by current EU environmental legislation
and the main political and strategic documents of the
past decade.
There are 18 binding and 24 non‑binding MBIs
that have been identified based on current EU
environmental legislation in force. Most of them,
9 binding and 12 non‑binding, are concerned with
producer responsibility and mainly apply to the waste
policy. A few other policy areas have provision-shaping
MBIs, namely energy; greenhouse gas emissions and
ozone depleting substances, mainly related to the use
of tradable permits and quotas; transport and noise;
and water.
(5
)	 These nine environmental policy areas are also the basis for an update of environmental targets and objectives established by EU regulations in
Annex 1 which closely follows the methodology and criteria set out in Towards a green economy in Europe — EU environmental policy targets and
objectives 2010–2050 published by the EEA in 2013.
(6
)	 For a definition of these terms, see Box 3.1 and footnote 23.
(7
)	 For example, according to Art. 15 par. 1 of Directive 2008/50/EC Member States shall take 'all necessary measures', not entailing
disproportionate cost, to reduce exposure to PM2.5 to achieve national exposure reduction targets. As the 'necessary measures' are generic and
not qualified as economic, financial, fiscal, market‑based, etc., they are not reported as MBIs.
Market-based instruments in EU environmental legislation
8 Environmental taxation and EU environmental policies
Figures 2.2 and 2.3 illustrate the relevant binding
and non‑binding MBIs in each environmental and
resource policy area. The most significant and direct
relationships between MBIs and environmental
targets/objectives in the same policy area are also
highlighted.
Figure 2.1	 Market-based instruments addressed in this report
MBIs
• established by existing EU environmental legislation in force
• aimed at achieving environmental objectives or with a positive impact
on the environment
• related to selected environmental and resource policy areas
• classified under the five categories
• excluding generic measures not specifically qualified in economic terms
Binding MBIs
Non-binding MBIs
Including generic MBIs, those which are set
as one of the options Member States are
required to adopt and those which Member
States are 'encouraged' to adopt
Figure 2.2	 Binding market‑based instruments
established by EU legislation, by
category and environmental policy
area
Note: 	 GEN: general and mixed instruments; TAX: taxation and
environmental tax reform: TAR: tariffs, fees, charges
and pricing policies; ET: tradable permits and quotas;
PR: producer responsibility schemes.
Source:	 EEA-ETC/WMGE based on the analysis of EU environmental
legislation in force.
0
1
2
3
4
5
6
7
8
9
10
GEN TAX TAR ET PR
Number of binding MBIs
Energy GHG emissions and ODS
Transport and noiseWaste
Water
Figure 2.3	 Non-binding market‑based
instruments established by EU
legislation, by category and
environmental policy area
Note: 	 GEN: general and mixed instruments; TAX: taxation and
environmental tax reform: TAR: tariffs, fees, charges
and pricing policies; ET: tradable permits and quotas;
PR: producer responsibility schemes.
Source: 	 EEA-ETC/WMGE based on the analysis of EU environmental
legislation in force.
Number of non-binding MBIs
Energy GHG emissions and ODS
Transport and noiseWaste
Water
0
2
4
6
8
10
12
14
GEN TAX TAR ET PR
General and mixed market‑based instruments
General and mixed MBIs are non‑binding measures
designed to achieve various environmental objectives.
In the energy sector, Member States shall ensure
that national energy regulatory authorities provide
Market-based instruments in EU environmental legislation
9Environmental taxation and EU environmental policies
incentives for grid operators to make system services
available to network users, allowing them to improve
energy efficiency (EU, 2012a). To enable Member States
to reach the renewable energy targets set by Directive
2009/28/EC (EU, 2009a) (8
), they may, inter alia, use
support schemes, which are defined as any instrument,
scheme or mechanism applied by a Member State
or a group of Member States, that promotes the use
of renewable energy by reducing its cost, increasing
its sale price, or increasing, for example, through
a renewable energy obligation (9
), the volume of
renewable energy purchased. This includes, but is
not restricted to, investment aid; tax exemptions or
reductions; tax refunds; renewable energy obligation
support schemes, including those using green
certificates; and direct price support schemes, including
feed-in tariffs and premium payments.
For transport and noise, Member States shall adopt
action plans to managing noise issues and effects for
all major agglomerations, airports, roads and railways.
These may include regulatory or economic measures
and incentives (Directive 2002/49/EC; EU, 2002).
For waste policy (10
), pursuant to Directive 2015/720/EU
(EU, 2015) that amended Directive 94/62/EC on
packaging and packaging waste, Member States shall
take measures to achieve a sustained reduction in the
consumption of lightweight plastic carrier bags. These
may include the use of national reduction targets,
maintaining or introducing economic instruments, and
marketing restrictions. Such measures shall ensure
the achievement of the binding, preventive targets
set by the directive. Member States may also use
economic instruments to promote the collection of
waste batteries/accumulators or to promote the use
of batteries/accumulators containing less polluting
substances, for instance by adopting differential
tax rates (Directive 2006/66/EC; EU, 2006). Member
States shall also take measures, as appropriate,
to promote the reuse of products by encouraging
the establishment and support of reuse and
repair networks and through the use of economic
instruments, procurement criteria, quantitative
objectives or other measures (Directive 2008/98/EC;
EU, 2008).
Tax and environmental tax reform
Two non‑binding MBIs exist in the energy sector.
Energy or carbon taxes that have the effect of
reducing end-use energy consumption may be used,
under specific conditions, by Member States as an
alternative to setting up an energy-efficiency obligation
scheme to achieve energy savings by final customers
(Directive 2012/27/EU; EU, 2012a). The energy savings
gained through taxation shall be equivalent to those
reached through energy-efficiency obligation schemes
which, in turn, shall, by 2020, ensure the achievement
of a cumulative energy-saving target applied to energy
distributors and sales companies.
Another relevant provision is contained in fiscal
legislation in Directive 2003/96/EC (EU, 2003a) on
the taxation of energy products and electricity (11
).
According to this, Member States may apply, under
fiscal control, total or partial exemptions or reductions
in the level of taxation to, among others, electricity
generated by specified renewable sources and
electricity produced from combined heat and power
generation, provided that the combined generators are
environmentally friendly.
Tariffs, fees, charges and pricing policies
Two binding MBIs have been established in the energy
sector. EU Member States shall ensure the removal
of those incentives in transmission and distribution
tariffs that are detrimental to the overall efficiency,
including energy efficiency, of the generation,
transmission, distribution and supply of electricity
(Directive 2012/27/EU; EU, 2012a). This provision
is directly linked to the cumulative end-use energy
savings target, set by the same directive, for energy
(8
)	 Increase renewable energy to at least 20 % of final energy consumption by 2020. Increase the share of energy from renewable sources to at
least 10 % of final consumption in the transport sector by the same deadline.
(9
)	 Pursuant to the directive, 'renewable energy obligation' means a national support scheme requiring energy producers to include a given
proportion of energy from renewable sources in their production, requiring energy suppliers to include a given proportion of energy from
renewable sources in their supply, or requiring energy consumers to include a given proportion of energy from renewable sources in their
consumption. This includes schemes under which such requirements may be fulfilled by using green certificates.
(10
)	 It should be underlined that, pursuant to the proposed directive on waste (EC, 2015a), which is part of the 2015 Circular Economy Package
(see Annex 1), Member States shall make use of adequate economic instruments to provide incentives for the application of the waste
hierarchy (Art. 1 par. 3).
(11
)	 As discussed above, the focus is on MBIs shaped by the EU's environmental legislation. Directive 2003/96/EC is fiscal legislation, but is also
relevant in terms of environmental protection. The directive establishes minimum tax levels on energy products and electricity, which are binding
on EU Member States (in this sense, it is a binding MBI). However, the provision of Directive 2003/96/EC, Member States may apply under fiscal
control total or partial exemptions or reductions in the level of taxation to, among others, electricity generated by specified renewable energy
sources (RES) and electricity produced from combined heat and power generation, which has a specific environmental character, is classified as
a non-binding MBI.
Market-based instruments in EU environmental legislation
10 Environmental taxation and EU environmental policies
distributors and sales companies to be reached by
2020. Further, Member States shall ensure that the
charging of transmission and distribution tariffs does not
discriminate against electricity and gas from renewable
sources (Directive 2009/28/EC; EU, 2009a). Finally, with
regard to non‑binding MBIs, Member States shall ensure,
when possible, reasonable and proportionate, that final
customers for electricity, natural gas, district heating
and/or cooling and domestic hot water are provided
with competitively priced meters that accurately
reflect the final customer's energy consumption
and provide information when that energy is used
(Directive 2012/27/EU; EU, 2012a).
For transport and noise, the Eurovignette Directive
(Directive 1999/62/EC; EU, 1999a), which is
fiscal legislation, establishes common rules on
distance‑related tolls and time-based user charges
(vignettes) for the use of certain infrastructure by heavy
goods vehicles. According to recent amendments to
the directive (EU, 2011), Member States may maintain
or introduce external-cost charges related to the 'cost
of traffic-based air pollution' — the cost of the damage
caused by the release of particulate matter and ozone
precursors, such as nitrogen oxide and volatile organic
compounds, in the course of operation. The revenues
generated from external cost charges should be used to
make transport more sustainable.
In the waste sector, Member States shall take measures
to ensure that all costs involved in the setting up and
operation of landfill sites, including, as far as possible,
the costs of the financial security and of the closure
and after-care of the sites for a period of at least
30 years are covered by the price charged by the
operator for the disposal of any type of waste at the
site (Directive 1999/31/EC; EU, 1999b). According to
Directive 2012/19/EU (EU, 2012b), which has amended
the previous provisions on the use of the 'visible
fees', Member States may require producers to show
purchasers, at the time of sale of new products, the costs
of the collection, treatment and environmentally-sound
disposal of waste electrical and electronic equipment
(WEEE). Directive 2000/59/EC (EU, 2000a) establishes
that Member States shall ensure that the costs of port
reception facilities for ship-generated waste, including
the treatment and disposal of the waste, shall be
covered through the collection of a fee from ships.
Moreover, any fee for delivery of cargo residues shall be
paid by the user of the reception facility.
According to the Water Framework Directive
(Directive 2000/60/EC; EU, 2000b), Member States shall
take account of the principle of recovery of the costs of
water services, including environmental and resource
costs. By 2010, they shall ensure:
•	 that water-pricing policies provide adequate
incentives for users to use water resources efficiently,
and thereby contribute to the environmental
objectives of the directive (all surface and
groundwater bodies in river basins shall achieve
'good status' by 2015);
•	 an adequate contribution from different water uses,
disaggregated into at least industry, households
and agriculture, to the recovery of the costs of
water services, taking account of the polluter pays
principle.
Measures deemed appropriate to apply these provisions
are conceived as 'basic measures' of the programme
that Member States are required to establish for each
river basin to achieve 'good water status' by 2015.
Tradable permits and quotas
The most important MBI in this category is the emission
trading system (ETS), shaped by Directive 2003/87/EC
(EU, 2003b) and related executive measures. The EU
ETS, launched in 2005, is now in its third phase, which
runs from 2013 to 2020. Working on the cap‑and‑trade
principle, the scheme covers around 45 % of total
greenhouse gas emissions from the EU‑28 and is aimed
directly at cutting emissions by 21 % below 2005 levels
by 2020. In particular, it covers carbon dioxide emissions
from power and heat generation; energy-intensive
industries, including oil refineries and producers of
iron, steel, aluminium and other metals, cement, lime,
glass, ceramics, pulp, paper, cardboard, acids and bulk
organic chemicals; and commercial aviation. It also
covers nitrous oxide from the production of nitric, adipic,
glyoxal and glyoxlic acids; and perfluorocarbons from
aluminium production. Under the third phase of ETS,
auctioning becomes the default method of allocating
allowances and at least 50 % of the revenues generated
should be used for climate-related purposes (12
).
The Effort Sharing Decision (EU, 2009b) introduces
national binding targets for the reduction of greenhouse
gas emissions by approximately 10 % compared to
2005 in sectors not covered by the EU ETS. To meet
their annual emissions target in the most cost-effective
way, Member States are allowed to make use of
different methods defined in the Decision, as well as
by the related executive measures, including the use,
within specified limits, of United Nations Framework
(12
)	 http://ec.europa.eu/clima/policies/ets/index_en.htm (accessed on 5 November 2015).
Market-based instruments in EU environmental legislation
11Environmental taxation and EU environmental policies
Convention of Climate Change (UNFCCC) Certified
Emission Reductions and Emission Reduction Units (13
).
Transferable rights to use and/or place the regulated
substances on the market are also established as
binding MBIs by the new Regulation on fluorinated
greenhouse gases (EU, 2014) and the Regulation on
ozone depleting substances (EU, 2009c). The tradable
quotas for placing hydrofluorocarbons on the market
relate to a target, which requires producers and
importers of these not to exceed the maximum quantity
for each year in question within the 2016–2030 period
and the corresponding quota.
Producer responsibility schemes
In the greenhouse gas emissions and ozone depleting
substances policy area, the Regulation on fluorinated
greenhouse gases (EU, 2014) requires Member States to
encourage the development of producer responsibility
schemes for the recovery of these and their recycling,
reclamation or destruction.
Most of the waste sector's MBIs concern the application
of the producer-responsibility principle to selected waste
streams (14
). Before analysing such measures, it is useful
to remember that producer responsibility:
•	 may be applied to waste collection and/or waste
management after collection — preparing for reuse;
preparing prior to recovery or disposal; recovery,
including recycling; and disposal;
•	 may be set at the individual level — each producer is
responsible for collecting/managing its own waste —
or collective level — producers are jointly responsible
for collecting/managing their waste;
•	 may be applied at the physical level — responsibility
for arranging waste collection/management — or
financial level — responsibility for covering the costs
associated with waste collection/management.
Sometimes, according to EU legislation, producers
are simply deemed responsible for waste collection/
management, without any further definition of such
a responsibility.
The Waste Framework Directive (EU, 2008) (15
) states
that any natural or legal person who professionally
develops, manufactures, processes, treats, sells or
imports products (producer of the product) may be
given an extended producer responsibility by the
Member States, in order to strengthen the reuse and
the prevention, recycling and other recovery of waste.
Member States may decide that the responsibility for
arranging waste management is to be borne partly or
wholly by the producer of the product from which the
waste came, and that distributors of such a product
may share that responsibility. In accordance with the
polluter-pays principle, Member States may also decide
that the costs of waste management are to be borne
partly or wholly by the producer of the product from
which the waste came, and that the distributors of such
a product may share these costs. Finally, Member States
may take appropriate measures to encourage the design
of products in ways that reduce their environmental
impacts and the generation of waste in the course of
their production and subsequent use. They may also
ensure that the recovery and disposal of products that
have become waste take place. Eco-design is a relevant
aspiration that is usually associated with the advocacy of
producer responsibility.
The EU legislation provides for the application of
producer responsibility to the following waste streams.
•	 Waste from electrical and electronic equipment
(Directive 2012/19/EU; EU, 2012b): with
regard to WEEE from private households
(business‑to‑consumer or B2C WEEE), producers
may set up and operate individual and/or collective
take-back systems and may, where appropriate,
be encouraged to finance the related costs. When
supplying a new product, distributors are responsible
for ensuring that such waste can be returned
to them, at least free of charge when buying a
replacement, as long as the equipment is of an
equivalent type and fulfilled the same function as the
supplied equipment.
	 Member States, however, may derogate from
this provision on condition that they ensure that
returning WEEE is not made more difficult for the
final holder and that it remains free of charge.
Member States shall ensure that producers
or third parties acting on their behalf set up
individual or collective systems to provide for the
recovery of WEEE using best available techniques.
Producers are deemed financially responsible for
WEEE management after collection: the financial
responsibility is set at the individual level for products
(13
)	 http://unfccc.int/kyoto_protocol/mechanisms/emissions_trading/items/2731.php.
(14
)	 See for further information on producer responsibility: Bio et al., 2014.
(15
)	 The proposed directive on waste (EC, 2015a), which is part of the 2015 Circular Economy Package (see also Annex 1), amends Art. 8 of the
Waste Framework Directive (EU, 2008) on extended producer responsibility (Art. 1 par. 8).
Market-based instruments in EU environmental legislation
12 Environmental taxation and EU environmental policies
placed on the market after 13 August 2005, and at
the collective level for products placed on the market
on or before that date.
	 For other WEEE (business-to-business or B2B
WEEE), Member States shall ensure that producers,
or third parties acting on their behalf, provide for
its collection, as well as for its recovery, through
individual or collective systems, using best available
techniques. Member States shall ensure that the
financing of the costs of collection, treatment,
recovery and environmentally sound disposal of new
B2B WEEE is provided for by producers. For historical
waste being replaced by equivalent new products
or by new products fulfilling the same function,
the financing of the costs shall be provided by the
producers of those products when supplying them.
Member States may, as an alternative, provide that
users other than private households also be made
partly or totally responsible for this financing. For
other historical waste, the financing of the costs
shall be provided by the users other than private
households.
	 Producer responsibility for WEEE collection is
explicitly connected to the implementation of WEEE
collection targets — according to the directive,
indeed, each Member State shall ensure the
implementation of the producer-responsibility
principle and, on that basis, that a minimum
collection rate is achieved annually (16
).
•	 Waste oils (Directive 2008/98/EC; EU, 2008): for
the purposes of separate collection of waste
oils and their proper treatment, Member States
may, according to their national conditions, apply
additional measures such as technical requirements,
producer responsibility, economic instruments or
voluntary agreements.
•	 Batteries and accumulators (Directive 2006/66/EC;
EU, 2006): producers or third parties acting on
their behalf shall deemed responsible for: a) taking
back waste industrial batteries and accumulators
from end-users, and b) setting up schemes for
the collection of waste automotive batteries and
accumulators from end-users or from an accessible
collection point in their vicinity, where collection
is not carried out under the End-Of-Life Vehicles
Directive (Directive 2000/53/EC; EU, 2000c). Member
States may, moreover, require producers to set up
collection schemes for waste portable batteries and
accumulators, in which other economic operators
may participate.
	 Once waste batteries/accumulators have been
collected, Member States shall ensure that, no
later than 26 September 2009, producers or
third parties set up schemes using best available
techniques, in terms of the protection of health and
the environment, to provide for the treatment and
recycling of such waste.
	 At the financial level, producers, or third parties
acting on their behalf, shall cover any net costs
arising from the collection, treatment and recycling
of all waste batteries and accumulators (portable and
industrial) collected in accordance with the directive.
They are also obliged to finance any net costs arising
from public information campaigns on the collection,
treatment and recycling of all waste portable
batteries and accumulators.
•	 End-of-life vehicles (Directive 2000/53/EC; EU, 2000c):
Member States shall ensure that economic operators
set up systems for the collection of all end-of life
vehicles and, as far as technically feasible, of waste
used parts removed when passenger cars are
repaired. The delivery of the vehicle to an authorised
treatment facility shall occur at no cost to the last
holder and/or owner as a result of the vehicle's
having no or a negative market value. Producers
shall meet all, or a significant part of, the costs of the
implementation of this measure and/or take-back
end-of life vehicles.
•	 Packaging and packaging waste (Directive 94/62/EC;
EU, 1994): Member States shall implement
preventive measures which may consist of national
programmes, projects to introduce producer
responsibility to minimize the environmental
impact of packaging, or similar action adopted,
as appropriate, in consultation with economic
operators. Member States shall ensure that systems
are set up to provide for: a) the return and/or
collection of used packaging and/or packaging
waste from the consumer, other final user, or
from the waste stream in order to channel it to
the most appropriate waste management option;
b) the reuse or recovery, including recycling, of the
packaging and/or packaging waste collected, in order
to meet the objectives laid down in the directive.
These systems shall be open to the participation of
economic operators of sectors concerned and to
competent public authorities. The directive has been
implemented by EU Member States mainly through
producer responsibility schemes.
(16
)	 Article 7.1 of Directive 2012/19/EU (EU, 2012b).
13
Definitions and rationales for environmental taxes
Environmental taxation and EU environmental policies
3	 Definitions and rationales for
environmental taxes
Environmental taxation and in particular tax‑shifting
programmes, also known as environmental tax reform
(ETR), are high on the political agenda, as illustrated
in recent EC publications and in the discussion of the
Europe 2020 strategy (17
). Environmental taxes are
also the most studied environmental market‑based
instrument.
The effects of environmental taxes as policy
instruments are well‑documented in economic and
political literature (for example Gago et al., 2014;
Withana et al., 2013; Castellucci and Markandya,
2012; Vivid Economics, 2012; Bowen, 2011; GFC, 2009;
OECD 2006; Speck et al., 2006). The positive impacts in
terms of reducing environmental pollution, fostering
innovation, and generating additional resources for
public budgets regularly play a secondary role when
assessing the effectiveness and efficiency of this type
of market‑based instrument. This is because potential
negative effects, such as the loss of competitiveness of
domestic industries and the possibilities of regressive
distributional implications across society, often
dominate the public discourse and agenda.
Support for environmental taxation is notable from
international organisations, such as the World Bank,
International Monetary Fund (IMF), Organisation of
Economic Co‑operation and Development (OECD) and
the European Commission (Fay et al., 2015; EC, 2014a
and 2015b; Heine et al., 2012; IMF, 2012; OECD, 2010
and 2013a). Nonetheless, the actual implementation of
environmental taxes in countries regularly lags behind
their potential.
This is a fortiori surprising as the experience gained
by EU Member States provides some proof of the
advantages of these policy instruments. One of the
most compelling pieces of evidence is the absolute
decoupling of economic development from greenhouse
gas emissions in Sweden where gross domestic product
(GDP) has grown by about 58 % since the introduction
of a carbon dioxide tax that contributed to the 23 %
reduction of greenhouse gas emissions between 1990
and 2013 (Åkerfeldt, 2015).
3.1	 Definitions of environmental taxes
The United Nations System of Environmental‑Economic
Accounting (SEEA 2012, UN et al., 2012), a global
statistical standard, provides a definition of
environmental tax as: a tax whose tax base is a physical
unit (or a proxy of it) of something that has a proven,
specific, negative impact on the environment (UN et al.,
2012 (4.150)). This definition now constitutes a
component of the EU's statistical framework as stated
in the Regulation (EU) No 691/2011 on European
environmental economic accounts (18
).
The definition sometimes leads to confusion as the
emphasis is put on the tax base and not at all on
an environmental motivation and/or purpose of
implementing environmental taxes. This is because
the tax base is the only objective way of identifying
and comparing tax data internationally (Eurostat,
2013) (19
).
The statistical definition of environmental taxation
is widely accepted, nevertheless, countries may use
different ones for national policy purposes. In the
United Kingdom, for example, the government defines
environmental taxes as those that meet all of the
following three principles:
•	 the tax is explicitly linked to the government's
environmental objectives;
(17
)	See http://ec.europa.eu/europe2020/index_en.htm.
(18
)	 There is a long‑standing discussion around the terms environmental taxes and environmentally related taxes. Eurostat (2013) discusses the two
and their underlying concepts as follows: the term 'environmental taxes' can be interpreted as referring to taxes with an environmental, rather than
a fiscal, motivation. Since motivation is not part of the definition used for environmental tax statistics, it can be argued that the term 'environmentally
related taxes' is more appropriate. This is the term used in Regulation (EU) No 691/2011 and is preferred e.g. by the OECD. As the more convenient term
'environmental taxes' is in common use, it is used in these guidelines. This term is also used in the United Nations System of Environmental‑Economic
Accounting (SEEA 2012) which was adopted as an international statistical standard in 2012.
(19
)	 A list of relevant tax bases satisfying this definition has been compiled by Eurostat and can be found in Eurostat, 2013. It is used for carrying out
international comparisons of environmental taxes.
Definitions and rationales for environmental taxes
14 Environmental taxation and EU environmental policies
Box 3.1	 Definition of environmental taxes and charges (24
)
A tax covers any compulsory, unrequited payment to general government levied on tax bases deemed to be of particular
relevance. Taxes are unrequited in the sense that benefits provided by government to taxpayers are not normally in proportion to
their payments (OECD, 2001).
The terms charges and fees are commonly used and cover compulsory and requited payments to general government
or to bodies outside general government, such as environmental funds or water management boards. Examples include
wastewater, abstraction, and waste charges.
Levy is a more general term covering taxes as well as charges and fees. It is commonly used, for example, in the United
Kingdom (climate change levy, aggregates levy), partly to avoid the bad publicity and hence the resistance associated with
the word tax.
Source: 	EEA, 2006.
•	 the primary objective of the tax is to encourage
environmentally positive behaviour change;
•	 the tax is structured in relation to environmental
objectives, for example: the more polluting the
behaviour, the greater the tax levied (20
).
This definition emphasises the environmental focus.
Based on these principles, the UK government
identified the following taxes as environmental: climate
change levy (CCL), aggregates levy, landfill tax, EU
emission trading scheme (EU ETS), carbon reduction
commitment energy efficiency scheme and the carbon
price support (21
).
This narrower definition of environmental taxes
corresponds to the thinking that taxes levied on petrol
and diesel (transport fuels) were introduced for purely
fiscal reasons and were not intended as environmental
policy instruments. This line of argument ignores the
fact that such environmental taxes are very potent
environmental policy instruments (Sterner, 2006)
although when they were introduced — in some
countries almost a century ago — environmental
purposes were not to the fore (22
).
(20
)	 See: https://www.gov.uk/government/news/definition-of-environmental-tax-published (accessed on 12 January 2016).
(21
)	 The definition is critical as the then UK government pledged to increase the revenues generated from environmental taxes, thereby referring
exclusively to these taxes.
(22
)	 The UK government stated that changes in fuel prices as an outcome of a reduction in fuel taxes will lead to a behavioural response which is
captured by an elasticity between the price of fuel and the amount consumed. A reduction in the fuel duty rate will increase demand for fuel,
as vehicle owners will use more of it. This has a positive impact on receipts (HM Revenue & Customs and HM Treasury, 2014). This statement
undoubtedly confirms that fuel taxes must be described as environmental policy instruments.
(23
)	 Tariffs — also known as user charges — can also be classified as MBIs, but they serve a different purpose from environmental taxes.
The distinction based on their functions in environmental and public policy can be made as environmental taxes are an instrument for
implementing the polluter pays principle compared to the latter which are founded on the user‑pays principle. As Dafflon and Daguet (2012)
note that while both types of MBI are compulsory payments, tariffs/user charges are paid for the provision and delivery of a specific service, in
particular in the areas of water supply, wastewater and waste. For a more detailed discussion regarding the distinction between environmental
taxation and user charges/tariffs, see Dafflon and Daguet (2012).
(24
)	 It should be stated that the differentiation between taxes and charges is not clear‑cut in political reality as the use of these phrases in the
wording/language of national tax legislation differs widely.
Environmental taxes are further classified between
(1) energy, (2) vehicle and (3) pollution and resource
taxes, a classification that is also used in this report.
Furthermore, the international statistical framework
has categorised carbon‑pricing measures as
energy taxation schemes (Eurostat, 2013). Another
classification distinguishes between taxes, charges,
fees and levies (Box 3.1) (23
).
In terms of revenues generated from environmental
taxes, energy taxes are the most significant as they
contribute 76 % of total environmental tax receipts.
Transport taxes account for 20 % of receipts while
4 % were collected from pollution and resource taxes
in EU‑28 in 2014. The split of the tax take between
the three categories differs between EU Member
States as national tax schemes vary but energy taxes
always contribute the largest share. Malta has the
lowest share of energy tax revenues, at 55 %, while
it has the highest share for transport taxes, at 41 %.
The countries with above‑average revenues from
pollution/resource taxes (more than 10 % of total
environmental tax revenues) are Croatia, Estonia,
the Netherlands and Slovenia. Meanwhile, Austria,
Belgium, Denmark, Ireland, Malta and Finland belong
Definitions and rationales for environmental taxes
15Environmental taxation and EU environmental policies
to the countries in which the share of transport tax
revenues exceeded 30 % in 2014.
3.2 	 Rationales for environmental
taxation
The economic and environmental rationales for
environmental taxation are discussed extensively
in mainstream economic literature. Environmental
pollution and resource use impose external costs
(or externalities) on society. These external costs and
risks are not borne by the polluters rather levied on
other groups of society and on to future generations.
This reflects market failures, owing to a lack of actual
markets for environmental goods or services and/or
the failure of conventional markets to take into account
the environmental implications of manufactured
products or natural resources exploitation. In other
words, prices in actual markets do not reflect the true
or full cost of producing goods and services. These
costs can be internalised in the prices of goods and
services by utilising instruments such as environmental
taxes or emission‑trading schemes, since the basic
motivation for their use is to correct the market failures
(Kosonen and Nicodeme, 2009). The overall concept
is therefore to reduce the level of environmental
pollution and resource use and ensure that costs
and benefits are fully taken into account in economic
decision‑making (25
). They also increase the efficiency of
resource use, thereby decreasing demand and reducing
environmental damage.
The major aim of environmental taxes is to achieve
static and dynamic efficiency gains as well as raise
revenues (Barde and Godard, 2012). The discussion
of the double‑dividend hypothesis (Pearce, 1991),
which led to an increased interest in environmental
taxation in the 1990s, developed the idea of tax‑shifting
programmes where revenues from environmental
taxes could be used to cut others. This policy approach
could therefore secure a second dividend — in addition
to the first dividend of environmental improvement —
since they can be used to reduce distorting labour and
capital taxes in a revenue‑neutral way, thus increasing
the overall efficiency benefits of the reform (26
).
Environmental taxes are also tools for achieving policy
goals in a cost‑effective manner. They allow economic
actors the flexibility to act independently as consumers
and businesses can decide the best/least cost way to
reduce environmental damage compared to regulation
imposing specific conditions and behavioural patterns.
Furthermore, environmental taxes can accelerate the
diffusion of known pollution abatement technologies
and provide incentives for innovation (EEA, 2011a
and OECD, 2010). This is also acknowledged by the
European Commission: MBIs, such as environmental
taxes, tradable permit systems or targeted subsidies, are a
cost‑effective way to protect and improve the environment.
They provide incentives to firms and consumers to opt for
greener production or products (27
).
Regulations are another policy tool that address
environmental pollution but they are not as effective
as MBIs (IMF, 2012). MBIs, in particular environmental
taxes, have a distinct advantage over regulations as
the authorities do not need detailed and relevant
information about the cost structure of abatement
technologies and economic activities of polluters (28
).
Effectively, they reduce overall administrative, and
often compliance, costs compared to the costs and
efforts of the implementation and monitoring of
regulatory activities.
Closely linked to taxes is the call for reforming and
phasing‑out environmentally harmful subsidies. This is
also considered as a pre‑condition for the effectiveness
of environmental taxation. Some progress has been
reported, in particular at the global level (Whitley and
van der Burg, 2015), and multilateral cooperation
to support the reform of environmentally harmful
subsidies, in particular with regard to fossil fuels,
is on‑going. The reform of fossil fuel subsidies is
critical for the transition to a green economy as such
subsidies are in conflict with climate policy action as
well as having a negative impact on public budgets.
A wide range of fossil fuel subsidies exists, making it
rather problematic to provide a clear picture of the
current situation. The definitions used by institutions
in estimating the total sum of subsidies are typically
tailored to specific purposes and they vary considerably in
terms of scope (WTO, 2006).
The figures published by the International Energy
Agency (IEA) reveal an interesting trend as they show
that subsidies on fossil fuel consumption increased
from USD 300 billion (EUR 275 billion (29
)) in 2009 to
USD 544 billion in 2012 (EUR 500 billion) — or roughly
0.7 % of global GDP in 2012. The latest IEA report shows
(25
)	 For a comprehensive discussion and analysis of environmental taxation, see Fullerton et al., 2010.
(26
)	 See Mori et al., 2014; Fullerton and Metcalf, 1997; Bovenberg and de Mooji, 1994 and Tullock, 1967.
(27
)	 See http://ec.europa.eu/environment/enveco/mbi.htm (accessed on 10 January 2016).
(28
)	 There are differences in the administrative and institutional requirements for monitoring different types of MBIs. The monitoring, reporting and
verifying of emission trading schemes have a higher administrative burden than environmental taxation schemes.
(29
)	 An exchange rate of USD 1.09: EUR 1 (as of January 2016) was used throughout this report.
Definitions and rationales for environmental taxes
16 Environmental taxation and EU environmental policies
Box 3.2	 Management of environmental taxes — reducing tax evasion and administrative costs
Studies show that environmental tax evasion is much lower than for other taxes. Sweden, for example, reports a carbon tax
evasion rate of 1 % which is lower than for value added tax and the United Kingdom shows a rather low energy tax evasion
rate of about 2 %, especially when it is related to the 17 % evasion of income tax (Fay et al., 2015). A carbon tax would be
rather simple to supervise in the United States, for example, as the monitoring of fewer than 3 000 refineries, coal mines,
and natural gas fields would mean that 80 % of United States greenhouse gas emissions would be covered (Metcalf and
Weisbach, 2009).
The administrative costs of environmental taxes are reported to be low. Estimates from the German Ministry of Finance,
for example, show that these are about 0.13 % of revenues (OECD, 2006), while the United Kingdom reports a range of
0.21–0.34 % (Pavel and Vitek, 2012). The costs for administering other taxes are higher in the United Kingdom, for example
the UK VAT costs were estimated at around 0.55 % and income tax at around 1.27 % of revenues collected (White, 2008).
Furthermore, additional administrative costs should not occur when introducing new carbon dioxide taxes as they can
be incorporated into existing schemes, as it was done in Sweden where the administration of a carbon dioxide tax was
combined with an existing energy tax scheme in the 1990s.
a decrease to about USD 490 billion (EUR 450 billion)
since 2009 because of reforms implemented in many
countries. Without these reforms, the IEA estimates
that subsidies would have increased to a staggering
USD 610 billion (EUR 560 billion) (OECD/IEA, 2015).
The IMF applies a very different methodology in
its analysis of fossil fuel subsidies, distinguishing
between pre‑tax and post‑tax subsidies, with the latter
amounting to USD 2 trillion (EUR 1.8 trillion) in 2011
which corresponded to 2.9 % of global GDP (Bárány
and Grigonyte, 2015) (30
). A further approach to getting
the energy prices right is based on an estimation
of corrective taxes so that major environmental
externalities are internalised in the final price. The
estimated revenue potential of these corrective taxes
amount to about 2.6 % of global GDP (Parry et al.,
2014) making it clear that it is critical to understand
the underlying methodologies and concepts when
evaluating the possible results of phasing out
environmentally harmful subsidies (EHS).
(30
)	 For a good overview of the different methodologies measuring fossil fuel subsidies: see Bárány and Grigonyte, 2015.
(31
)	 This argument is debated in the economic literature. The potential negative consequences on the income of poor households may be reduced
through public income transfers as governments can have additional funds as the result of the removal of subsidies. See also Sterner, 2012.
The often rather blunt calls for the removal of fossil
fuel subsidies should be treated with some caution.
Several studies reveal that middle‑class and wealthy
people benefit disproportionately from subsidies,
as the biggest consumers of fossil‑based energy. At
the same time, the removal of subsidies would affect
poor households disproportionally as these spend a
higher proportion of their household income on energy
(IEA, OECD and World Bank, 2010) (31
).
The EU recognised this distributional equity issue in
the 2011 Roadmap for a Resource Efficient Europe that
includes the following milestone: by 2020, EHS will be
phased out, with due regard to the impact on people
in need (EC, 2011s). In essence, the removal of fossil
fuel/environmentally harmful subsidies should be
seen in a broader context, in particular when thinking
of a transition towards a green economy, in which
resource efficiency, ecosystem resilience, human
well‑being and societal equity considerations and
trade‑offs need to be balanced (EEA, 2014).
17
Implementation of environmental taxes in EEA member countries
Environmental taxation and EU environmental policies
4	 Implementation of environmental taxes
in EEA member countries
Overall, the current strategic policy focus in the EU
is directed towards growth, competitiveness and
jobs (32
) and the Europe 2020 strategy aims for the
EU to become a smart, sustainable and inclusive
economy (33
). Political realities, as well as the results
of theoretical modelling frameworks, reveal that
market‑based instruments for environmental policy are
enabling factors in achieving these economic and social
objectives (Andersen and Ekins, 2007).
Properly designed environmental taxes and emission
trading schemes, for example, can help achieve these
objectives in a cost‑effective manner. Furthermore,
environmental taxes can help countries to increase
their overall tax take and reduce debt and borrowing,
releasing countries from the need to increase other
taxes, such as income taxes or corporate taxes
(EC, 2015b). The overall potential of environmental tax
revenue is, however, limited and not high compared to
taxes on labour or other indirect taxes such as value
added tax (VAT) (Table 4.1 and EC, 2014b).
Shifting taxation from labour to pollution, energy and
resource use in a budgetary neutral way is a policy
approach promoted by international institutions such
as the Organisation for Economic Co‑operation and
Development (OECD), the World Bank, the International
Monetary Fund (IMF) and the European Commission.
Environmental taxation schemes are especially
well‑suited to the post‑financial crisis context, in
which countries wish to continue to grow while also
raising revenues to plug budget gaps. Furthermore,
environmental taxes have been shown to be the least
detrimental to employment and growth (Wöhlbier et al.,
2014; EC, 2010; OECD, 2010).
(32
)	See https://ec.europa.eu/priorities/jobs-growth-and-investment_en.
(33
)	 Europe 2020: the EU's growth strategy for the coming decade, see http://ec.europa.eu/europe2020/index_en.htm.
The actual number of environmental taxes
implemented in EEA member countries over the past
decade suggests that demands for their more extensive
use have been met, albeit only partly. While the
revenue generation potential of environmental taxes is
not their main purpose, interest in them in the political
and public debate on the promotion of tax shifting
programmes is increasing (EC, 2015b).
Environmental tax revenue at the EU‑28 level grew
more slowly than gross domestic product (GDP)
between 2002 and 2014, increasing by 9.5 % in
real terms (an average increase of 0.8 % annually)
compared to GDP growth of 13.9 % (an average
increase of 1.1 % per year). This trend reversed for
the period 2009–2014 as environmental tax revenues
increased in real terms by 9.4 % and GDP by 5 %.
There are striking differences between EU Member
States in terms of environmental tax revenues — some
EU Member States increased their environmental tax
take considerably in real terms, as well as in the ratio
of environmental tax revenues to GDP. For example,
between 2002 and 2014, this ratio increased in Greece
from 2.24 % to 3.68 %, in Estonia from 1.99 % to
2.67 %, and in Slovenia from 3.19 % to 3.89 %. Over the
same period, the ratio dropped from 2.81 % to 1.7 %
in Lithuania, and from 2.16 % to 1.79 % in Slovakia
(Table 4.1). The ratio also dropped in the often‑quoted
1990s forerunner European countries, for example, in
Denmark, from 5 % to 4.08 %; Sweden, from 2.74 % to
2.21 %; and Norway, from 3.24 % to 2.31 %.
Implementation of environmental taxes in EEA member countries
18 Environmental taxation and EU environmental policies
Table 4.1	 Environmental tax revenues as a percentage of GDP in EU Member States, Norway and
Switzerland, 1995–2014
1995 1998 2002 2005 2008 2012 2013 2014
EU‑28 n/a n/a 2.56 2.51 2.29 2.44 2.45 2.46
Austria 2.16 2.31 2.63 2.59 2.37 2.42 2.40 2.43
Belgium 2.40 2.57 2.32 2.45 2.14 2.15 2.06 2.05
Bulgaria 1.67 1.97 2.29 2.90 3.27 2.68 2.80 2.73
Croatia n/a n/a 4.08 3.85 3.44 3.19 3.51 3.86
Cyprus 2.62 2.30 2.73 3.34 3.05 2.57 2.73 3.08
Czech Republic 2.65 2.19 2.28 2.48 2.26 2.24 2.14 2.12
Denmark 4.31 5.26 5.00 4.92 4.18 3.99 4.20 4.08
Estonia 0.88 1.90 1.99 2.27 2.32 2.72 2.55 2.67
Finland 2.86 3.23 2.98 2.97 2.60 2.98 2.93 2.88
France 2.49 2.43 2.05 2.00 1.84 1.96 2.03 2.05
Germany 2.12 2.09 2.47 2.42 2.14 2.12 2.04 2.00
Greece 3.09 2.78 2.24 2.08 1.91 3.16 3.55 3.68
Hungary 2.89 3.32 2.74 2.75 2.68 2.71 2.59 2.60
Ireland 2.96 2.93 2.27 2.48 2.30 2.38 2.45 2.43
Italy 3.46 3.24 2.93 2.90 2.56 3.49 3.42 3.60
Latvia 0.99 2.79 2.14 2.53 1.85 2.45 2.45 2.67
Lithuania 1.87 2.54 2.81 2.29 1.63 1.64 1.64 1.70
Luxembourg 2.97 2.93 2.68 3.00 2.62 2.38 2.16 1.99
Malta 3.10 3.76 3.27 3.08 3.27 2.83 2.68 2.89
Netherlands 3.28 3.41 3.29 3.56 3.48 3.28 3.31 3.36
Poland 1.78 1.89 2.46 2.69 2.66 2.49 2.39 2.51
Portugal 3.35 3.34 2.99 2.89 2.48 2.16 2.21 2.25
Romania 1.74 3.03 2.11 1.98 1.75 1.98 2.05 2.42
Slovakia 2.29 1.89 2.16 2.34 2.00 1.73 1.73 1.79
Slovenia 4.13 4.95 3.19 3.15 2.95 3.83 3.97 3.89
Spain 2.14 2.22 2.03 1.90 1.63 1.57 1.90 1.85
Sweden 2.69 2.89 2.74 2.72 2.57 2.40 2.36 2.21
United Kingdom 2.70 2.93 2.62 2.38 2.35 2.48 2.49 2.48
Norway 3.62 3.66 3.24 2.96 2.64 2.36 2.36 2.31
Switzerland 1.61 1.67 1.78 1.81 1.68 1.72 1.69 n/a
Source: 	 Eurostat (Environmental tax revenues [env_ac_tax] as of 30 March 30 2016).
Implementation of environmental taxes in EEA member countries
19Environmental taxation and EU environmental policies
4.1	 Current status of implemented
environmental taxes
Table 4.2 provides an aggregated overview of the types
of environmental taxes implemented in EEA member
countries. Annex 2 provides more details for individual
countries. Overall, the number of environmental taxes
has increased since 2006 (EEA, 2006).
The most obvious developments are apparent in
four main environmental tax categories — energy,
transport, pollution and resources.
•	 There is comprehensive energy taxation in EU
Member States as required by Directive 2003/96/EC
on the taxation of energy products and electricity
(ETD). At the same time, EU Member States are
allowed to maintain tax reductions or exemptions,
in particular with regard to the household sector
(Section 4.2.1). The number of countries that have
introduced carbon pricing schemes either through
carbon taxes or greenhouse gas emission trading
schemes (34
) has increased (Section 4.2.2).
•	 Transport tax design (tax base and rate) varies
widely between countries (35
). They include both
one‑off taxes such as sales/registration taxes
and recurrent ones such as annual circulation
taxes. As Table 4.2 shows, sales taxes have been
implemented in fewer European countries than
circulation taxes: 21 out of 28 EU Member States (36
)
compared to 28 out of 28. Private vehicles,
(34
)	 GHG emission trading schemes are included in this overview tables as revenues generated from the auctioning of emission allowances are
treated as tax receipts in national accounts and should also be listed under the heading energy taxes (Eurostat, 2013).
(35
)	 Information on tax design can be found in reports published by the European Automobile Manufacturers' Association (ACEA) and on the
website of ACEA: http://www.acea.be.
(36
)	 Sales/registration taxes are not in place in Bulgaria, Czech Republic, Germany, Estonia, Luxembourg, Sweden and the United Kingdom.
(37
)	 The EU Member States without annual circulation taxes on private vehicles are: Czech Republic, Estonia, France, Lithuania, Poland and Slovakia.
(38
)	 For an overview of the Nordic countries: see Bragadóttir et al., 2014. Further country information can be found in reports commissioned by the
European Commission, DG Environment: Bio et al., 2014.
(39
)	 See Bio et al., 2012.
(40
)	 See Bahn-Walkowiak and Steger, 2015, for a discussion of resource taxes.
(41
)	 See for more information: Ecotec et al., 2001.
(42
)	 See Hogg et al., 2015, 2016 and Bragadóttir et al., 2014.
however, are not subject to annual circulation
taxes in all countries: 6 out of 28 EU Member
States do not levy them (37
). In recent years, road
user charges have become more common for
private as well as commercial vehicles (Annex 2 and
Section 4.2.3).
•	 A rather broad range of pollution and waste taxes
is in place, as shown in Table 4.2 and discussed in
Chapter 2. These include producer responsibility
schemes, recycling fees and product taxes, applied
for different products (38
). Landfill taxes are not in
place in three EU Member States, their coverage
as well as rates varies in the other countries (39
).
Environmental tax schemes addressing water
pollution also differ widely between countries
(EEA, 2013).
•	 Water abstraction or resource extraction taxes
are becoming more widespread but again the
design of these schemes varies between countries.
Furthermore, in some countries, such as in
Germany, Italy and Spain, resource taxes as well
as some energy taxes are devolved to a regional
level (40
).
•	 Only a few countries — Belgium, Denmark,
Italy, Norway and Sweden levy tax on the use of
pesticides and/or fertilisers, and indeed, several
other countries have abolished them (41
). Currently,
a multifaceted form of these taxes is in place in
Denmark (42
).
Implementation of environmental taxes in EEA member countries
20 Environmental taxation and EU environmental policies
Table 4.2	 Overview of environmental taxes in EEA member countries
Austria
Belgium
Bulgaria
Croatia
Cyprus
CzechRepublic
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Ireland
Italy
Latvia
Lithuania
Luxembourg
Malta
Netherlands
Poland
Portugal
Romania
Slovakia
Slovenia
Spain
Sweden
UnitedKingdom
Iceland
Liechtenstein
Norway
Switzerland
Turkey
Energy (including fuel for transport)
Energy
products for
transport
purposes
x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x
Energy
products for
stationary
purposes
x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x
Greenhouse
gases (GHG)
• Carbon
content of
fuels —
CO2 tax
x x x x x x x x x x x x
(a
)
x x x x
• GHG
emissions
trading
schemes
x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x
Transport (excluding fuel for transport)
Motor vehicles
import or
sale, one off/
registration tax
x x x x x x x x x x x x x x x x x x x x x x x x X
Use of motor
vehicles,
recurrent
(yearly/
circulation
taxes)
x x x x x x
(b
)
x x
(b
)
x x
(b
)
x x x x x x x
(b
)
x x x x
(b
)
x x x
(b
)
x x x x x x x x x
Road use:
passenger
car (distance
based/
vignette)
x x x x x x x x x x x x x x x x x
Road use:
commercial/
heavy goods
vehicles (HGV)
(distance
based/
vignette)
x x x x x x x x x x x x x x x x x x x x x x x x x x x x
Congestion
charges (cities)
x x x x x
Implementation of environmental taxes in EEA member countries
21Environmental taxation and EU environmental policies
Note: 	 (a
) Includes climate change levy (CCL), carbon reduction commitment (CRC) energy efficiency scheme and the carbon price support (CPS).
	(b
) Annual taxes for commercial vehicles only — passenger cars are not subject to annual circulation taxes.
	 (c
) Czech Republic, Croatia, Lithuania, Latvia, Estonia, Poland, Romania, Slovakia have in place a quite comprehensive charging system
covering different air pollution including CO2 in some countries (Croatia, Estonia, Poland).
	(d
) A whole range of different MBIs, such as taxes, recycling fees, deposit refund schemes, extended producer responsibility levied on
individual products, such as packaging; batteries and/or accumulators; tyres; plastic bags; electric and electronic products; lubricating/
waste oils and end‑of‑life vehicles, are implemented in EEA member countries and covered here. Detailed country information
regarding the implementation of different MBIs can be found in Bio et al., 2014 and the Organisation for Economic Co-operation and
Development (OECD) database on instruments used for environmental policy at http://www2.oecd.org/ecoinst/queries.
	(e
) Tax was abolished.
Source: 	 EEA based on references provided in Annex 2.
Austria
Belgium
Bulgaria
Croatia
Cyprus
CzechRepublic
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Ireland
Italy
Latvia
Lithuania
Luxembourg
Malta
Netherlands
Poland
Portugal
Romania
Slovakia
Slovenia
Spain
Sweden
UnitedKingdom
Iceland
Liechtenstein
Norway
Switzerland
Turkey
Pollution
Measured
or estimated
emissions to
air (c
)
x x x x x x x x x x x x x x
Measured
or estimated
effluents to
water
x x x x x x x x x x x x x x x x x x
Waste
management
• Landfill x x x x x x x x x x x x x x x x x x x x x x x x x x x x
• Incinerator x x x x x x x (e
) (e
) x
• Individual
products (d
)
x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x
Non‑point
sources of
water pollution
Pesticides x x (e
) x x x
Fertilisers (e
) x (e
) (e
)
Resources
Water
abstraction
x x x x x x x x x x x x x x x x x x x x
Extraction of
certain raw
materials
x x x x x x x x x x x x x x x x x x x x x
Table 4.2	 Overview of environmental taxes in EEA member countries (cont.)
Implementation of environmental taxes in EEA member countries
22 Environmental taxation and EU environmental policies
4.2	 Analysis of selected developments in
environmental taxation
This section highlights selected developments in
environmental taxation, focusing on energy and
carbon taxes as well as vehicle taxation schemes.
These discussions are not meant to present a
comprehensive overview of changes in environmental
taxation schemes but rather to analyse some specific
trends as well as innovative and striking examples of
the application of environmental taxes in Europe (43
).
4.2.1	 Energy taxation
The following aspects are probably the most
noteworthy in regard to energy taxation schemes.
•	 Minimum energy tax rates are laid down in
Directive 2003/96/EEC 'Restructuring the
Community framework for the taxation of energy
products and electricity' (ETD) and are in place for
all energy products. They do, however distinguish
between different energy uses (transport,
industrial/commercial use, heating differentiated
between business and non‑business use).
•	 EU Member States are permitted to maintain
different types of taxation on energy products
and electricity, for example, carbon taxes as
well as other specific national taxes, such as the
Polish fuel tax (opłata paliwowa). The sum of these
different indirect taxes are taken into account
when assessing compliance with the minimum
ETD tax rates. An analysis of energy taxes should
therefore include consideration of other types of
tax levied on the same energy product since these
(43
)	 See the reports of Hogg et al., 2014, 2015 and 2016 for a comprehensive overview of the application of environmental taxes in EU Member
States. These reports were commissioned by DG Environment of the European Commission as part of the work on 'Greening the European
Semester' (http://ec.europa.eu/environment/integration/green_semester/studies_en.htm).
(44
)	 For example, electricity used by households is exempt from paying tax in Bulgaria, Croatia, Hungary, Latvia, Lithuania, Slovakia and the United
Kingdom; and natural gas in Bulgaria, Croatia, Hungary, Romania, the United Kingdom; and coal: Bulgaria, Lithuania, Hungary, Poland, Romania,
Slovakia and the United Kingdom. (EC, DG Taxation and Customs Union (TAXUD), 'Excise Duty Tables' as of January 2016).
(45
)	 For more information on tax exemption, see the special tables in the bi‑annual 'Excise Duty Tables' of DG TAXUD (http://ec.europa.eu/taxation_
customs/taxation/excise_duties/energy_products/rates/index_en.htm) and the OECD database on instruments used for environmental policy
(http://www2.oecd.org/ecoinst/queries/Default.aspx). An analysis of energy and carbon tax exemptions for industries implemented in different
European countries (Denmark, Finland, the Netherlands, Germany, the United Kingdom and Slovenia) can be found in Speck, 2007.
(46
)	 An interesting study comparing effective carbon prices that different economic sectors face within and across countries was published by the
OECD (2013a).
(47
)	 The indexation of tax rates is of great significance for ad quantum taxes, i.e. the basis of the tax is is the physical quantity of the product,
compared to ad valorem taxes as these taxes are based on the value of the relevant taxable product. Environmental taxes are by and large
ad quantum taxes as tax rates are expressed as EUR per litre (petrol, diesel), EUR per kilowatt‑hour (electricity), etc. The majority of taxes belong
to the category of ad valorem taxes. For example, the most common example of an ad valorem tax is value-added tax (VAT), which is a tax on
the value of goods and products exchanged. Income tax rates are also set in relation to values — on the income or capital of taxable entities.
See for further discussion Määttä, 2006.
(48
)	 A 'dieselation' of Europe's vehicle fleet happened in recent decades as the share of diesel in the total consumption of petroleum products by
road transport increased from 52 % in 2000 to 71 % in 2013. This development had a positive effect on the total carbon dioxide emissions not
on other pollutants, including nitrogen oxides. These latter pollutants significantly damage health, contributing to lung disease, heart attacks
and other respiratory diseases (EEA, 2015a).
instruments work in parallel and determine the
actual tax burden of the relevant energy product.
•	 The policy of giving energy tax relief — in the
form of exemptions or reductions — can be
found across EU Member States. As shown in the
detailed overview table in Annex 2, household
energy use is exempt from energy taxes in several
EU Member States (44
). Partial energy and carbon
tax exemptions for agriculture, industrial sectors
and public transport exist in many EU Member
States (45
).
•	 Closely linked to the topic of tax relief is the
comparison between effective and nominal
energy tax rates. An interesting aspect — but
often overlooked when making such comparisons
— is the possibility for companies to deduct
expenditures on climate‑related taxes from their
income tax assessments. For example, in Sweden
[M]any companies have in practice approximately
25 per cent lower costs for climate‑related taxes than
they pay the central government (Swedish NAO,
2012) (46
).
•	 The indexation of energy tax rates is not
widespread. This is significant since the
inflation‑adjusted, real value of energy tax rates
decreases with inflation. For example, Germany
increased energy tax rates during the period
1999 and 2003 significantly but has since kept the
nominal value constant resulting in an erosion of
their effectiveness (Table 4.3) (47
).
•	 There is an on‑going discussion on the
differential (48
) between petrol and diesel tax
rates, in particular in the context of reforming
Implementation of environmental taxes in EEA member countries
23Environmental taxation and EU environmental policies
environmentally harmful subsidies. For example,
the tax differential between tax levied on petrol
and diesel is classified as a tax expenditure and
consumer support by the Ministry of Finance
in Sweden (49
); but this is not the case in all EU
Member States. As the data show, tax differences
are still in place in all but one EU Member States.
However, a process of aligning the tax rates is
noticeable (Table 4.3).
•	 Additional taxes levied on energy products and
electricity have been implemented in some EU
Member States. These additional levies were often
introduced with clearly defined objectives for
the use of the revenues generated. For example,
the revenues have been earmarked for financing
renewables in Slovenia and the Netherlands, or for
financing strategic oil reserves in Austria, Finland,
Germany and Latvia.
Table 4.3 shows some developments in terms of
taxation on transport fuels — petrol and diesel — and,
indeed, taxes levied on them generate the greatest
environmental tax revenues (50
). The countries that
joined the EU in the 2000s generally had larger
increases in transport fuel tax rates, largely the result
of a catching‑up process as well as the need to comply
with the ETD's minimum tax rates. The indexation
of energy tax rates, which is policy in countries such
as Sweden and the Netherlands, ensures that the
ad quantum tax rates are not devalued in real terms.
Furthermore, the tax differential between petrol and
diesel was reduced in 20 of the EU Member States
between 2005 and 2016.
Some new energy taxes have been introduced in
the past decade. One of the most interesting is the
Danish 'security of supply tax', introduced in early
2013 but then abolished at the end of 2014. The
reasoning for implementing the tax is noteworthy,
as the revenues were planned to offset the losses of
revenue of the existing taxes levied on fossil fuels as
their consumption were projected to fall (Danish Energy
Agency, 2012). The tax was abandoned because of
(49
)	 For further information, see the analysis, data and reports published by OECD and IEA 'OECD-IEA Fossil Fuel Support and Other Analysis' at
http://www.oecd.org/site/tadffss. However, this tax difference is not reported in the OECD and IEA data as a tax expenditure for the majority of
EU Member States.
(50
)	 For more information, see Environmental tax statistics (Eurostat Statistics explained) http://ec.europa.eu/eurostat/statistics-explained/index.
php/Environmental_tax_statistics (accessed on 15 January 2016).
(51
)	 See Excise Duty Tables of DG TAXUD (situation as of 1 January 2016).
(52
)	 All EU Member States are required, according to Council Directive 68/414/EEC of 20 December 1968, to have a strategic petroleum reserve
equal to at least 90 days of average domestic consumption.
(53
)	 See the reports 'Fiscal Flash Electricity' published by Eurelectric for a comprehensive and thorough overview of MBIs affecting utilities. The
reports can be found at http://www.eurelectric.org/but, unfortunately, the publication of them was discontinued in 2014. For example, a levy
on networks with the rate depending on the length of the transmission lines and a levy on wind electricity production with the number of wind
turbines as the taxable event is in place in the Spanish autonomous community Castilla Y Leon. The region of La Rioja is also levying a tax on
the length of the network.
competitiveness concerns (Nordenergie, 2015). In this
context, it is of interest to note that the electricity tax
levied on business use in Denmark was dramatically
reduced. In 2010 a rate of EUR 97 per megawatt‑hour
(MWh) was levied compared to a rate of about EUR 0.54
per MWh in July 2015 corresponding more or less to
the ETD's minimum excise rate of EUR 0.5 per MWh (51
).
However, this alteration must be assessed within
the overall energy and climate policy framework, in
particular related to the EU Emission Trading System
(EU ETS) and the auctioning of emission allowances, as
this affects electricity prices.
The Danish policy approach of taking energy/climate
into account as well as fiscal considerations will probably
attract more attention in Europe when assessing the
long‑term revenue‑generating potential of energy taxes
because of the likely tax base erosion resulting from
a reduction in energy products that are heavily taxed
today — transport fuels. This is because the erosion of
the tax base must be counterweighed by increases in
energy tax rates if energy tax revenues are to remain
constant and thereby continue to be significant in
generating revenue for the overall fiscal system.
The Netherlands introduced an energy tax surcharge on
natural gas and electricity in 2013 with the underlying
rationale of generating funds for financing renewable
energy production. This type of market‑based
instrument for promoting renewable energy and
high‑efficiency co‑generation is also in place in Slovenia.
However, Slovenia levies a surcharge on all energy
products, including transport fuels and a strategic
stockpile charge. The latter can be found in many
countries, including Austria, Cyprus, Finland, Germany
and Latvia. The purpose of this charge is rather similar
across countries: it is to fund reserves of oil products for
at least 90 days' worth of consumption (52
).
A rather complex and wide‑ranging system of taxes
and charges affecting the production and distribution
of electricity has been implemented at regional
(autonomous communities) and national levels in EU
Member States including Italy, Portugal and Spain (53
).
Implementation of environmental taxes in EEA member countries
24 Environmental taxation and EU environmental policies
Table 4.3	 Development of indirect taxes on petrol and diesel between January 2005 and July 2014
(changes of tax rates are shown in EUR in current and constant 2005 prices — Eurostat GDP
deflator used) and tax difference between diesel and petrol prices in 2005 and 2016
Petrol Diesel Difference between petrol and
diesel tax rate in % (x)
Percentage change
2005–2014
Percentage change
2005–2014
Current prices Constant 2005
prices
Current prices Constant 2005
prices
2005 2016
Austria 16 – 1 31 12 28 20
Belgium 9 – 6 29 11 70 33
Bulgaria 43 – 2 63 12 25 10
Croatia n/a n/a n/a n/a n/a 26
Cyprus 58 37 81 58 23 6
Czech Republic 34 9 36 11 19 17
Denmark 17 – 2 0 – 16 48 46
Estonia 47 – 4 60 5 18 8
Finland 10 – 9 44 19 84 32
France 3 – 8 3 – 9 41 27
Germany 0 – 11 0 – 11 39 39
Greece (a
) 126 105 35 22 21 101
Hungary (b
) – 1 – 10 11 1 22 9
Ireland 33 36 30 33 20 22
Italy 30 13 50 31 37 18
Latvia 43 – 5 35 – 10 17 27
Lithuania 51 9 35 – 3 17 32
Luxembourg 5 – 21 26 – 4 67 38
Malta 64 31 72 37 26 16
Netherlands 14 1 31 16 75 59
Poland 5 – 12 32 11 38 14
Portugal 12 – 1 20 6 70 53
Romania 40 – 6 70 14 31 7
Slovakia 42 1 7 – 24 7 40
Slovenia 35 15 32 12 19 16
Spain 7 – 3 13 2 35 26
Sweden 23 3 39 16 36 13
United Kingdom (c
) – 2 – 6 – 8 – 12 – 6 0
(54
)	 Data on taxes levied on oil products are published by DG TAXUD (Excise Duty Tables) and DG Energy (Weekly oil bulletin). The tax rates published by
DG Energy do not always correspond to the ones presented by DG TAXUD for different reasons, such as the date of publication and the coverage
of indirect taxes levied on energy products. For example, the inclusion of strategic stockpile taxes or charges is not dealt with consistently.
Note: 	 (x) The difference between petrol and diesel tax rates are expressed as % of diesel, i.e. positive values indicate that the petrol tax rates
is by % percentage higher than diesel tax rate.
	 The difference in excise duty is calculated based on the tax rates expressed in EUR/1 000 litres. The percentage changes may differ
when a different base year is used for the analysis. These decisions influence the results:
	 Greece: the tax rate on diesel was increased from 245 EUR/1 000 litres in 2005 to 412 EUR/1 000 litres in May 2010, a nominal increase
of 68 % compared to an increase of 35 % as presented in the table above as the tax rates was reduced to 330 EUR/1 000 litres in October
2012 which is the actual tax rate in 2016.
	 Hungary: the nominal petrol tax rates increased by 19 % when expressed in Hungarian Forint.
	 United Kingdom: when expressing the tax rates in the national currency (UK Pound) the nominal rate increased by 15 % (unleaded
petrol) and 9 % (diesel) during the period 2004–2014.
Source: 	 EEA based on EC DG TAXUD and EC DG Energy (54
) and Eurostat (GDP deflator used for determining constant prices).
Implementation of environmental taxes in EEA member countries
25Environmental taxation and EU environmental policies
An innovative approach of setting energy tax rates
was put forward by the UK government in 2012. The
United Kingdom implemented rather advanced political
approaches for establishing energy tax rates in the
1990s with the commitment to increase energy tax rates
in real terms, above inflation, through the fuel‑price
escalator (55
). This escalator resulted in an annual
tax‑rate increase of 3 % above inflation, later rising to
5 % and finally to 6 % above inflation in 1997 (56
). These
rather substantial increases ended in 2000. The escalator
policy was re‑introduced in the 2009 budget when it was
announced that rates should be increased by 1 % above
the inflation rate annually. However, this was not fully
implemented because of increases in the international
oil prices (Figure 4.1). The government announced in the
2011 budget that it would replace the fuel price escalator
with the 'fair fuel duty stabiliser', the idea behind which
was to link oil prices and fuel tax increases, reducing the
taxes on transport fuels when oil prices rise and vice
versa.
The policy was introduced when the world oil price
was high (Figure 4.1) implying that the tax rate would
be cut, but, if the price of oil (Brent crude) fell below
a pre‑determined trigger price, an increase of the tax
rate by the retail price index (RPI) plus 1 penny per litre
would be implemented. The underlying motive was to
stabilise petrol and diesel prices and increase the taxes
levied on transport fuels only when oil prices remained
(55
)	 It is also known as the fuel duty escalator.
(56
)	 Table 4.3 presents the increases in tax rates in constant prices between 2005 and 2014 and is useful as a benchmark for revealing the
dimension of an increase of 6 % per annum in real terms (constant prices). It would mean that the tax rates would rise by 70 % during
this period. Only the increase in petrol taxes in Greece exceeded this rather large increase and this increase can be attributed to the fiscal
consolidation process.
(57
)	 For more information, see the country overview 'France' in the publication of OECD/IEA Energy Prices and Taxes — Quarterly Statistics.
(58
)	 Other European countries, such as Norway and Serbia, increased energy tax rates at the beginning of 2016.
below USD 75 per barrel for more than three months
(Seely, 2014). However, although the oil price has been
below the USD 75 ceiling since December 2014, the fuel
duty stabiliser has yet to be initiated.
The UK approach of linking increases of energy tax
rates to the world oil price is not unique. A similar
arrangement was in place from 1 October 2000 to
21 July 2002 in France. The excise tax rates (taxe
intérieure sur les produits pétroliers (TIPP)) floated in line
with price changes of crude oil using North Sea Brent
prices as a benchmark. The policy was that a reduction
of the benchmark price by more than 10 % would
trigger an increase of the tax by the same amount.
Conversely, when the benchmark price increased by
more than 10 %, the tax decreased. The link between
tax rates and oil price was revoked in 2002 (57
), but
French regions have the power to slightly increase the
nationally determined tax rates.
The current low oil price is regularly argued as an
opportunity to increase energy taxes to help achieve
energy and climate policy objectives. So far, evidence
for this argument is mixed among EU Member States,
with 11 having increased taxes levied on transport
fuels, nine leaving rates unchanged, while the indirect
tax burden levied has been lowered for both petrol and
diesel use in four EU Member States: Hungary, Poland,
Romania and Slovenia (Table 4.4) (58
).
Figure 4.1	 Trend of nominal price of Brent crude oil, January 2010–March 2016
Source: 	 World Bank Commodity Price Data (http://www.worldbank.org/en/research/commodity-markets).
0
20
40
60
80
100
120
2010M
012010M
042010M
072010M
102011M
012011M
042011M
072011M
102012M
012012M
042012M
072012M
102013M
012013M
042013M
072013M
102014M
012014M
042014M
072014M
102015M
012015M
042015M
072015M
102016M
01
Trend of nominal crude oil price (Brent): January 2012 = 100
Implementation of environmental taxes in EEA member countries
26 Environmental taxation and EU environmental policies
Table 4.4	 Excise tax rates (EUR and national currencies — current prices) levied on petrol and diesel
in 2015 and 2016
Petrol Diesel Petrol Diesel Petrol Diesel
EUR/1 000 l EUR/1 000 l EUR/1 000 l EUR/1 000 l
% change
2016/2015
% change
2016/2015
2016 2016 2015 2015
Austria 482 397 482 397 0 0
Belgium 619 465 615 428 0.6 8.6
Bulgaria 363 330 363 330 0 0
Croatia 505 401 479 374 5.5 7.0
Cyprus 479 450 479 450 0 0
Czech Republic 472 403 467 398 1.1 1.2
Denmark 611 416 608 414 0.6 0.6
Estonia 465 448 423 393 10.0 14.0
Finland 681 506 681 506 0 0
France 641 498 624 468 2.7 6.4
Germany 655 470 655 470 0 0
Greece 670 330 670 330 0 0
Hungary 384 353 397 366 – 3.5 – 3.6
Ireland 588 479 588 479 0 0
Italy 728 617 728 617 0 0
Latvia 436 341 411 333 6.1 2.4
Lithuania 434 330 434 330 0 0
Luxembourg 462 335 462 335 0 0
Malta 549 472 519 442 5.8 6.8
Netherlands 770 484 766 482 0.5 0.5
Poland 393 344 399 349 – 1.5 – 1.5
Portugal 618 402 618 402 0 0
Romania 461 430 462 430 – 0.1 – 0.1
Slovakia 551 386 551 386 0 0
Slovenia 545 462 596 495 – 8.5 – 6.5
Spain 425 331 425 331 0 0
Sweden 676 623 646 586 4.7 6.2
United Kingdom 787 787 745 745 5.6 5.6
National
currency/1 000 l
National
currency/1 000 l
National
currency/1 000 l
National
currency/1 000l
% change
2016/2015
% change
2016/2015
Bulgaria 710 646 710 645 0 0
Croatia 3 860 3 060 3 660 2 860 5.5 7.0
Czech Republic 12 840 10 950 12 840 10 950 0 0
Denmark 4 561 3 104 4 525 3 080 0.8 0.8
Hungary 120 000 110 350 123 300 113 555 – 2.7 – 2.8
Poland 1 669 1 459 1 669 1 459 0 0
Romania 2 035 1 897 2 035 1 897 0 0
Sweden 6 340 5 838 5 880 5 331 7.8 9.5
United Kingdom 580 580 580 580 0 0
Note:	 When taking variations in the exchange rate into account, the number of EU Member States with changes in the tax rates drops to
8 countries with increased and 2 with decreased tax rates as the tax rates (expressed in national currencies) remained constant in the
Czech Republic, Poland, Romania and the United Kingdom.
Source: 	 EEA based on EC, DG TAXUD, Excise Duty Tables; January 2015 and 2016.
Implementation of environmental taxes in EEA member countries
27Environmental taxation and EU environmental policies
When analysing current approaches, the most notable
country is Slovenia, where energy tax rates have been
revised frequently in line with overall government
policy. Seven changes were made in 2012, nine in 2013,
14 in 2014 and a further seven in 2015 (59
) (Figure 4.2).
This fiscal approach stands in contrast to policies
adopted in other countries. The trend of reducing
energy tax rates in early 2015 is worth highlighting as,
to some extent, it reversed the trend of the global oil
price at the end of 2014 and the beginning of 2015.
The tax rates levied on petrol and diesel increased
between August 2014 and January 2015 at a time when
the global oil price dropped. During the subsequent
months (March–June 2015) a slight increase in the
global oil price was associated with a reduction in
the tax rates on petrol and diesel between February
and August 2015. However, the distinct fall in the
global oil price since August 2015 did not trigger any
government actions and tax rates have remained
constant since August 2015 apart from a marginal
increase at the beginning of 2016.
A further interesting development occurred Belgium
at the end of 2015 to increase diesel tax rates and
thereby close the gap between the tax rates for
diesel and petrol. The Swedish government also has
the objective of aligning petrol and diesel tax rates,
as shown in the different percentage increases in
the respective tax rates between 2015 and 2016
(Table 4.4).
Figure 4.2	 Changes in petrol and diesel tax rates (current prices) in Slovenia, January 2012–April 2016
Source: 	 EEA based on EC, DG Energy.
325
375
425
475
525
575
625
01/01/2012
01/03/2012
01/05/2012
01/07/2012
01/09/2012
01/11/2012
01/01/2013
01/03/2013
01/05/2013
01/07/2013
01/09/2013
01/11/2013
01/01/2014
01/03/2014
01/05/2014
01/07/2014
01/09/2014
01/11/2014
01/01/2015
01/03/2015
01/05/2015
01/07/2015
01/09/2015
01/11/2015
01/01/2016
01/03/2016
EUR/1 000 litres
Petrol Diesel
4.2.2	 Carbon tax schemes — a snapshot of the current
situation in Europe
The pricing of carbon has become a signpost in
the climate‑policy debate on bringing down carbon
emissions and stimulating investment in cleaner
technologies. Two approaches to carbon pricing exist
in Europe: emission trading (ETS) and carbon taxation
schemes.
European countries have been pioneers of
implementing carbon taxation schemes. At the
beginning of the 1990s, Nordic countries introduced
them in addition to existing energy taxes. The final
user of energy products may not be aware of the
difference between energy and carbon taxes since
the total combined tax burden is usually reported.
However, the distinction is significant as the intentions
may differ: energy taxes aim mainly to decrease energy
consumption, while carbon taxes aim to incentivise
a shift in the energy mix away from carbon‑intensive
energy sources. This is the case when carbon taxes are
set at a uniform rate for all energy products and users,
and thereby the combined ambitions of efficiency and
cost‑effectiveness are fully exploited. However, carbon
tax rates as implemented in European countries vary
between different energy products and users, which
is no surprise since both forms of carbon pricing —
carbon taxes and ETSs — are applied.
(59
)	 Retail prices for petrol, diesel and heating oil are regulated in Slovenia.
Implementation of environmental taxes in EEA member countries
28 Environmental taxation and EU environmental policies
The first country in Europe to introduce a carbon
tax based on the carbon content of fossil fuels
was Finland, in January 1990. The carbon taxation
scheme is now designed in such a way that the total
tax burden is differentiated between an energy tax
and a carbon dioxide tax component. Deviating from
standard theory, the carbon dioxide tax rate now
differentiates between usages: the rate on transport
fuels is EUR 70 per tonne of carbon dioxide but
EUR 54 per tonne for heating purpose (tax rate for
light and heavy fuel oil, coal and natural gas). The
differentiated rates were initially set at EUR 50 and
EUR 30 respectively but when the energy/carbon
taxation scheme was changed in 2011 the percentage
increase applicable to heating was higher than the one
for transport fuels.
In 2011, the European Commission published a
proposal for re‑structuring the energy taxation
directive (ETD), differentiating between an energy tax
component and a per tonne of carbon dioxide tax
component. The proposal was withdrawn in 2015,
as the negotiation between the EU Member States in
the European Council was unsuccessful. The proposal
also distinguished between transport fuels and
energy products for heating, as is the case in Finland.
However, in the proposal, the carbon dioxide tax
rate per tonne would have been the same for both
purposes but the energy tax rate would have varied
depending on energy use.
The carbon tax scheme in Sweden was implemented
in the early 1990s by reducing existing excise taxes
so that the overall tax burden for households and
services did not change, and special tax rules for
energy‑intensive industries were extended so that the
overall industry carbon tax levels were reduced by
about 75 % in 1993 (Hammar and Åkerfeldt, 2011). The
carbon dioxide tax rate per tonne has increased over
the past 25 years and is now by far the highest in the
world at SEK 1 120 (EUR 120) per tonne CO2 (60
). The
design of carbon taxation as well as energy taxation
schemes was revised in Sweden in 2009 and the
changes entered into force in steps between 2010 and
2015. These changes affected in particular industry
since the industrial sectors covered by the EU ETS are
now completely exempt from paying any carbon taxes
— preventing double taxation (carbon pricing) — and
non‑EU ETS industries are facing increased carbon
dioxide tax levels but low energy tax rates. In 2013, the
non‑EU ETS industries were subject to a carbon dioxide
tax equal to 30 % of the standard carbon dioxide tax
rate per tonne and this increased to 60 % in 2015. The
exemption of industry outside the EU ETS is planned
that will finish in 2016, implying that these industries
will be subject to the standard carbon dioxide tax rate
per tonne — a policy approach similar to the 2011 EC
proposal.
A carbon dioxide tax on all fossil fuels as well as
on electricity was introduced in Denmark in 1992.
In 2014, the scheme on electricity was revised by
including carbon dioxide in the general electricity tax.
However, this change was accompanied by a reduction
in the electricity tax rate for business use so that it
corresponds with the minimum tax rate laid out in
the ETD and is levied on electricity consumption in EU
ETS sectors. As in the case of other EU Member States,
Denmark applies different rates for EU ETS and non‑EU
ETS industrial sectors (Andersen, 2015). The carbon
dioxide tax is EUR 22.8 per tonne (Hansen, 2015).
The carbon tax scheme in Norway established
different carbon dioxide tax rates for energy products
and purposes, ranging from NOK 365 (EUR 38) for
mineral oil (61
) to NOK 420 (EUR 45) per tonne of
carbon dioxide for petrol and diesel in 2016 (62
).
Some sectors, such as petroleum, are subject to the
carbon tax and the ETS (Bragadóttir et al., 2014). Other
European countries do not adopt this policy approach,
rather exempting EU ETS sectors from any payment of
carbon taxes.
At the end of 2015 the Norwegian Green Tax
Commission submitted its findings on whether and
how a green tax reform can be used to secure reduced
greenhouse gas emissions, improved environmental
conditions and sound economic growth (63
). One of their
recommendations was that the current system of
different carbon dioxide tax rates should be ended
so that all emissions from the non‑EU ETS sectors
are subject to the same tax rate per tonne of carbon
dioxide equivalent as is currently applied to petrol and
diesel (NOK 420 (EUR 45) per tonne carbon dioxide).
Slovenia implemented a carbon tax in 1997 and the
tax rate amounts to EUR 17 per ton of carbon dioxide
equivalents. Exemptions on liquefied petroleum gas
and natural gas were removed and the tax applies to
fossil fuels.
(60
)	 The exchange rate of SEK 9.31 per EUR (as of January 2016) was used throughout the report.
(61
)	 The exchange rate of NOK 9.42 per EUR (as of January 2016) was used throughout the report.
(62
)	 Differences in the CO2 tax rates levied on energy products have been reduced during recent years.
(63
)	 See the press release of Norwegian government at https://www.regjeringen.no/en/aktuelt/report-from-the-green-tax-commission/id2466332
(accessed on 5 January 2016).
Implementation of environmental taxes in EEA member countries
29Environmental taxation and EU environmental policies
In 2008, Switzerland launched a carbon dioxide levy
on a limited number of energy products, such as gas
oil and natural gas used for heating purposes, but
transport fuels are exempt. This scheme includes an
innovative approach as the rise in the tax rate is linked
to the non‑achievement of pre‑defined quantitative
emission reduction targets. The rate was initially set at
CHF 12 (EUR 11 (64
)) per tonne of carbon dioxide in 2008,
rising CHF 84 (EUR 76) in January 2016. Although carbon
dioxide emissions — relevant for assessing whether the
pre‑determined reduction target had been met — had
fallen within the period, the drop was not sufficient and
the pre‑set increase in the tax rate was triggered. The
latest amendments of the Swiss law may lead to further
increases of up to a maximum rate of CHF 120 (EUR 109)
per tonne carbon dioxidefor 2018 but only if pre‑defined
reduction targets have not been achieved. The link
between price‑based instruments and quantity‑based
reduction targets is an interesting one — the design of
the carbon dioxide levy is directly related to changes in
the behaviour of energy users since the rate increases if
pre‑determined reduction targets are not reached.
A carbon tax was introduced in Ireland for all energy
products and users not covered by the EU ETS.
The carbon tax was levied on transport fuels from
mid‑December 2009, and on fuel for heat from May
2010. Although initially exempt, since May 2013 solid
fuels, such as coal, are also subject to the carbon tax.
The rate increased from EUR 15 per tonne of carbon
dioxide to its current value of EUR 20 as part of the 2012
Budget.
Fiscal reasons were one of the reasons for the
introduction in 2010 of Iceland's carbon tax that covers
the majority of transport and heating fuels but not
kerosene and coal. Probably the most striking feature of
this tax was the connection to the EU ETS, as the tax rate
reflected the price of the EU ETS emission allowance.
In 2010 the carbon tax amounted to about EUR 14 per
tonne of carbon dioxide and also applied to fuels used
by fishing vessels (OECD, 2014). An interesting aspect
of the Icelandic climate policy is that some installations,
such as small emitters, are excluded from the ETS
but are subject to an emission charge which is set in
accordance with the development of ETS allowance
prices and was ISK 1 338 (EUR 8.26) per tonne of carbon
dioxide equivalent in 2013 (Bragadóttir et al., 2014)).
In April 2014, France introduced a carbon tax (taxe
intérieure sur la consommation (TIC)), in a tax neutral way,
covering coal, heavy fuel oil and natural gas. From 2015
onwards transport fuels were also subject to the tax
which initially was set at EUR 7 per tonne carbon dioxide
but increased to EUR 14.5 in 2015 and EUR 22 in 2016.
In August 2015, in probably the most remarkable recent
development dealing with environmental taxation, the
French parliament passed the Energy Transition for
Green Growth Act, an energy bill outlining an increase in
the tax rates to EUR 56 per tonne carbon dioxide in 2020
and EUR 100 in 2030.
Announcing these long‑term increases in carbon
tax rates is unique — the implementation of this
trajectory will require average annual increases of
26 % between 2016 and 2020 and 6 % annually for the
period 2021–2030. The total tax burden levied on the
different energy products is the sum of the existing
energy taxation scheme and a carbon tax component.
The share attributed to the carbon tax is rather low for
petrol and diesel compared to other energy products
as it was projected that the carbon tax component for
energy products such as liquid petroleum gas (LPG)
and fuel oil will increase steadily (El Beze, 2014). This
development is reflected in the recent sharp increases
in the tax rates for heating gas oil and heavy fuel
oil: the former increased by 26 % between January
2015 and January 2016 and the latter by 52 %. The
continuation of the carbon tax trajectory will trigger
further increases but not as steep.
Portugal introduced the most recent carbon tax in
Europe. The parliament endorsed the carbon tax law in
2014, paving the way its introduction from the beginning
of 2015. A Commission for Environmental Tax Reform,
which was appointed by the Portuguese government,
came up with a proposal for linking carbon tax rates
to the allowance prices of the EU ETS. However, the
government rejected the proposal and set the tax rate at
EUR 5 per tonne of carbon dioxide.
Experience with carbon taxes/charges has also been
gained in several Eastern European countries that
have used of carbon pricing tools for many years.
For example, Croatia, Latvia and Poland have
comprehensive air emission charging schemes that
include carbon dioxide emissions (Speck et al., 2006;
OECD, 2003; REC, 2001 and 1999). Estonia also has a
carbon tax in place and the generation of thermal energy
is subject to it. In all these cases the rates are rather low,
for example EUR 2 per tonne carbon dioxide in Estonia
(Ecologic Institute and eclareon, 2014).
(64
)	 The exchange rate of CHF 1.10 per EUR (as of January 2016) was used throughout the report.
Implementation of environmental taxes in EEA member countries
30 Environmental taxation and EU environmental policies
The United Kingdom has a rather broad and complex
approach to carbon taxation schemes with three
different instruments: the climate change levy (CCL),
CRC Energy Efficiency Scheme (CCR, formerly the
Carbon Reduction Commitment) and the carbon price
floor (CPF).
•	 The climate change levy (CCL) was introduced in
2001 and is a tax on energy products (electricity,
natural gas, LPG and solid fuels) consumed by
non‑domestic users and increased by 30 % between
its introduction in 2001 and the latest increase in
April 2016 (an average 1.8 % per year — in nominal
prices). The CCL rates were increased by about
1 % (nominal; an increase in line with inflation) in
April 2016 but the taxes levied on transport fuels
remained at the same level although the conditions
of the fair fuel duty stabilisers (oil price below
USD 75 per barrel for more than three months)
for an increase were met. The CCL was criticised
in the past as the energy products are not taxed
in proportion to their carbon contents. Originally,
electricity generated from renewable sources was
exempt from the CCL but this will be abolished —
in the November 2015 Spending Review the UK
government announced that a transitional period
for electricity suppliers to apply the CCL exemption
on electricity generated from renewable sources will
end on 31 March 2018.
•	 The CRC Energy Efficiency Scheme was introduced in
2010 applying to large non‑energy intensive public
and private sector organisations having half‑hourly
meters recording total electricity consumption
every half‑hour and consumption greater than
6 000 MWh. The participating organisations are
not part of the EU ETS and must monitor and
report their energy uses which are then converted
to CO2 emissions by applying emission factors
published by the Environment Agency. Based on
these calculations the organisations are required
to surrender allowances for their emissions
and the initial allowance price was set at GBP
12 (EUR 15.8 (65
)) per tonne CO2 and the price
increased to GBP 16.90 (EUR 22.2) for the financial
year 2015/2016 (66
). The government announced
in the 2016 budget that the CRC energy efficiency
scheme will be abolished at the end of March 2018.
Furthermore, it was stated that this will lead to an
increase in CCL rates above inflation to recover the
losses in tax revenues of discontinuing the CRC
energy efficiency scheme (HM Revenue & Customs
and HM Treasury, 2016) (67
).
•	 In the 2011 budget, the UK government announced
a carbon price support (CPS)/carbon price floor (CPF)
mechanism operational from 1 April 2013 (68
). The
aim is to foster investment in low‑carbon electricity
generation technology by reducing uncertainty
about the volatility of the future prices of EU ETS
emission allowances. Only fuels used to generate
electricity are subject to the CPS policy and the
government announced a carbon price floor (CPF),
set at GBP 16 (EUR 21) per tonne of carbon dioxide
in 2013 and originally planned to increase it to
GBP 30 (EUR 39) in 2020 (69
). The initial CPS rate
was set at GBP 4.9 (EUR 6.5) per tonne of carbon
dioxide (April 2013) and this was raised to GBP 18.1
(EUR 23.8) in April 2015. The UK government
reviewed the decision of the annual increase in
the CPF in the 2014 Budget and capped the CPF
trajectory at GBP 18 (EUR 24) for the period from
2016/17–2019/20, reasoning that this would limit
competitive disadvantages for the UK economy
(HM Treasury, 2014). The two components making
up the CPF are the allowance price from the EU ETS
and the CPS rate per tonne of carbon dioxide. The
CPS rate is only imposed in the United Kingdom and
utilities using fossil fuels in electricity generation
face this additional cost component (70
). Capping the
CPF trajectory therefore limits the price disparity
between utilities in the United Kingdom and other
EU Member States as well as the cost of electricity.
The CPS rate, expressed in GBP per tonne of carbon
dioxide, serves as the basis for determining specific
CPS rates for different fossil fuels through the
application of emission coefficients and are included
in the CCL regime (71
).
(65
)	 The exchange GBP 0.76 per EUR (as of January 2016) was used throughout the report.
(66
)	 The CRC Scheme provides the option of buying allowances at the start of the compliance year in the cheaper 'forecast sale' at a rate of
GBP 16.10, or in a more expensive 'compliance sale' at the end of the year at GBP 16.90 for reaching the compliance requirements.
(67
)	 In 2014 revenues generated from CRC amounted to about 38 % of revenues from the CCL, i.e. GBP 504 million as compared to GBP 1 506
million.
(68
)	 For a detailed discussion of the CPS see 'A guide to carbon price floor' published by HM Revenue & Customs: https://www.gov.uk/
government/publications/excise-notice-ccl16-a-guide-to-carbon-price-floor/excise-notice-ccl16-a-guide-to-carbon-price-floor#who-has-topay-the-cps-rates-of-ccl
(accessed on 30 March 2016).
(69
)	 The prices are expressed in constant (2009) prices.
(70
)	 Although a detailed and comprehensive analysis of the consequences of the introduction of the CPF/CPS scheme has not been
undertaken, this policy is regularly mentioned as a contributing factor for planned or actual closure of coal powered utilities in the United
Kingdom.
(71
)	 The French Government plans to introduce in France's 2017 Finance Bill a carbon floor price of EUR 30 per tonne aiming to cut carbon
dioxide emissions in the follow-up of the Paris Agreement on climate change.
Implementation of environmental taxes in EEA member countries
31Environmental taxation and EU environmental policies
Many businesses currently explicitly support carbon
pricing (72
). Furthermore, an increasing number of
businesses make use of internal carbon prices both as
a voluntary tool for making investment decisions with
regard to new technologies and to mitigate risks from
future regulation and global carbon pricing frameworks
(CDP, 2015). Businesses from many industrial sectors,
including energy, finance, manufacturing and IT, are
applying internal carbon prices. The range of these
carbon prices is enormous, with energy companies
often reporting a higher price than businesses in the
financial sector. For example, Exxon uses a price of
USD 80 per tonne of carbon dioxide equivalent, Statoil
of USD 50, and Royal Dutch Shell of USD 40, compared
to Caixa Bank and Societe Generale price of about
USD 11 (CDP, 2015).
The theoretically significant distinction between
carbon and energy taxes is of less relevance in
political reality as both are converted into the same
unit (EUR per physical unit of energy/carbon per
litre, kilogram, etc.). The actual tax burden, the sum
of energy and carbon taxes, determines the final
end‑user energy price and is more relevant than the
individual tax components, in particular when the aim
is to study whether the tax changes the behaviour of
economic actors, namely the consumers of energy
products. The exclusive focus on carbon pricing in
climate discussions may provide some biased results.
For example, the highest tax burden on transport
fuels (petrol and diesel) is in the United Kingdom,
which does not levy any carbon tax on these energy
products.
4.2.3	 Transport taxation
The most important taxes listed in this category
are related to the ownership and use of vehicles,
although taxes levied on other transport equipment
and transport services are also included (Eurostat,
2013). Increased attention is being given to road user
and congestion charges, which were introduced as
environmental policy tools to reduce air pollution and
congestion in cities as well as to generate revenues
often used to repay debts issued to finance the
construction, operation and maintenance of roads.
Schemes exist in the majority of countries (Table 4.2
and Annex 2) which generally distinguish between
private vehicles and commercial vehicles/heavy good
vehicles (HGVs) (73
). Moreover, the schemes can differ
widely in their design as the charge rates may be
distance‑based or not (a vignette approach).
Sales and/or registration taxes on vehicles are in place
in 21 of the 28 EU Member States. The countries that
do not levy these one‑off taxes charge may charge an
administrative fee for the registration of vehicles (74
).
The status of the application of circulation (annual)
taxes paints a similar picture with the majority of EU
Member States making use of them. The number of
countries applying circulation taxes is higher when
including those levying this tax on the ownership of
commercial vehicles. The design of these transport
taxes differs significantly, as the taxable base can be
carbon dioxide emissions, weight, engine size, price
of the vehicle (sales/registration taxes) and in the
case of circulation taxes: engine size, carbon dioxide
emissions, weight, etc. (75
).
There have been interesting developments in terms
of vehicle taxation in the Netherlands and Denmark.
These are of added significance since these countries'
share of transport tax revenues in GDP is among the
highest in Europe — Denmark is ranked first and in
the Netherlands third in 2013.
The Dutch development is interesting as it reveals
valuable insights to assessing the effectiveness and
efficiency of market‑based instruments. The focus
is on vehicle purchase or registration tax since the
design of the tax was changed in 2009. From then,
the tax was not only based on the price (the tax
rate was 45.2 % of the net list price) but also on the
carbon‑efficiency, with vehicles emitting less than
110 grams of carbon dioxide per kilometre for petrol
vehicles and 95 grams for diesels exempt from the
tax (Kok, 2015). In subsequent years, the cut‑off limit
was adjusted according to technological advances and
in 2013 the registration tax was completely based on
the carbon efficiency of the vehicle. The circulation
tax was based on a vehicle's mass and fuel type but
in 2008 carbon dioxide emissions were added as a
further tax component with the same cut‑off limits as
for the registration tax. Vehicles below these cut‑off
limits were eligible for partial tax exemptions.
(72
)	 See for example the list of carbon pricing supporters at http://siteresources.worldbank.org/EXTSDNET/Resources/carbon-pricing-supporterslist-UPDATED-110614.pdf
(accessed on 10 December 2015).
(73
)	 As discussed in the Eurostat statistical guide 'Environmental taxes' road-pricing schemes are treated differently in national accounts and
only when that the country regards this type of MBI as a tax in national accounts, 'should it be included as a transport tax' (Eurostat, 2013).
This report does not follow this guideline in detail as it includes all charging schemes, thereby disclosing the extent of charging schemes
implemented in European countries.
(74
)	 Registration fees are not considered in the overview tables.
(75
)	 More information can be found on the European Automobile Manufacturers' Association (ACEA) website (www.acea.be).
Implementation of environmental taxes in EEA member countries
32 Environmental taxation and EU environmental policies
The comparison of the performance of the Dutch
ranking of average vehicle carbon dioxide emissions
between 2007 and 2014 reveals a big change; the
Netherlands was ranked 12th in Europe in 2007 (76
) and
1st in 2014 (EEA, 2015a). It is clear that these changes
cannot be exclusively due to changes in the vehicle
taxation schemes but Kok stated that … about two‑thirds
is explained by the introduction of CO2‑based tax incentives
and about one third by exogenous factors of which the
economic recession in 2008–2009 is the most prominent
(Kok, 2015).
The effectiveness of the change in policy on reducing
emissions is beyond doubt, but, as the Court of Auditors
of the Netherlands noted, this policy is 'relatively
expensive and inefficient' as a fiscal stimulus (Brunisma
and Echten, 2015) (77
). Estimates show that for the period
2008–2013 … the cost‑effectiveness would be in the order of
EUR 1 400–1 900 loss of car‑related tax revenues per tonne
of carbon‑dioxide abatement (Kok, 2015). The most recent
data of the Dutch registration tax revenue show that the
revenues dropped by about 65 % from EUR 3.6 billion
in 2007 to EUR 1.1 billion in 2014 (nominal prices). This
policy change clearly has budgetary implications, as
stated in the latest environmental performance review
of the Netherlands: such a reduction in tax revenues
certainly represents a major fiscal challenge (OECD, 2015a).
The fiscal trend in Denmark was comparable as
revenues from the vehicle registration tax dropped
from DKK 24.3 billion (EUR 3.3 billion (78
)) in 2007 to
DKK 13.1 billion (EUR 1.8 billion) in 2012, but has since
increased to DKK 16 billion (EUR 2.1 billion) in 2014. The
Danish registration tax increases the purchase price of
a vehicle dramatically as the two‑tier tax rate is set at
105 % of the list price for the first EUR 10 600 and 180 % for
the remaining part (Hogg et al., 2016) (79
).
The findings of a recent assessment of the Danish
vehicle and energy taxation scheme states that per
capita road transport emissions in Denmark are among
the highest in the EU, which suggests that the structure of
car taxation in Denmark, currently based on low excise
duties and high car registration fees, is not meeting
its environmental objectives. In particular, it provides
disincentives to purchase newer and more efficient cars
(EC, 2015c).
Lamine and Lõhmuste (2014) support this feature of
registration taxes slowing the renewal of the car fleet (80
).
However, other research shows that changes in the
design of registration taxes to include carbon dioxide
emissions as a taxable component reduced the carbon
dioxide emission intensity of the average new car by 1.3 per
cent, partly through an induced increase of the share of
diesel‑fuelled cars by 6.5 percentage points (Gerlagh et al.,
2015). The same study further concluded that taxes on
transport fuels also need to be taken into account when
assessing the effectiveness of environmental taxation,
noting higher fuel taxes lead to the purchase of more fuel
efficient cars, but higher annual road taxes have no or an
adverse effect.
The need to regularly review the basis of tax structures
is therefore of great relevance for transport taxes when
they are set in relation to the carbon efficiency of cars
given technological developments. Newly registered
vehicles in Europe are emitting less carbon dioxide per
vehicle kilometre, year on year (EEA, 2015a) and if these
changes are not considered, revenues from transport
taxes will reduce over time.
With this in mind, the UK government announced a
complete overhaul of its existing circulation taxation
scheme (vehicle excise duty (VED)) by 2017. From 1 April
2010 onwards, the first owner car is exempt from paying
VED for vehicles belonging to band A‑D (CO2 emission
figures of up to 130 g/km) and from the second licence
onwards the VED rate zero rated only for vehicles of
band A (CO2 emission figures up to 100 g/km). After
April 2017, newly purchased vehicles will be subject to
a tax rate directly linked to carbon dioxide emissions
(the current practice) but only vehicles with zero CO2
emission are exempt from VED payments (zero‑emission
vehicles). The VED payments will be phased in with the
first band reaching from 1–50 g/km (81
).
The new scheme foresees that in subsequent
years there will be only three rates. The rate for
zero‑emission vehicles will be zero, while the standard
(76
)	 As quoted in Kok, 2015.
(77
)	 Presentation 'Cost-effectiveness of national tax incentives in car taxation — The Netherlands as an example' given by Brunisma and Echten
(Ministry of Finance of the Netherlands) at the 6th International Tax Dialogue Global Conference, Tax and the Environment, 1–3 July 2015, Paris.
(78
)	 The exchange DKK 7.46 per EUR (as of January 2016) was used throughout the report.
(79
)	 The Budget 2016 reduced the tax rate from 180 % to 150 % for the part exceeding DKK 79 000 (EUR 10 600).
(80
)	 Lamine and Lõhmuste (2014) studied vehicle taxation scheme and concluded: However, in 2012 and among the countries with the highest
purchasing power (Germany, Belgium, the Netherlands, Finland, Italy), those with low transport taxation had the largest share of new cars (less
than five years old) in their fleet. In contrast, in Finland and to a lesser extent in the Netherlands, where notably the registration tax was higher,
the share of new cars was smaller, suggesting a potential negative effect of high purchase taxes on the renewal of car fleets.
(81
)	 See for more information on the scheme including the different emission bands: https://www.gov.uk/government/publications/vehicle-excise-
duty/vehicle-excise-duty.
Implementation of environmental taxes in EEA member countries
33Environmental taxation and EU environmental policies
will be a flat rate of GBP 140 (EUR 184) applying to all
vehicles independent of their carbon efficiency, and
there will be a premium rate, a supplement of GBP 310
(EUR 408) a year for cars with a list price exceeding
GBP 40 000 (EUR 53 000).
This move is understandable as maintaining the current
scheme would lead to increased losses in tax revenues,
as the tax base will erode because of technological
advances in engine performance. The UK Office for
Budget Responsibility (OBR) projected a sharp fall in
vehicle excise duty revenues, predicting that their share
in GDP would decrease from 0.4 % currently to about
0.1 % in the mid‑2030s if the existing structure were
maintained and the rates increased only in line with
inflation (OBR, 2014).
Environmental taxation and EU environmental policies34
Overall findings and reflections
5	 Overall findings and reflections
5.1	 Overall findings on environmental
taxation
Progress has been made with the application of
environmental taxes when one compares the actual
number of environmental taxes discussed in this report
(Table 4.2 and Annex 2) with the data published by the
EEA in 2006 (82
). One of the reasons for the increase
is the change in the requirements of the 2003 Energy
Taxation Directive (ETD) and especially the expiry of
transition periods as countries were legally obliged to
introduce new taxes on energy products.
In addition, environmental taxation in combination
with other market-based instruments (MBIs), such as
extended producer responsibilities, were introduced
in the waste area in many countries — 25 of the 28 EU
Member States now use landfill taxes as part of their
waste management policies. Road pricing schemes
are another area that have been implemented in
many European countries in the past decade. It is
not always clear, however, whether national road
pricing/congestion charge schemes can be labelled as
environmental taxes based on national taxation and
national accounting principles.
The EEA's European environment — state and outlook
report (SOER) concluded that over the past 40 years
the implementation of environment and climate policies
has delivered substantial benefits for the functioning
of Europe's ecosystems and for the health and living
standards of its citizens (EEA, 2015b). Market-based
instruments have contributed to this, but it is also clear
that the number of environmental taxes implemented
does not say anything about their effectiveness
in terms of reducing environmental pollution and
changing the behaviour of economic actors (83
).
Economic literature discusses the advantages
of environmental taxes at length, referring to
practical results and findings of empirical and
theoretical modelling frameworks. In recent years,
policymakers have shown an ever-increasing interest
in environmental taxation and this is undoubtedly
associated with its revenue-generating potential as
well as to the overall fiscal outlook and the concept of
environmental tax reform.
The underlying idea of introducing environmental tax
reform is to change the national tax system where
the burden of taxes shifts from economic functions,
sometimes called 'goods', such as labour and capital
to activities that lead to environmental pressures and
over-use of natural resources, sometimes called 'bads'
(EEA, 2006).
This tax-shifting policy approach has become even
more relevant as an essential policy driver at the EU
level since the launch of the Europe 2020 Strategy and
European Semester process (Hogg et al., 2016, EC,
2015b and Garnier et al., 2014). The concept has been
discussed for more than two decades in the EU with the
underlying idea promoted in the White Paper 'Growth,
Competitiveness and Employment' (COM(93)700) of
December 1993.
These reform agenda has led to some changes in the
overall focus of environmental taxation, away from
purely a policy tool for environmental protection
towards a policy instrument for simultaneously
addressing environmental, socio-economic and
fiscal considerations. Taxation has thereby become
an enabling factor for triggering the green economy
transition process at the heart of several EU policies
(EEA, 2014 and Ekins and Speck, 2011). This in turn
implies that the development of environmental
tax revenue must play a bigger role than hitherto
considered when studying the current status and
impacts of environmental taxes.
The primary objective of environmental taxes,
however, is not to raise public revenues but to tackle
environmental challenges. This aspect is of great
significance as environmental taxes will never generate
(82
)	 See also the OECD database on instruments used for environmental policy: http://www2.oecd.org/ecoinst/queries.
(83
)	 For a discussion of the current energy tax regime and the challenges in achieving energy and climate policy targets, such as GHG emission
reduction, increase of renewable energy and energy efficiency, see Schlegel (2014).
Overall findings and reflections
35Environmental taxation and EU environmental policies
large amounts of revenue but can change behaviour
towards a resource-efficient circular economy, as,
for example, impressively revealed by the experience of
the Irish plastic-bag tax (84
).
Although the actual number of environmental taxes
implemented in EU Member States has increased,
the revenues generated as a proportion of GDP has
decreased. Trends for the tax revenues generated from
labour in the 2002–2014 period reveal an even larger
increase than for GDP and environmental tax revenue at
EU‑28 level (Figure 5.1). This picture does not correspond
to the idea of implementing tax-shifting programmes.
It is worth emphasising that the growth of
environmental tax revenues in the EU28 has exceeded
the development of GDP and labour tax revenues since
the economic and financial crisis of 2008/2009. This
development is in strict contrast to the development
between 2002 and 2009 when environmental tax
revenues were more or less flat — there was slight
growth in 2003 and 2004 and a fall of 4 % between
2007 and 2009.
Figure 5.1	 Trends in GDP, labour and environmental tax revenues and employment, EU‑28, 2002–2014
(2002 = 100)
GDP Tax on labour Environmental tax Employment
90
95
100
105
110
115
120
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
% (Index 2002 = 100)
The developments in EU Member States were rather
diverse, with increases in environmental tax revenues
exceeding GDP growth and labour taxation revenues
in a number of countries including Bulgaria, Estonia,
Greece, Latvia, Poland and Slovenia, between 2002 and
2014. A sharp increase in environmental tax revenues
in the post-crisis years is reported for France, Greece,
Finland and Italy, while the trend of a continuous rise
in environmental tax revenues in Estonia, Poland and
Slovenia was not broken by the economic and financial
crisis of 2008/2009.
Focusing on tax revenues alone can be misleading as
revenue figures do not directly show the environmental
effectiveness and efficiency of taxes. A good example
of the effectiveness of environmental taxes is the
Dutch vehicle registration tax scheme discussed in the
previous chapter that contributed to a change in the
vehicle stock as many smaller (low carbon emitting)
vehicles were purchased. This trend, however, also
led to a reduction in tax revenues, thereby limiting the
potential of tax-shifting programmes.
Note: 	 Monetary data (GDP, labour and environmental tax revenues are in constant prices using the GDP deflator); 'Employment' is employed
persons aged 15–64 years. 'Tax on labour' comprises all taxes paid by employers and employees that are linked to wages, such as
payroll taxes and personal income taxes as well as social security contributions.
Source: 	 EEA based on Eurostat and EC, DG TAXUD.
(84
)	 Convery et al. (2007) summarised as follows: The effect of the tax on the use of plastic bags in retail outlets has been dramatic — a reduction in
use in the order of 90 %, and an associated gain in the form of reduced littering and negative landscape effects.
Overall findings and reflections
36 Environmental taxation and EU environmental policies
The call for a more widespread application of
environmental taxes is omnipresent as experience
shows that they can contribute to environmental
improvement and reduced energy and resource
consumption by improved economic performance
including the stimulation of innovation (OECD, 2010).
The number of environmental taxes has indeed
increased over the past decade and the redesign
of existing ones may have helped improve their
effectiveness. However, the important element of
generating revenues, which is of high relevance in the
current political debate about promoting the idea of tax
shifting programmes, has stagnated, although a slight
increase is reported for the most recent years. There
are many reasons for this stagnation, the main ones
being competitiveness and social equity concerns (85
).
The rather sluggish increases in energy and carbon
tax rates in recent years are a case in point given the
compelling resource and climate change logic for their
increased use.
5.2	 Reflections on future challenges
Environmental tax reform has been implemented in
several European countries and around the world in
the past three decades (Andersen and Ekins, 2009 and
Sustainable Prosperity, 2012). The concept of altering
national tax systems in a revenue-neutral way is now
of growing importance in the context of global efforts
to shift economies to become more resource-efficient,
green and socially inclusive.
In the past, governments introduced environmental
taxes as a way of achieving particular environmental
objectives, simultaneously using the additional
revenues generated for reducing other taxes.
Attitudes towards such environmental tax reform
and environmental taxes in general have changed,
however, as policymakers have become increasingly
aware of the systemic links between environmental
problems and the need to formulate coherent,
integrated policy responses (EEA, 2014 and 2015b).
This recognition is currently reflected at all levels
of EU policy. Environmental tax/fiscal reforms are
recommended as a means of fostering resource
efficiency and economic transition in EU fiscal and
budgetary, as well as environmental, policies. This
is the case, in particular, in the European Semester
process of the Europe 2020 strategy, and explicitly in
the country-specific recommendations of its Annual
Growth Survey, as well as in the EU 7th Environmental
Action Programme (EAP).
One of the challenges for environment and climate
policies is their medium- to long-term perspective
compared with the relatively short-term challenges
and requirements of economic, fiscal and social
policies (EEA, 2014). Following the financial crisis,
societies understandably regard job creation and social
inequities as urgent issues, demanding swift action.
Policymakers therefore face a significant challenge in
reconciling slightly abstract, long-term policy goals with
immediate political realities. This is particularly visible
in the academic and political discussion of carbon
pricing as a prerequisite for the transition to a low
carbon and green economy. Changes in the current
pricing structure are critical for the implementation of
resource efficient and low carbon technologies because
the widespread diffusion of new technologies are
often not economically viable under current economic
conditions of falling energy prices.
At the same time, this can lead to a challenge of how to
combine the priorities and objectives of environment/
climate policies with fiscal, economic and social policies
in the short-to-medium-to-long-term. The objectives of
the first are to reduce environmental pressures while
for the second the overall target is to guarantee fiscal
sustainability. Assessing this dichotomy is of particular
interest, for example, when considering the potential
implications for the fiscal system of cutting greenhouse
gas emissions in the EU by 80 % by 2050 compared to
1990 levels alongside demographic changes projected
for the EU over the same period.
5.2.1 	 Possible implications of meeting EU climate policy
targets
There has been a gradual extension over time of EU
policy objectives and targets relating to the reduction
of greenhouse gas emissions and the transition to
a low‑carbon economy. For 2020, there is a 20 %
reduction target for EU greenhouse gas emissions
from 1990 levels, while for 2030 and 2040, 40 % and
60 % reductions are foreseen compared to 1990. The
ultimate overall ambition is to cut the EU's emissions
by 80 % below 1990 levels by 2050 through domestic
reductions alone (86
).
(85
)	 There is a range of literature assessing the potential fear of loss of competitiveness as a consequence of introducing environmental taxation
unilaterally; for example: Andersen and Ekins, 2009, and Rosenstock 2014. The topic of regressive effects of environmental taxes is also covered
in the literature: see Ekins and Speck, 2012, Kosonen, 2012 and EEA, 2011b.
(86
)	See http://ec.europa.eu/clima/policies/strategies/2050/index_en.htm.
Overall findings and reflections
37Environmental taxation and EU environmental policies
Transport-related greenhouse gas reduction targets
were set in the Transport White Paper (EC, 2011):
transport emissions to be reduced by 20 % from 2008
levels by 2030 and by at least 60 % from 1990 level by
2050 (EEA, 2014b). Furthermore, an indicative target
of a 70 % reduction of transport oil consumption by
2050 on the basis of the 2008 level was used in the
impact assessment accompanying the Transport White
Paper (EEA, 2014b). An annual reduction of 2.8 % in
transport oil consumption would be required to meet
this target (87
). This is of relevance when assessing the
role of environmental taxation in the transition process
towards a low carbon economy as well as the potential
of tax-shifting programmes.
As already discussed, energy/carbon taxes levied
on transport fuels generate the largest amount of
environmental tax revenue and are therefore a critical
factor when assessing any tax-shifting programmes.
Sustaining the tax revenues of transport fuels at the
current level (expressed as a constant share of tax
revenues to GDP (88
)) would require an annual average
increase of more than 4 % in constant prices as both
the required reduction in fuel consumption and
offsetting the projected increase in GDP are needed (89
).
An annual increase of this size would require a
fundamental rethink by politicians since the absolute
increase in the tax rates levied on petrol and diesel in
2005–2014 in the majority of EU Member States was
much lower (Table 4.3 (90
)).
This indicative calculation of increases in transport fuel
taxes illustrates the increases in the tax rates required
to keep the tax revenue level of transport fuels
constant, assuming no changes in transport policies
and vehicle mix. It is clear that transport modes and
vehicle stocks will change over time, and these changes
will undoubtedly influence the future development of
the tax take. The transition from oil-driven to electric
vehicles can be assumed to have fiscal implications
as the current system levies much higher tax rates on
transport fuels than on electricity (91
). Estimates based
on the German energy tax scheme show that the tax
take for petrol- and diesel-driven vehicles is on average
8 and 5 times higher respectively than the tax revenues
generated from electric-driven vehicles (Teufel et al.,
2015) (92
).
Vehicle-related taxes, such as sales or registration taxes
and annual vehicle taxes, also generate significant
amounts of revenues in some EU Member States, such
as Denmark and the Netherlands. In recent years, the
general trend has been to design these taxes so that
the tax base is carbon dioxide emissions. Furthermore,
countries are also providing financial incentives for the
purchase of electric vehicles that can have budgetary
consequences, as reported for Norway. The Norwegian
government incentive scheme is a success as the
country is the biggest user of electric vehicles in the
world — 20 % of all new vehicles sold were electric in
2015 (93
). However, this success was accompanied by a
reported loss in the budget of between NOK 3–4 billion
(EUR 310–420 million (94
)). It is highly likely that the
transformation of the car fleet will require a revision of
vehicle taxation design in the medium to long term, as
already announced in the United Kingdom.
The topic of tax-base erosion for transport fuels
therefore requires special attention, bearing in mind
technological improvements in terms of vehicles using
less fuel per kilometre, the setting and achievement
of energy consumption and greenhouse gas reduction
targets, as well as changes in transport modes and
vehicle stocks (95
). These features are all relevant and
significant when assessing the potential of tax shifting
policies in the medium to long term.
A similar development of a shrinking tax base for other
energy products can be expected as part of the overall
transition to a low-carbon economy. For example,
Denmark's national policy goal is to become a fossil
fuel free economy by 2050, with energy consumption,
(87
)	 The final energy consumption of petroleum products in the transport sector increased by an annual average rate 0.7 % between 1990 and 2014
(calculation based on Eurostat data ‘Simplified energy balances 3 annual data [nrg_100a] (accessed on 16 February 2016)).
(88
)	 The underlying assumption of long-term projections regarding tax revenue trends is to keep a constant tax-to-GDP ratio. This approach is
applied in examples of sustainability analysis (OBR, 2014).
(89
)	 For example, GDP is projected to increase by 78 % in constant prices between 2010 and 2050, an annual increase of about 1.5 % — see the data
in EC, 2013.
(90
)	 The countries with an annual average increase in tax rates (in constant prices) for the period 2005–2014 were Greece (petrol tax rate increased
by 8.3 % per year) and Cyprus (diesel tax rate increased by 5.2 % per year).
(91
)	See http://www.oecd.org/tax/taxing-energy-use-2015-9789264232334-en.htm — tax rates are expressed in EUR per gigajoule.
(92
)	 It is projected that about 80 % of private passenger transport activity is to be carried out with electric (plug-in or pure electric) vehicles by 2050
(EC, 2015d) which has implications for energy tax revenues — assuming that there will be no major change in the overall structure of energy
taxation with high tax rates levied on transport fuels (petrol and diesel) and lower electricity tax rates.
(93
)	 See the article 'Norway Is a Model for Encouraging Electric Car Sales' in The New York Times (15 October 2015 at http://www.nytimes.
com/2015/10/17/business/international/norway-is-global-model-for-encouraging-sales-of-electric-cars.html?_r=0).
(94
)	See http://www.reuters.com/article/2015/04/20/us-norway-autos-idUSKBN0NB1T520150420. The exchange rate NOK 9.62 per EUR
(as of February 2016) was used throughout the report.
(95
)	 For further discussion, see EEA, 2015c.
Overall findings and reflections
38 Environmental taxation and EU environmental policies
including in the transport sector, based on renewables
(Danish Government, 2013) and discussions are
underway to ban the use of coal from 2025 and not as
initially planned from 2030. Similar discussions about
ending the consumption of fossil fuels are underway
in other EU Member States, including Sweden and the
United Kingdom.
A relevant study when considering the potential
of energy tax base erosion was undertaken in the
United Kingdom, analysing the macro-economic
effects of decarbonising the UK economy through
a series of carbon budgets (CE, 2014). The period
covered in the study is the first four carbon budgets,
up to 2027 for which a target of a 50 % reduction in
greenhouse gas emissions relative to 1990 levels is set.
A striking result of the macro-econometric modelling
exercise is the scenario result related to the fiscal
and budgetary implications — a net increase in annual
government revenue of GBP 5.7billion by 2030 due to a
stronger economy (CE, 2014) is projected. However, the
environmental tax take will be lower although revenues
from auctioning of EU emission trading system (ETS)
allowances and from the carbon prices support
mechanism will increase. These increases in revenues,
however, are not enough to offset the reduction of
transport fuel tax revenues as petrol and diesel sales
fall. The overall increase in government revenue will
come from an increase in revenues from income tax
and value added tax.
One of the most interesting findings of this study
is that an increase of environmental tax revenues
cannot be expected in the future if greenhouse gas
reduction targets are met and a substitution process
from petrol‑and diesel-powered cars to electric vehicles
occurs as one of the components of the transition to a
low-carbon economy. The projections of the UK Office
for Budget Responsibility (OBR) also provide interesting
insights into this discussion as they show a decreasing
trend in revenues from petrol and diesel taxation
although tax rates will be increased in line with inflation
(OBR, 2014).
The projected results depend critically on the
assumptions about the fuel efficiency of cars as the
central scenario assumes that new car fuel efficiency
will improve over the projection period in line with recent
trends. In this scenario, average new car fuel efficiency
reaches 78 grams per kilometre in 2029–30 compared to
a more fuel-efficient scenario which is consistent with the
recommendation of the Committee on Climate Change (CCC)
that new car efficiency needs to reach 50 g/km by 2030 and
trend towards zero emissions by 2035 (OBR, 2014). Historic
data show that fuel duty revenues amounted to about
1.8 % of GDP in 2009/2010 and they are projected to fall
to about 1.1 % in 2033/2034 and to less than 1 % of GDP
under the more fuel-efficient scenario, achieving the fuel
efficiency target recommended by the Committee on
Climate Change.
These projections underline the fact that the
combination of environmental taxes and regulatory
policies do work in parallel as environmental policy
tools. However, the revenue potential of energy taxes
and carbon pricing policies should not necessarily be
at the forefront in assessments as environmental taxes
have many other positive features including that they
can stimulate the development and diffusion of ecoinnovations
(OECD, 2010). Another central feature of
environmental taxation is the potential for offsetting
a rebound effect (Barker et al., 2009; Kosonen and
Nicodème, 2009; Sorrel, 2007) (96
).
5.2.2	 The potential for environmental tax reform, given
expected demographic trends
Environmental tax reform, as a policy tool for shifting
taxes away from labour towards environmental factors
that are less detrimental to growth, aims at a more
efficient tax system as this policy shifts the burden from
distorting taxes, such as on labour, to less distorting
taxes, such as on pollution and energy consumption
(EC, 2015b). However, the amounts generated by these
taxes differ substantially: the share of revenues from
labour taxes (including security contributions) of total
tax revenues in the EU‑28 in 2014 was 51 % (weighted
average) compared with 6 % from environmental
taxes (97
). There are some differences in the overall
fiscal budget (taxes and social security contributions)
between EU Member States, with, for example, Sweden
and Germany relying more heavily on labour taxation
(59 % and 57 % in 2014, respectively) compared to
Malta (34 %), Bulgaria (35 %) and the United Kingdom
(38 %).
This aspect is of significance when studying the
projected demographic changes of EU Member States.
The projection is that the EU‑28 population will increase
from 507 million in 2013 to 526 million in 2050, an
increase of nearly 4 % (EC, 2015e). As expected, the
(96
)	 When resource efficiencies provide some the gains in income that is then spent on more consumption, for example, driving further in more
fuel efficient cars, so that the total consumption of energy and resources actually increase following improvements in eco‐efficiency. This is the
rebound effect.
(97
)	See http://ec.europa.eu/taxation_customs/taxation/gen_info/economic_analysis/data_on_taxation/index_en.htm (accessed on 9 June 2016).
Overall findings and reflections
39Environmental taxation and EU environmental policies
trends differ between Member States: for example, an
8 % decline in the Germany population is projected,
in sharp contrast to a 21 % increase in the United
Kingdom. What EU Member States have in common is
that the share of the population that is elderly (65 and
over) will increase from 18 % of total in 2013 to 28 %
in 2050, an increase of 59 % in absolute numbers (98
).
However, the development of the labour force,
defined as people aged between 15 and 64, does not
show a homogenous and consistent pattern between
EU Member States. The projected changes differ
widely from a reduction of 34 % in Bulgaria and 7 % in
the EU‑28 overall, to increases of 24 % in Sweden and
even 80 % in Luxembourg between 2013 and 2050. All
these figures illustrate the challenges that the EU is
facing as the old-age dependency ratio (people aged
65 or more relative to those aged 15–64) is projected
to increase from 28 % to 50 % in the EU by 2050 (99
).
These projected trends will have implications for fiscal
systems. The budgetary requirements are projected
to increase by about 2 percentage points (pp) of
GDP (100
) because of an increase in public age-related
expenditure (pensions, health care, long-term care
and education). The demographic changes will not
only affect public spending, since revenues may also
be affected because of an overall reduction in the
labour supply and revenues from labour taxes. The
trajectory of the projections shows a more or less
stable level of labour supply in the EU between 2013
and 2023 (age group 20–64) followed by a decline of
about 6 % between 2023 and 2050. The projected
figures on the employment level show a decline
of about 3 % during 2013–2050 under the given
assumptions (101
).
A squeeze on the public budget is likely, considering the
projected increase in expenditures and a simultaneous
potential erosion of the tax base because of the fall
in employment. Labour taxation, including social
security contributions, is key to the overall tax take.
A  reduction in employment could be offset by either
an increase in the tax base (wages) or an increase in
tax rates (personal income tax rate and/or the rates
of social security contributions) (102
), if the overall
take of labour taxes, expressed as a share of total tax
revenue of GDP, is to be kept constant (103
). The trend
of a shrinking revenue base may have consequences
for the budgets of countries that rely heavily on labour
taxation (104
). This development will not happen in the
immediate future as it is projected that employment
and the working-age population will only decline after
2023 onwards (EC, 2015e).
5.2.3 	 Tax base erosion over the long term
The coming 5–10 years may provide room for
tax‑shifting programmes by increasing the tax take from
environmental taxes and reducing labour taxation, but
the question arises whether this policy approach will be
at the disposal of policymakers in the longer term.
(98
)	 These figures are projections of future developments and are therefore highly uncertain, as with any modelling exercises. Nevertheless, they
provide some background information for assessing potential future trends and are therefore useful when studying transition processes.
These results depend critically on underlying assumptions and methodologies as well as the current policies in place that may change over
time, influencing the overall outcome of these projections. In summary, projections are illustrative and not precise calculations but support
policymakers in developing longer-term strategic policy approach.
(99
)	 This projection implies that Germany would move from a ratio of about three working-age people for every elderly person in 2013 to fewer
than two in 2050.
(100
)	 All monetary data in EC, 2015e are in constant prices (base year 2013); this increase shows the result of the baseline scenario and for the
period 2013–2060. The projected trends differ widely between EU Member States as the estimates show a fall in total age-related expenditures
in eight countries, in ten countries an increase of up to 2.5 percentage points of GDP is expected and for the remaining ten a rise of between
2.5 and 6.8 percentage points of GDP is projected (EC, 2015e). The uncertainty is clearly reflected in the findings that the latest projections of
age‑related public spending show more favourable expected development relative to the past, the burden on public finances is still expected to
be significant (EC, 2016).
(101
)	 The underlying assumptions of the EC ageing report (EC, 2015e) do not always comply with the political realities as several EU Member States,
including Belgium, Germany, France, Ireland, the Netherlands and the United Kingdom, have already implemented changes to the retirement
age. This implies that the employment cohort of people aged below 64 as currently used in the report does not reflect actual political
development and is too small. But at the same time average life expectancy is also projected to increase and this may imply changes in the
number of elderly persons.
(102
)	 The social security contributions (SSCs) paid by employers and employees in Germany are projected to increase from 18.7 % of gross income
(2015) to 21.4 % in 2028, making labour more expensive for the employer and reducing the net income of employees (BMAS, 2014). This increase
in the SSC rates is not necessarily consistent with the concept of the policy of shifting the tax burden from labour to resource use and pollution.
(103
)	 In recent years the growth in real wages in developed countries, including EU Member States, was rather low — see ILO, 2015.
(104
)	 A thought-provoking report presenting impacts of an aging population on tax receipts was done for the US (Felix and Watkins, 2013). The report
assesses the implications for tax revenues by studying income tax revenues across age cohorts, revealing that the income tax revenue from
people aged 65 and over declines steeply compared to the income tax revenue of people in active employment. The report also discusses that
spending patterns change throughout lifetimes, which also affects the public budget as the elderly population have lower expenditures, thereby
affecting sales tax revenues. These findings are also relevant for Europe as personal income tax rates levied on pensions is typically less than
the income tax rate on earned income (OECD, 2013b). Changes in spending patterns of age cohorts would affect value added tax revenues
(VAT) in EU Member States that are very significant in terms of revenues generated. In 2014, the EU-28 average of VAT revenues was 18 % of
total tax revenues, ranging from about 34 % in Croatia and 32 % in Bulgaria to 15 % in France and 14 % in Italy.
Overall findings and reflections
40 Environmental taxation and EU environmental policies
There are at least two aspects to assess in answering
this question:
(1)	 the reduction in the tax base for energy and
carbon taxation schemes as currently implemented
considering energy and climate policy reduction
targets are met and technological progress, such
as improvements in energy efficiency, as well as
changes in transport modes and vehicle stock;
(2)	 the potential decline of the tax base of labour
taxation because of demographic changes and the
projected increase in age-related expenditure by the
public purse.
Both these aspects need to be addressed when
studying the potential for tax-shifting programmes
between labour and environmental/energy taxes in the
medium to long term as well as when considering a
resilient fiscal system for the future (105
).
The demographic part of this fiscal challenge has
been discussed for several years. For example, it was
noted in a report published by the EC in 2007 that The
demographic transition and ageing population in the EU
raises many challenges and issues in terms of the structure
of taxation … The coming challenge of ageing is likely to
increase the need for these categories of social spending
and to decrease the labour tax base. … What seems a
likely development for the future is that the financing of
the welfare state may have to rely less on labour taxes
(Carone et al., 2007).
The issue of energy tax base erosion as a complement
of the transition to a low-carbon economy has gained
(105
)	 For example, Auerbach (2010) describes the demands on a fiscal system as: A tax base should reflect an economy’s capacity to fund public
expenditures, meaning that as the economy grows, the tax base should grow with it. Otherwise, it will be necessary to raise tax rates and, in doing so,
worsen economic distortions. This claim is somehow contrary to the rationale for implementing environmental taxation, in particular, when
considering the fact that the majority of environmental taxes are ad quantum taxes. The situation is different for personal income taxes as it
is expected that earnings will increase faster than the overall price level because of productivity growth. This implies that income earners are
taxed at higher tax rates as their income moves into higher tax bands. This situation is known as fiscal drag.
(106
)	 An interesting study for the US was done by Palmer et al. (2012) showing that increases in a tax rate lead to falling tax revenues as the tax base
starts to erode with diminishing reliance on fossil fuels and greater use of renewables and nuclear.
some momentum. For example, the Organisation for
Economic Co-operation and Development (OECD)
recently stated that, in the near term, fluctuations in
energy-related tax revenues are the result of changes in
economic cycles (OECD, 2015). But, for the longer term,
the report concludes that with much lower CO2 emissions
anticipated in the second half of the century, and therefore
lower fossil fuel use, the question (of stable budgetary
resources) will gain importance (OECD, 2015). This view
is shared by Vollebergh who, assessing the Dutch
energy taxation system, summarises that another,
more important trend is that fossil fuel use is expected to
decline as a result of environmental and energy policies
aimed at mitigating climate change and air pollution. … In
the long run, these policies will inevitably undermine the
present energy tax bases for natural gas, electricity and
motor fuels. … leading to tax base erosion, in the long term
(Vollebergh, 2014) (106
).
It is the consideration of both issues together —
energy/carbon tax base and labour tax erosion —
that brings new questions and more systemic policy
challenges to the fore. Also relevant are the rather
long time-frames required for revising or adapting
fiscal systems as for example observed in the many
attempts at revising the energy taxation scheme by
introducing an energy/carbon tax which started in
1992 when the European Commission put forward the
first proposal (Klok, 2005).
Taken together, although 2050 appears far in the
future in policy terms, it might be wise for European
policymakers to start thinking from today about the
implications of these combinations of issues for the
design of resilient fiscal systems for the long term.
41
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47
Annex 1
Environmental taxation and EU environmental policies
Annex 1	EU environmental targets and
objectives
(107
)	 See EEA, 2013, pp.8–10.
A1.1 	Environmental targets and
objectives: an update
Environmental targets and objectives are often
correlated with market-based instruments (MBIs), as
MBIs are one of the instruments that policymakers
can use to support the achievement of the targets
and objectives. Sometimes only indirect links can
be identified, while in other cases the relationship
between the targets/objectives and the MBIs is
directly made evident by the EU legislator (e.g. the EU
emission trading scheme is expressly aimed at cutting
greenhouse gas emissions).
This section provides an update of the EU
environmental targets and objectives set out in
EEA Report No 8/2013 (EEA, 2013). The update has
the same aims, structure, and limitations as that
report (107
), and can be summarised as follows:
•	 The update only covers nine environmental and
resource policy areas: energy; greenhouse gas
emissions and ozone‑depleting substances; air
pollution and air quality; transport (greenhouse
gas emissions and air pollutants) and noise; waste;
water; sustainable consumption and production;
chemicals; biodiversity and land use.
•	 Time-frame: the analysis focuses on the
environmental targets and objectives related to
2013–2050.
•	 Targets are binding goals established by EU
legislation (regulations, directives, and decisions),
European Council Presidency conclusions, and
international legislation to that Member States and
the EU are committed to implement.
•	 All other goals are classified as non‑binding
objectives. This broad category includes goals
set out in Commission communications and
environmental action programmes. They can
also be shaped by European Council Presidency
conclusions or incorporated into EU legislation,
including indicative targets, target values or targets
subject to subsequent confirmation. Non-binding
objectives are, therefore, quite heterogeneous and
can vary greatly in their stringency and political
strength (Figure A1.1).
•	 Exclusions:
−− Only new targets and objectives not included
in the EEA Report No 8/2013 (EEA, 2013), are
addressed in this annex (the cut-off date of the
previous study was autumn 2012).
−− Most of the reported objectives and targets
are aimed directly at reducing pollution and
resource use, and improving environmental
quality. Objectives concerned with other
indirect measures, such as collecting
information and data, registration or
classification procedures, monitoring, or
establishing programmes and plans (which all
play an important role in EU environmental
policy and legislation) are outside the scope of
the study.
−− Only targets and objectives provided with a
specific deadline for implementation are taken
into account. Where targets or objectives are
set by legislation, the update only includes
those that are set for a future date, i.e. after
the date of entry into force or of transposition
(where necessary).
−− Apart from the EU greenhouse gas emission
reduction target under the Kyoto Protocol and
its successor agreements, the analysis does not
present the objectives and targets of multilateral
environmental agreements to which the EU or its
Member States are party, or those established
by related protocols and decisions of the
executive organs of those agreements, except
where they have been integrated into EU policy.
Annex 1
48 Environmental taxation and EU environmental policies
Figure A1.1	 Objectives and targets addressed in this report
Source: 	 Based on EEA, 2013.
EU policy goals
• related to selected environmental and resource policy areas
• related to the period 2013–2050
• include a specific deadline for implementation
• aimed at reducing pollution or resource use, or improving environmental quality
• exclude targets and objectives covered by the EEA Report No 8/2013
• exclude objectives in multilateral environmental agreements
Binding targets
Based on EU legislation in force
Non-binding objectives
Based on EU legislation in force and on the
main political and strategic documents
of the last 10–15 years
•	 The review is based on a broad analysis of the EU
legislation in force (excluding legislative proposals)
and the main political and strategic documents
of the past decade. The most important sources
include the European Commission's Summaries
of EU legislation (EC, 2015a), the websites of
the Commission's directorates-general (for
environment, mobility and transport, energy,
climate action, etc.) and EEA reports.
•	 The EU's environmental objectives and targets are
continually being supplemented and adjusted. The
cut-off date for the present study was spring 2015.
Based on EEA Report No 8/2013 (EEA, 2013), a total of
63 legally binding targets and 69 non-binding objectives
were identified across the nine environmental policy
areas for the 2010–2050 period. Many of the binding
targets were set for 2015 and 2020 in the areas of
energy, air pollution, transport emissions, and waste.
The great majority of non‑binding objectives were set
for 2020, with sustainable consumption and production
and resource efficiency playing a larger role, together
with biodiversity and land use.
Compared to the 2013 EEA Report, 35 new targets and
31 new non‑binding objectives have been introduced
by the EU legislation and strategic-political documents,
in the nine environmental policy areas considered, for
the 2013–2050 period. Some objectives and targets
have been removed, giving a net total of 82 binding
targets and 84 non‑binding objectives established in
response to these challenges for the period 2013–2050
(see Figure A1.2).
Most of the new targets concern policy on greenhouse
gas emissions and ozone‑depleting substances.
In particular, the 2014 Regulation on fluorinated
greenhouse gases (EU, 2014) introduces a substantial
set of targets, as a contribution by the fluorinated
gas sector to the EU's objective of cutting its overall
greenhouse gas emissions by 80 % of 1990 levels
by 2050. Relevant binding targets have also been
established in the biodiversity and land use policy
area by the new Regulation on the Common Fisheries
Policy (EU, 2013b) and in the chemicals sector by the
amendments to REACH Regulation (EU, 2006b) and the
legislation on active substances contained in biocidal
product types (EU, 2012a).
Most of the non‑binding objectives have been shaped
by the 7th Environment Action Programme (7th EAP;
EU, 2013a), to be reached by 2020. Other relevant
strategic objectives are embodied in the Presidency
conclusions of the European Council of October 2014
for the energy sector, in the Clean air programme for
Europe (EC, 2013) for the air pollution and quality, and
in the 2015 Circular Economy Package (EC, 2015b-f) for
the waste sector.
With specific reference to each environmental and
resource policy area, the following can be observed.
Annex 1
49Environmental taxation and EU environmental policies
Figure A1.2	 Binding targets (a) and non-binding objectives (b) in EU environmental policy, by sector and
year, 2013–2050
0
5
10
15
20
25
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2027
2028
2030
2050
Number of binding targets
Source: 	 EEA-ETC/WMGE based on the analysis of EU environmental legislation in force.
0
10
20
30
40
50
60
2013
2014
2015
2016
2017
2018
2019
2020
2025
2030
2050
Number of non-binding objectives
Energy
Greenhouse gas emissions and ozone-depleting substances
Air pollution and air quality
Transport (greenhouse gas emissions and air pollution) and noise
Waste
Water
Sustainable consumption and production and resource efficiency
Chemicals
Biodiversity and land use
(a)
(b)
Annex 1
50 Environmental taxation and EU environmental policies
Table A1.1	 Timeline for the new objectives and targets for energy (2013–2050)
Objectives Sources Deadline for implementation
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2027
2030
Innovative approaches for
sustainable buildings and
energy efficiency.
Decision 1836/2013/EU
⇒2020
Increase energy savings of
25 %.
Policy framework for climate
and energy 2020–2030 ⇒2030
Increase energy savings of
30 %.
Energy efficiency
communication ⇒2030
27 % increase in efficiency
compared to projections of
future energy consumption.
Council Conclusion,
October 2014 ⇒2030
Increase renewable energy
to 27 % of EU energy
consumption (EU‑28).
Council Conclusion,
October 2014 ⇒2030
Note: 	 Non-binding objectives (including national indicative targets, target values and targets to be confirmed, set by EU legislation) are in blue;
binding targets are in red.
the EU level of at least a 27 % improvement in energy
efficiency in 2030 compared to projections of future
energy consumption. This will be reviewed by 2020,
with the aim of increasing it at an EU level to 30 %
(European Council, 2014).
During the October 2014 meeting, the European
Council also adopted a binding commitment to increase
the share of renewable energy consumed in the EU‑28
to 27 % by 2030. The target is binding at the EU level,
but not on the Member States individually.
Energy: with regard to energy efficiency, four
non‑binding objectives have recently been introduced.
In particular, according to the 7th EAP (EU, 2013a),
innovative approaches for sustainable buildings and
energy efficiency are expected to be adopted by 2020.
Moreover, the European Commission has proposed
an energy saving objective of 25 % by 2030 (EC,
2014a), which was later raised to 30 % (EC, 2014d).
Based on the Commission proposals, the European
Council, in October 2014, set an indicative target (not
to be translated into nationally binding targets) at
Annex 1
51Environmental taxation and EU environmental policies
Table A1.2	 Timeline for the new objectives and targets for greenhouse gas emissions and
ozone‑depleting substances, 2013–2050
Objectives Deadline for implementation
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2027
2030
The placing on the market
of fluorinated greenhouse
gases shall be prohibited.
⇒2015
The placing on the market
of domestic refrigerators
and freezers that contain
HFCs with global warming
potential (GWP) of ≥ 150
shall be prohibited.
⇒2015
The placing on the market
of fire protection equipment
containing HFC-23 shall be
prohibited.
⇒2016
The percentage to calculate
the maximum quantity of
HFCs to be placed on the
market and corresponding
quotas shall be 93 %.
⇒2016
Refrigeration, air
conditioning and heat pump
equipment charged with
HFCs shall not be placed
on the market unless
accounted for within the
quota system.
⇒2017
Greenhouse gas emissions and ozone‑depleting
substances: during the European Council of October
2014, EU leaders endorsed, as a binding target, the
reduction of greenhouse gas emissions by 40 %
compared to 1990 levels by 2030 (with reductions in
the EU emission trading scheme (ETS) and non‑ETS
sectors amounting to 43 % and 30 % compared to
2005, respectively; European Council, 2014). Another
relevant set of binding targets has been established
by the 2014 Regulation on fluorinated greenhouse
gases (EU, 2014), as a contribution by the fluorinated
gas sector to the EU's objective of cutting its overall
greenhouse emissions by 80 % of 1990 levels by 2050,
confirmed by the 7th EAP (EU, 2013a). Pursuant to the
Regulation, the placing on the market of fluorinated
greenhouse gases and gases listed in Annex II shall
be prohibited by 2015, while Annex III, differentiating
according to the type or global warming potential of the
gas, lists specific products and equipment containing
fluorinated greenhouse gases that cannot be placed on
the market and the related date of prohibition which
ranges from 2015 to 2025. From 2017, refrigeration, air
conditioning and heat pump equipment charged with
hydrofluorocarbons (HFCs) shall not be placed on the
market unless accounted for within the quota system
established by the Regulation. Another binding target
concerns the use of fluorinated greenhouse gases to
service or maintain refrigeration equipment. Finally,
in order to reduce the quantity of HFCs placed on the
market, producers and importers shall not exceed the
maximum quantity for the year in question, calculated
in accordance with Annex V and the corresponding
quota. The percentage to calculate the maximum
quantity of HFCs to be placed on the market and
corresponding quotas shall be 93 % for 2016–2017,
63 % for 2018–2020, 45 % for 2021–2023, 31 % for
2024–2026, 24 % for 2027–2029 and 21 % for 2030
onward.
A non‑binding objective to make decisive progress in
adapting to the impact of climate change by 2020 has
been shaped by the 7th EAP (EU, 2013a).
Annex 1
52 Environmental taxation and EU environmental policies
Table A1.2	 Timeline for the new objectives and targets for greenhouse gas emissions and
ozone‑depleting substances, 2013–2050 (cont.)
Objectives Deadline for implementation
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2027
2030
The placing on the market
of technical aerosols
that contain HFCs with
GWP ≥ 150 shall be
prohibited.
⇒2018
The use of sulphur
hexafluoride in magnesium
die-casting and in the
recycling of magnesium
die‑casting alloys in
installations using a quantity
of sulphur hexafluoride
below 850 kilograms per
year is prohibited.
⇒2018
The percentage to calculate
the maximum quantity of
HFCs to be placed on the
market and corresponding
quotas shall be 63 %.
⇒2018
Decisive progress in
adapting to the impact of
climate change.
⇒2020
Ban on the placing on
the market of specific
equipments containing
HFCs (108
).
⇒2020
The use of fluorinated
greenhouse gases, with
a GWP ≥ 2 500 to service
or maintain refrigeration
equipment with a charge
size ≥ 40 tonnes of CO2
equivalent shall be
prohibited.
⇒2020
The percentage to calculate
the maximum quantity of
HFCs to be placed on the
market and corresponding
quotas shall be 45 %.
⇒2021
(108
)	 The placing on the market of the following shall be prohibited:
	-	 refrigerators and freezers for commercial use containing HFCs with GWP ≥ 2 500;
	-	 stationary refrigeration equipment containing HFCs with GWP ≥ 2 500;
	-	 movable room air-conditioning equipment containing HFCs with GWP ≥ 150;
	-	 foams containing HFCs with GWP≥ 150 — extruded polystyrene.
Annex 1
53Environmental taxation and EU environmental policies
Table A1.2	 Timeline for the new objectives and targets for greenhouse gas emissions and
ozone‑depleting substances, 2013–2050 (cont.)
Objectives Deadline for implementation
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2027
2030
The placing on the market of
a) refrigerators/freezers for
commercial use containing
HFCs with GWP ≥ 150 and
b) multipack centralised
refrigeration systems for
commercial use with a rated
capacity ≥ 40 kW containing
fluorinated greenhouse
gases with GWP ≥ 150 shall
be prohibited.
⇒2022
The placing on the market
of foams containing HFCs
with GWP ≥ 150 shall be
prohibited.
⇒2023
The percentage to calculate
the maximum quantity of
HFCs to be placed on the
market and corresponding
quotas shall be 31 %.
⇒2024
The placing on the market of
single split air-conditioning
systems containing less than
3 kilograms of fluorinated
greenhouse gases that
contain fluorinated
greenhouse gases with GWP
≥ 750 shall be prohibited.
⇒2025
The percentage to calculate
the maximum quantity of
HFCs to be placed on the
market and corresponding
quotas shall be 24 %.
⇒2027
Reduce GHG emissions by
40 % compared to 1990
levels (with the reductions in
the ETS and non‑ETS sectors
amounting to 43 % and 30 %
by 2030 compared to 2005,
respectively).
⇒2030
The percentage to calculate
the maximum quantity of
HFCs to be placed on the
market and corresponding
quotas shall be 21 %.
⇒2030
Note: 	 Non-binding objectives (including national indicative targets, target values and targets to be confirmed, set by EU legislation) are in blue;
binding targets are in red.
Annex 1
54 Environmental taxation and EU environmental policies
Table A1.3	 Timeline for the new objectives and targets for air pollution and air quality, 2013–2050
Objectives Sources Deadline for implementation
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2027
2030
Reduce air pollution and its
impact on ecosystems and
biodiversity.
Decision 1386/2013/EU
⇒2020
Improve outdoor and indoor
air quality (making reference
to WHO recommended
levels/guidelines).
Decision 1386/2013/EU
⇒2020
Reduce health impacts
(premature mortality due
to particulate matter and
ozone) of 52 % relative to
2005.
A Clean Air Programme for
Europe ⇒2030
Reduce ecosystem area
exceeding eutrophication
limits by 35 % relative to
2005.
A Clean Air Programme for
Europe ⇒2030
Note:	 Non-binding objectives (including national indicative targets, target values and targets to be confirmed, set by EU legislation) are in blue;
binding targets are in red.
Air pollution and air quality: four new environmental
objectives have been adopted in this policy area.
The 7th EAP (EU, 2013a) should ensure that, by 2020,
air pollution (and its impact on ecosystems and
biodiversity) is reduced and outdoor and indoor air
quality is improved, making reference to World Health
Organization (WHO) recommended levels and guidelines.
The Clean air programme for Europe (EC, 2013) sets two
new air policy objectives for 2030 relative to 2005: reduce
health impacts (premature mortality due to particulate
matter and ozone) by 52 % and reduce ecosystem area
exceeding eutrophication limits by 35 %.
Annex 1
55Environmental taxation and EU environmental policies
Table A1.4	 Timeline for the new objectives and targets for transport and noise, 2013–2050
Objectives Sources Deadline for implementation
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2027
2030
Reduce maximum sulphur
content of marine fuels to
(at least) 3.5 %.
Directive 1999/32/EC
amended by
Directive 2012/33/EU
⇒2014
Innovative approaches for
urban public transport and
mobility.
Decision 1386/2013/EU
⇒2020
Noise pollution has
significantly decreased.
Decision 1386/2013/EU
⇒2020
Reduce maximum sulphur
content of marine fuels to
0.5 %.
Directive 1999/32/EC
amended by
Directive 2012/33/EU
⇒2020
Note: 	 Non-binding objectives (including national indicative targets, target values and targets to be confirmed, set by EU legislation) are in blue;
binding targets are in red.
Transport and noise: the 7th EAP (EU, 2013a) sets
two strategic objectives to be reached by 2020: achieve
a significant decrease in noise pollution, and adopt
innovative approaches for urban transport and mobility.
The 2012 amendment to Directive 1999/32/EC on the
sulphur content of certain liquid fuels (EU, 2012b),
requires Member States to take all necessary
measures to ensure that marine fuels are not used in
the areas of their territorial seas, exclusive economic
zones and pollution control zones, if the sulphur
content of those fuels by mass exceeds: (a) 3.5 % as
from 18 June 2014; (b) 0.5 % as from 1 January 2020.
Annex 1
56 Environmental taxation and EU environmental policies
(109
) 	According to the EC Communication Zero waste programme for Europe (EC, 2014c), the EU waste policy, in strategic terms, was aimed at:
1) by 2020, reducing marine litter by 30 %, which applies to the ten most common types of litter found on beaches, as well as for fishing
gear found at sea; 2) by 2025, banning the landfilling of plastic bags, as well as of recyclable plastics, metals, glass, paper/cardboard, and
biodegradable wastes. Food waste in specified sectors is to be reduced by at least 30 % within the same deadline; 3) by 2030, increasing the
recycling rate of packaging waste to 80 % (to 60 % by 2020 and 70 % by 2025 as interim targets) and increasing the reuse and recycling of
municipal waste to a minimum of 70 %.
(110
)	 Note that the targets provided for by the 2015 Circular Economy Package (EC, 2015b-f) do not meet the selection criteria on which the present
overview of the EU environmental targets/objectives is based (in particular, according to Annex 1.1, only legislation in force is covered and
the cut-off date for the study is spring 2015). However, they have been included, as an exception, since the objectives set by the European
Commission Communication Zero waste programme for Europe (EC, 2014c), following the withdrawal of the related legislative proposal
(EC, 2014b), are out of date.
Waste: new non‑binding objectives have recently
been shaped for waste policy. According to
the 7th EAP (EU, 2013a), by 2020, landfilling is
to be limited to non‑recyclable materials. The
European Commission Communication Zero waste
programme for Europe (EC, 2014c) introduced
a wide set of waste objectives (109
) that were
incorporated into a proposal for a new directive
(EC, 2014b). The proposal, withdrawn in December
2014, was replaced, in December 2015, by the
Circular Economy Package, consisting of the EU
Action Plan for a Circular Economy (EC, 2015f)
and four legislative proposals (EC, 2015b-e)
which establish new waste targets updating the
ones provided in the Zero waste programme for
Europe (EC, 2014c) (110
). Since they are, currently,
only proposed targets, they are considered by
the present paper as environmental objectives.
In particular, Member States should, by 2030:
•	 increase the rate of packaging waste prepared
for reuse and recycled to 75 % (65 % by 2025 as
an interim target);
•	 achieve the following minimum targets by
weight for preparing for reuse and recycling for
the following materials contained in packaging
waste: (i) 75 % of wood; (ii) 85 % of ferrous
metal; (iii) 85 % of aluminium; (iv) 85 % of glass; (v)
85 % of paper and cardboard (interim targets by
2025: (i) 55 % of plastic; (ii) 60 % of wood; (iii) 75 %
of ferrous metal; (iv) 75 % of aluminium; (v) 75 % of
glass; (vi) 75 % of paper and cardboard);
•	 increase the reuse and recycling of municipal waste
to a minimum of 65 % (60 % by 2025 as interim
target).
•	 ensure that the amount of municipal waste
landfilled is reduced to 10 % of the total amount of
municipal waste generated.
The 2015 amendment to Directive 94/62/EC on
packaging and packaging waste introduced binding
targets aimed at reducing the consumption of
lightweight plastic carrier bags (EU, 2015). In particular,
Member States are required to meet either or both
of the following targets: a) ensure that the annual
consumption level does not exceed 90 lightweight
plastic carrier bags per person by 31 December 2019
and 40 lightweight plastic carrier bags per person by
31 December 2025 (or equivalent targets set in weight);
b) ensure that, by 31 December 2018, lightweight
plastic carrier bags are not provided free of charge at
the point of sale of goods or products, unless equally
effective instruments are implemented.
Annex 1
57Environmental taxation and EU environmental policies
Table A1.5	 Timeline for the new objectives and targets for waste, 2013–2050
Objectives Sources Deadline for implementation
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2027
2030
Landfilling is limited
to non‑recyclable and
non‑recoverable waste.
Decision 1386/2013/EU
⇒2020
Increase the rate of
packaging waste prepared
for reuse and recycled to
65 % (interim target).
2015 Circular Economy
Package ⇒2025
Increase reuse and recycling
of municipal waste to a
minimum of 65 % (interim
target).
2015 Circular Economy
Package ⇒2025
Minimum targets by weight
for preparing for reuse and
recycling:
• 55 % of plastic;
• 60 % of wood;
• 75 % of ferrous metal;
• 75 % of aluminium;
• 75 % glass;
• 75 % paper and cardboard.
2015 Circular Economy
Package ⇒2025
Reduction in the
consumption of lightweight
plastic carrier bags
(2018–2025) (*).
Directive 94/62/EC as
amended by
Directive 2015/720/EU
⇒2025
Increase the rate of
packaging waste prepared
for reuse and recycled to
75 % (final target).
2015 Circular Economy
Package ⇒2030
Increase reuse and recycling
of municipal waste to a
minimum of 65 %.
2015 Circular Economy
Package ⇒2030
Reduce the amount of
municipal waste landfilled to
10 % of the total amount of
municipal waste generated.
2015 Circular Economy
Package ⇒2030
Minimum targets by weight
for preparing for reuse and
recycling:
• 75 % of wood;
• 85 % of ferrous metal;
• 85 % of aluminium;
• 85 % glass;
• 85 % paper and cardboard.
2015 Circular Economy
Package
⇒2030
Note: 	 Non-binding objectives (including national indicative targets, target values and targets to be confirmed, set by EU legislation) are in blue;
binding targets are in red.
	 (*) The measures taken by Member States shall include either or both of the following:
a: the adoption of measures ensuring that the annual consumption level does not exceed 90 lightweight plastic carrier bags per
person by 31 December 2019 and 40 lightweight plastic carrier bags per person by 31 December 2025, or equivalent targets set in
weight. Very lightweight plastic carrier bags may be excluded from national consumption objectives;
b: the adoption of instruments ensuring that, by 31 December 2018, lightweight plastic carrier bags are not provided free of charge
at the point of sale of goods or products, unless equally effective instruments are implemented. Very lightweight plastic carrier bags
may be excluded from these measures.
Annex 1
58 Environmental taxation and EU environmental policies
Water: in the water sector, the 7th EAP (EU, 2013a)
specifies new non‑binding objectives to be reached
by 2020. In particular, the EU should significantly
reduce the impact of pressures on transitional, coastal,
and freshwaters; reduce the impact of pressures on
marine waters; manage the nutrient cycle in a more
sustainable and resource efficient way; prevent or
significantly reduce water stress; and adopt high
standards for safe drinking and bathing waters.
Table A1.6	 Timeline for the new objectives and targets for water, 2013–2050
Objectives Sources Deadline for implementation
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2027
2030
Significantly reduce the
impact of pressures on
transitional, coastal and
freshwaters.
Decision 1386/2013/EU
⇒2020
Reduce the impact of
pressures on marine waters.
Decision 1386/2013/EU
⇒2020
Manage the nutrient cycle
in a more sustainable and
resource-efficient way.
Decision 1386/2013/EU
⇒2020
Prevent or significantly
reduce water stress.
Decision 1386/2013/EU
⇒2020
High standards for safe
drinking and bathing waters.
Decision 1386/2013/EU
⇒2020
Note: 	 Non-binding objectives (including national indicative targets, target values and targets to be confirmed, set by EU legislation) are in blue;
binding targets are in red.
Sustainable consumption and production:
according to the 7th EAP (EU, 2013a), the EU should
by 2020 significantly reduce the overall environmental
impact of all major economic sectors and of
consumption and production in the food, housing, and
mobility sectors.
Note: 	 Non-binding objectives (including national indicative targets, target values and targets to be confirmed, set by EU legislation) are in blue;
binding targets are in red.
Table A.1.7	 Timeline for the new objectives and targets for sustainable consumption and production and
resource efficiency, 2013–2050
Objectives Sources Deadline for implementation
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2027
2030
Significantly reduce the
overall environmental
impact of all major sectors
of EU economy.
Decision 1386/2013/EU
⇒2020
Reduced overall
environmental impact
of production and
consumption in the food,
housing and mobility
sectors.
Decision 1386/2013/EU
⇒2020
Annex 1
59Environmental taxation and EU environmental policies
Chemicals: with regard to binding targets, based on
Regulation No (EU) 1602/2014 (EC, 2014e), the list
of active substances contained in selected biocidal
product types to be phased out (i.e. for which a
decision of non‑inclusion into Annex I has been
adopted pursuant to Regulation EU 528/2012; EU,
2012a) has been progressively extended. Considering
the 2013–2050 period, according to the available
information (112
), compared to EEA (2013), new
substances had to be phased out in 2013, 2014, and
2015. Likewise, Annex XIV of the REACH Regulation
(EU, 2006) has been amended, so that the number
of substances of very high concern it lists, which are
subject to authorisation obligations, have gone up from
14, as reported by EEA (2013), to 31, with new 'sunset
(112
)	 The list of active substances and related dates by which products containing these active substances shall no longer be placed on the market
for the relevant product types is available at: http://ec.europa.eu/health/biocides/active_substances/non_inclusion/index_en.htm (consolidated
list as of 26.02.2013) and http://echa.europa.eu/web/guest/information-on-chemicals/biocidal-active-substances.
dates', making reference to the 2013–2050 period, in
2016, 2017, and 2019. Also the list of restrictions on the
manufacture, placing on the market and use of certain
dangerous chemical substances, mixtures and articles,
contained in Annex XVII of the REACH Regulation, has
been extended and new restrictions apply to mercury
starting from 2014.
In strategic terms, the 7th EAP (EU, 2013a) states that,
by 2020, risks associated with the use of hazardous
substances, including in chemical products, are to
be minimised; plant protection products are to be
sustainably used, without any harmful effect on human
health; and safety concerns related to nanomaterials
are to be effectively addressed.
Table A1.8	 Timeline for the new objectives and targets for chemicals, 2013–2050
Objectives Sources Deadline for implementation
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2027
2030
Phase out of several active
substances contained in
selected biocidal product
types.
Regulation 528/2012/EU
⇒2013
Phase out of several active
substances contained in
selected biocidal product
types.
Regulation 528/2012/EU
⇒2014
REACH restrictions
concerning mercury.
Regulation 1907/2006/EC,
consolidated version ⇒2014
Phase out of several active
substances contained in
selected biocidal product
types.
Regulation 528/2012/EU
⇒2015
'Sunset date' for the
following substances of
very high concern (SVHCs):
trichloroethylene.
Regulation 1907/2006/EC,
consolidated version ⇒2016
Annex 1
60 Environmental taxation and EU environmental policies
Objectives Sources Deadline for implementation
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2027
2030
'Sunset date' for the
following SVHCs: chromium
trioxide, acids generated
from chromium trioxide,
sodium dichromate/
chromate, potassium
dichromate/chromate,
methylenedioxyamphetamine
(MDA),
arsenic acid, Bis(2methoxyethyl)
ether, 1-Ethyl-
3-(3-dimethylaminopropyl)
carbodiimide (EDC),
4,4'-Methylenebis(2chloroaniline)
(MOCA).
Regulation 1907/2006/EC,
consolidated version ⇒2017
'Sunset date' for the
following SVHCs:
dichromium tris
(chromate), strontium
chromate, potassium
hydroxyoctaoxodizincatedichromate,
pentazinc
chromate octahydroxide.
Regulation 1907/2006/EC,
consolidated version ⇒2019
Risks associated with the use
of hazardous substances,
including chemicals in
products, are minimised.
Decision 1386/2013/EU
⇒2020
Sustainable use of plant
protection products, without
any harmful effect on
human health.
Decision 1386/2013/EU
⇒2020
Safety concerns related to
nanomaterials are effectively
addressed.
Decision 1386/2013/EU
⇒2020
Table A1.8	 Timeline for the new objectives and targets for chemicals, 2013–2050 (cont.)
Note: 	 Non-binding objectives (including national indicative targets, target values and targets to be confirmed, set by EU legislation) are in blue;
binding targets are in red.
Annex 1
61Environmental taxation and EU environmental policies
Biodiversity and land use: relevant binding targets
have been introduced for fishing by the new Regulation
on the Common Fisheries Policy (EU, 2013b). In
particular, Member States were required to ensure that,
from 1 January 2014, the fishing capacity of their fleets
did not exceed, at any time specified, fishing capacity
ceilings. Moreover, in order to avoid the practice of
unwanted catches and discards, which negatively
affect the sustainable exploitation of marine biological
resources and marine ecosystems, a landing obligation
will be gradually introduced between 2015 and 2019
Note: 	 Non-binding objectives (including national indicative targets, target values and targets to be confirmed, set by EU legislation) are in blue;
binding targets are in red.
(113
)	 According to the Regulation, MSY means the highest theoretical equilibrium yield that can be continuously taken on average from a stock under
existing average environmental conditions without significantly affecting the reproduction process.
for all commercial fisheries (species under total
allowable catches or under minimum sizes) in European
waters. Finally, the Regulation requires the maximum
sustainable yield (MSY) (113
) exploitation rate to be
achieved by 2015 where possible and, on a progressive,
incremental basis at the latest by 2020 for all stocks.
With regard to non‑binding objectives, based on the
7th EAP (EU, 2013a), by 2020, land should be managed
sustainably and innovative approaches should be
adopted for urban biodiversity conservation.
Table A1.9	 Timeline for the new objectives and targets for biodiversity and land use, 2013–2050
Objectives Sources Deadline for implementation2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2027
2030
Fishing capacity ceilings. Regulation 1380/2013/EU
⇒2014
Landing obligation for
specified commercial
fisheries.
Regulation 1380/2013/EU
⇒2015
Landing obligation for
specified commercial
fisheries.
Regulation 1380/2013/EU
⇒2016
Landing obligation for
specified commercial
fisheries.
Regulation 1380/2013/EU
⇒2017
Landing obligation for
specified commercial
fisheries.
Regulation 1380/2013/EU
⇒2019
Manage land sustainably. Decision 1386/2013/EU
⇒2020
Innovative approaches
for urban biodiversity
conservation.
Decision 1386/2013/EU
⇒2020
Fishing within maximum
sustainable yield
exploitation rate for all
stocks (2015–2020).
Regulation 1380/2013/EU
⇒2020
Annex 1
62 Environmental taxation and EU environmental policies
A1.2	Summary
Since the publication of the 2013 report disclosing
the situation as of autumn 2012, 35 new binding
policy targets and 31 non‑binding objectives were
introduced through EU environmental legislation and
policy. The higher number of binding targets can be
found in the area of greenhouse gas emissions and
ozone‑depleting substances, while the higher number
of objectives concerns the waste area. All the new
targets and objectives cover the period up to 2030
which may imply that the time period for current
policymaking has a lead time of about 15 years. This
is interesting in relation to the 7th EAP as this will
guide European environmental policy until 2020 but at
the same time spells out a vision of where it wants the
Union to be by 2050 (114
).
A1.3	References
EC, 2011, Communication from the Commission to
the European Parliament, the Council, the European
Economic and Social Committee and the Committee of
the Regions — Roadmap to a Resource Efficient Europe,
COM(2011)571 final, Brussels, 20.9.2011.
EC, 2013, Communication from the Commission to
the European Parliament, the Council, the European
Economic and Social Committee and the Committee
of the Regions — A clean air programme for Europe,
COM(2013)918 final, Brussels, 18.12.2013.
EC, 2014a, Communication from the Commission to
the European Parliament, the Council, the European
Economic and Social Committee and the Committee
of the Regions — A policy framework for climate and
energy in the period from 2020 to 2030, COM(2014)15
final, Brussels, 22.1.2014.
EC, 2014b, Proposal for a Directive of the European
Parliament and the Council, amending Directives
2008/98/EC on waste, 94/62/EC on packaging and
packaging waste, 1999/31/EC on the landfill of waste,
2000/53/EC on end-of-life vehicles, 2006/66/EC on
batteries and accumulators and waste batteries and
accumulators, and 2012/19/EU on waste electrical and
electronic equipment, COM(2014)397 final, Brussels,
02.07.2014.
EC, 2014c, Communication from the Commission to
the European Parliament, the Council, the European
Economic and Social Committee and the Committee
(114
)	See http://ec.europa.eu/environment/action-programme (accessed on 28 January 2016).
of the Regions — Towards a circular economy: A zero
waste programme for Europe, COM(2014)398 final,
Brussels, 2.7.2014
EC, 2014d, Communication from the Commission to
the European Parliament, the Council, the European
Economic and Social Committee and the Committee of
the Regions — Energy Efficiency and its contribution to
energy security and the 2030 Framework for climate
and energy policy, COM(2014)520 final, Brussels,
23.7.2014.
EC, 2014e, Commission Delegated Regulation (EU) No
1062/2014 of 4 August 2014 on the work programme
for the systematic examination of all existing active
substances contained in biocidal products referred
to in Regulation (EU) No 528/2012 of the European
Parliament and of the Council, OJ L 294, 10.10.2014,
pp. 1–34.
EC, 2015a, Summaries of EU legislation (http://eur-lex.
europa.eu/browse/summaries.html), accessed on
5 November 2015.
EC, 2015b, Proposal for a Directive of the European
Parliament and the Council amending Directives
2000/53/EC on end-of-life vehicles, 2006/66/EC on
batteries and accumulators and waste batteries and
accumulators, and 2012/19/EU on waste electrical
and electronic equipment, COM(2015)593, Brussels,
02.12.2015.
EC, 2015c, Proposal for a Directive of the European
Parliament and the Council amending Directive
1999/31/EC on the landfill of waste, COM(2015)594,
Brussels, 02.12.2015.
EC, 2015d, Proposal for a Directive of the European
Parliament and the Council amending Directive
2008/98/EC on waste, COM(2015)595, Brussels,
02.12.2015.
EC, 2015e, Proposal for a Directive of the European
Parliament and the Council amending Directive 94/62/EC
on packaging and packaging waste, COM(2015)595,
Brussels, 02.12.2015.
EC, 2015f, Communication from the Commission to
the European Parliament, the Council, the European
Economic and Social Committee and the Committee of
the Regions — Closing the loop — An EU action plan for
the Circular Economy, COM(2015)614 final, Brussels,
02.12.2015.
Annex 1
63Environmental taxation and EU environmental policies
EEA, 2013, Towards a green economy in Europe — EU
environmental policy targets and objectives 2010–2050,
EEA Report No 8/2013, European Environment Agency,
Copenhagen
EU, 1994, European Parliament and Council Directive
94/62/EC of 20 December 1994 on packaging and
packaging waste, OJ L 365, 31.12.1994, 10–23.
EU, 2006, Regulation (EC) No 1907/2006 of the European
Parliament and of the Council of 18 December 2006
concerning the Registration, Evaluation, Authorisation
and Restriction of Chemicals (REACH), establishing
a European Chemicals Agency, amending Directive
1999/45/EC and repealing Council Regulation (EEC)
No 793/93 and Commission Regulation (EC) No 1488/94
as well as Council Directive 76/769/EEC and Commission
Directives 91/155/EEC, 93/67/EEC, 93/105/EC and
2000/21/EC, OJ L 396, 30.12.2006, 1–849.
EU, 2012a, Regulation (EU) No 528/2012 of the
European Parliament and of the Council of 22 May 2012
concerning the making available on the market and use
of biocidal products, OJ L 167, 27.6.2012, pp. 1–123.
EU, 2012b, Directive 2012/33/EU of the European
Parliament and of the Council of 21 November 2012
amending Council Directive 1999/32/EC as regards the
sulphur content of marine fuels, OJ L 327, 27.11.2012,
1–13.
EU, 2013a, Decision No 1386/2013/EU of the European
Parliament and of the Council of 20 November 2013
on a General Union Environment Action Programme to
2020 'Living well, within the limits of our planet' Text
with EEA relevance, OJ L 354, 28.12.2013, 171–200.
EU, 2013b, Regulation (EU) No 1380/2013 of
the European Parliament and of the Council of
11 December 2013 on the common organisation of
the markets in fishery and aquaculture products,
amending Council Regulations (EC) No 1184/2006 and
(EC) No 1224/2009 and repealing Council Regulation
(EC) No 104/2000, OJ L 354, 28.12.2013, 1–21.
EU, 2014, Regulation (EU) No 517/2014 of the
European Parliament and of the Council of 16 April
2014 on fluorinated greenhouse gases and repealing
Regulation (EC) No 842/2006, OJ L 150, 20.5.2014,
195–230.
EU, 2015, Directive 2015/720/EU of the European
Parliament and of the Council of 29 April 2015
amending Directive 94/62/EC as regards reducing
the consumption of lightweight plastic carrier bags,
OJ L 115, 6.5.2015, 11–15.
European Council, 2014, Presidency Conclusions of the
Brussels European Council, 23–24 October 2014, EUCO
169/14 CO EUR 13 CONCL 5, Brussels.
Environmental taxation and EU environmental policies64
Annex 2
Annex 2	Overview of environmental taxes
in EEA member countries
Table A2.1 closely follows the categorisation as stressed
in the Eurostat report 'Environmental taxes — A statistical
guide' (2013).
Data in brackets show the year of the introduction of
the tax. The table applies the term 'tax' to mean taxes,
charges, levies, duties as national legislative provisions
do not always correspond to the widely accepted
distinction between these terms. Countries are
applying different market‑based instruments (MBIs),
such as taxes, recycling fees, deposit refund schemes
and extended producer responsibility (EPR) schemes,
levied on individual products, such as packaging;
batteries and/or accumulators; tyres; plastic bags;
electric and electronic products; lubricating/waste oils;
and end-of‑life vehicles. The entries do not distinguish
between the different MBIs instead revealing whether
countries are making use of MBIs in this environmental
field. Detailed country information regarding the
implementation of different MBIs can be found in
Bio et al., 2014 and the Organisation for Economic
Co-operation and Development (OECD) database on
instruments used for environmental policy at
http://www2.oecd.org/ecoinst/queries.
An attempt was made to deliver a comprehensive
overview of the current status of the application of
environmental taxes using a whole range of different
sources as listed below. But we do not think that the list
is exhaustive, as, for example, environmental taxation
may be implemented at regional levels as it is the case
in Italy and Spain (see also the list of 'minor' taxes,
those which are generating revenues less than 0.1 %
of GDP — see DG TAXUD Taxes in Europe database at
http://ec.europa.eu/taxation_customs/taxation/gen_
info/info_docs/tax_inventory/index_en.htm.
Annex 2
65Environmental taxation and EU environmental policies
Table A2.1	 Overview of environmental taxes in EU‑28 Member States and non‑EU EEA member
countries
Austria Belgium Bulgaria Croatia Cyprus
Energy (including fuel
for transport)
Energy products for
transport purposes
•	 Unleaded petrol x x x x x
•	 Leaded petrol x x x x x
•	 Diesel x x x x x
•	 Other energy
products for
transport purposes
(e.g. liquid
petroleum gas
(LPG), natural gas,
kerosene or fuel oil)
x x x x
Energy products for
stationary purposes
•	 Light fuel oil x x x x x
•	 Heavy fuel oil x x x x x
•	 Natural gas x x x (2012: household
use is exempt)
x (2013: household
use is exempt)
x
•	 Coal/coke X x x (2007: household
use is exempt)
x x
•	 Electricity
consumption
x x x (2007: household
use is exempt)
x (household use is
exempt)
x (2008: tax on
energy conservation)
•	 Electricity
production/nuclear
fuels/radioactive
waste
x (tax on profits from
nuclear production)
x (radioactive waste
charge)
Greenhouse gases
•	 Carbon content of
fuels (carbon tax)
x
•	 emissions of
greenhouse gases
(including proceeds
from emission
permits recorded as
taxes in the national
accounts)
x x x x x
Transport (excluding
fuel for transport)
•	 Motor vehicles
import or sale (one
off/registration
taxes)
x X (new and
second‑hand cars are
subject to the tax)
x (only for used cars) x x
•	 Use of motor
vehicles, recurrent
(e.g. yearly/
circulation taxes)
x x x x x
•	 Road use
(e.g. motorway
taxes, road vignette)
— passenger car
x (vignette) x (vignette) x (distance based)
•	 Road use
(e.g. motorway
taxes, road vignette)
— commercial/
heavy goods
vehicles (HGV)
x (distance based) x (HGV: Eurovignette
scheme which
was replaced by
a distance‑based
scheme on 1 April
2016)
x (vignette) x (distance based)
•	 Congestion charges
and city tolls/
bridges etc.
x x x x
Annex 2
66 Environmental taxation and EU environmental policies
Table A2.1	 Overview of environmental taxes in EU‑28 Member States and non‑EU EEA member
countries (cont.)
Austria Belgium Bulgaria Croatia Cyprus
•	 Other means of
transport (ships,
airplanes, railways,
etc.)
x x x
•	 Flights and flight
tickets
x
Pollution
Measured or estimated
emissions to air
x (air pollution
charge; SO2, NOX,
CO2) — EU ETS
installations are
exempt from the CO2
charge
•	 Measured or
estimated nitrogen
oxide (NOx)
emissions
x
•	 Measured or
estimated sulphur
oxide (SOx)
emissions
x
•	 Other measured or
estimated emissions
to air (excluding
carbon dioxide
(CO2))
•	 Ozone‑depleting
substances
(e.g. ozone depleting
chemicals (ODC),
chlorofluorocarbons
(CFCs) or halons)
and HFC
Measured or estimated
effluents to water
x (Flanders and
Wallonia)
x x
•	 Measured or
estimated effluents
of oxydisable matter
(biochemical oxygen
demand (BOD),
chemical oxygen
demand (COD))
•	 Other measured or
estimated effluents
to water
Non-point sources of
water pollution
•	 Pesticides (based
on e.g. chemical
content, price or
volume)
x
•	 Artificial fertilisers
(based on
e.g. phosphorus or
nitrogen content or
price)
•	 Manure x (Flanders: abolished
2007)
Waste management
•	 Collection,
treatment or
disposal
•	 Landfill x x (Flanders and
Wallonia)
x (2011) x (only for industrial
waste)
•	 Incinerator x x
Annex 2
67Environmental taxation and EU environmental policies
Austria Belgium Bulgaria Croatia Cyprus
•	 Individual products x (producer fee
scheme)
•	 Packaging x x x
•	 Batteries/
accumulators
x
•	 Tyres x x
•	 Plastic bag x x (2011) x
•	 Products containing
PVC/phthalates
•	 Electric and
electronic products
(bulbs, fuses,
monitors, etc.)
x
•	 Lubricating oils/
waste oils
x
•	 End-of-life vehicles x
•	 Noise (e.g. aircraft
take-off and
landings)
x (2012)
Resources
•	 Water abstraction x (Flanders and
Wallonia)
x x
•	 Harvesting of
biological resources
(e.g. timber, hunted
and fished species)
•	 Extraction of
raw materials
(e.g. minerals, oil
and gas)
x (regional) x (Flanders) x x x
Table A2.1	 Overview of environmental taxes in EU‑28 Member States and non‑EU EEA member
countries (cont.)
Annex 2
68 Environmental taxation and EU environmental policies
Table A2.1	 Overview of environmental taxes in EU‑28 Member States and non‑EU EEA member
countries (cont.)
Czech Republic Denmark Estonia Finland France
Energy (including fuel for transport)
Energy products for
transport purposes
•	 Unleaded petrol x x x x x
•	 Leaded petrol x x x x x
•	 Diesel x x x x x
•	 Other energy
products for
transport purposes
(e.g. liquid
petroleum gas
(LPG), natural gas,
kerosene or fuel oil)
x x x x x
Energy products for
stationary purposes
•	 Light fuel oil x x x x x
•	 Heavy fuel oil x x x x x
•	 Natural gas x (2008) x x (2008) x x
•	 Coal/coke x (2008) x x x x
•	 Electricity
consumption
x (2008) x x (2008) x x
•	 Electricity
production/nuclear
fuels/radioactive
waste
x (2011: tax on solar
radiation)
x x (tax on nuclear
installations)
Greenhouse gases
•	 Carbon content of
fuels (carbon tax)
x (1992: CO2 tax on
electricity abolished
in 2014)
x x (1990) x (2014)
•	 Emissions of
greenhouse gases
(including proceeds
from emission
permits recorded as
taxes in the national
accounts)
x x x x x
Transport (excluding fuel for transport)
•	 Motor vehicles
import or sale (one
off/registration
taxes)
x (commercial
vehicles, trucks and
buses are exempt)
x x
•	 Use of motor
vehicles, recurrent
(e.g. yearly/
circulation taxes)
x (only for
commercial vehicles)
x x (only for
commercial cars)
x x (only for
commercial cars)
•	 Road use
(e.g. motorway
taxes, road vignette)
— passenger car
x (vignette) x (distance based)
•	 Road use
(e.g. motorway
taxes, road vignette)
— commercial/
heavy goods
vehicles (HGV)
x (distance based) x (HGV: Eurovignette
scheme)
x x (distance based)
•	 Congestion charges
and city tolls/
bridges etc.
x (bridges) x
•	 Other means of
transport (ships,
airplanes, railways,
etc.)
x x (railway tax)
Annex 2
69Environmental taxation and EU environmental policies
Table A2.1	 Overview of environmental taxes in EU‑28 Member States and non‑EU EEA member
countries (cont.)
Czech Republic Denmark Estonia Finland France
•	 Flights and flight
tickets
x (abolished in 2007) x (air traffic
supervision charge
— earmarked for
administration
purposes
x
Pollution
Measured or estimated
emissions to air
x (air pollution tax
(NOX, particulate
matter (PM), SO2,
volatile organic
compounds (VOC))
x x (2000: air pollution
charges (SO2, CO2,
carbon monoxide
(CO), NOX, etc))
x (pollution tax — La
taxe générale sur les
activités polluantes
(TGAP — 1999)
•	 Measured or
estimated nitrogen
oxide (NOx)
emissions
x x x x
•	 Measured or
estimated sulphur
oxide (SOx)
emissions
x x (sulphur content
of fuel — exceeding
0.05 % sulphur — or
SO2 emissions)
x x
•	 Other measured or
estimated emissions
to air (excluding
carbon dioxide
(CO2))
x (1996: tax on
chlorinated solvents)
•	 Ozone‑depleting
substances
(e.g. ozone
depleting
chemicals (ODC),
chlorofluorocarbons
(CFCs) or halons)
and HFC
X (ODC) x (CFC, HFC,
perfluorinated
compounds (PFC) and
sulfur hexafluoride
(SF6))
Measured or estimated
effluents to water
x x x (2006: pollution
charge for the
discharge of
pollutants into water
bodies)
x
•	 Measured or
estimated effluents
of oxydisable matter
(biochemical oxygen
demand (BOD),
chemical oxygen
demand (COD))
x x x X (set by Water
Agencies)
•	 Other measured or
estimated effluents
to water
x x (nitrogen,
phosphorous, organic
material)
x x (water protection
charge — abolished
in 2000)
Non-point sources of
water pollution
•	 Pesticides (based
on e.g. chemical
content, price or
volume)
x (1996 'ad-valorem
tax'; revised and new
tax design 2013)
x (abolished 2007)
•	 Artificial fertilisers
(based on
e.g. phosphorus or
nitrogen content or
price)
x (1998: nitrogen
fertiliser — for small
users; 2005; mineral
phosphorous
x (abolished 1994)
•	 Manure
Waste management
•	 Collection,
treatment or
disposal
•	 Landfill x x x x (1996) x (TGAP)
•	 Incinerator x (2010: design was
changed and is now
following the energy
tax scheme)
x (TGAP)
Annex 2
70 Environmental taxation and EU environmental policies
Table A2.1	 Overview of environmental taxes in EU‑28 Member States and non‑EU EEA member
countries (cont.)
Czech Republic Denmark Estonia Finland France
•	 Individual products
•	 Packaging x x x (packaging outside
of Deposit Refund
Scheme (DRS))
•	 Batteries/
accumulators
x
•	 Tyres x x (Extended Producer
Responsibility (EPR)
financed through
recycling fee)
•	 Plastic bag x x (TGAP)
•	 Products containing
PVC/phthalates
x
•	 Electric and
electronic products
(bulbs, fuses,
monitors, etc.)
x x (EPR financed via
recycling fee)
•	 Lubricating oils/
waste oils
x x (2009) x (TGAP)
•	 End-of-life vehicles x (EPR financed via
recycling fee)
•	 Noise (e.g. aircraft
take-off and
landings)
x
Resources
•	 Water abstraction x x (piped water) x x (set by Water
Agencies)
•	 Harvesting of
biological resources
(e.g. timber, hunted
and fished species)
x
•	 Extraction of
raw materials
(e.g. minerals, oil
and gas)
x x x x
Annex 2
71Environmental taxation and EU environmental policies
Table A2.1	 Overview of environmental taxes in EU‑28 Member States and non‑EU EEA member
countries (cont.)
Germany Greece Hungary Ireland Italy
Energy (including fuel for transport)
Energy products for
transport purposes
•	 Unleaded petrol x x x x x
•	 Leaded petrol x x x x x
•	 Diesel x x x x x
•	 Other energy
products for
transport purposes
(e.g. liquid
petroleum gas
(LPG), natural gas,
kerosene or fuel oil)
x x x x x
Energy products for
stationary purposes
•	 Light fuel oil x x x x x
•	 Heavy fuel oil x x x x x
•	 Natural gas x x (2011) x (household use is
exempt)
x (2010) x
•	 Coal/coke x x x (household use is
exempt)
x x
•	 Electricity
consumption
x x (2010: renewable
electricity is exempt)
x (household use is
exempt)
x (2009) x (national, regional
and municipal taxes)
•	 Electricity
production/nuclear
fuels/radioactive
waste
x (2011: tax on
nuclear fuel rod;
limited in time until
2016)
X (2010: special levy
for the reduction of
GHGs)
Greenhouse gases
•	 Carbon content of
fuels (carbon tax)
x (2009) x (1999: abolished
soon afterwards)
•	 emissions of
greenhouse gases
(including proceeds
from emission
permits recorded as
taxes in the national
accounts)
x x x x x
Transport (excluding fuel for transport)
•	 Motor vehicles
import or sale (one
off/registration
taxes)
x x x x (applicable for new
and second-hand
cars)
•	 Use of motor
vehicles, recurrent
(e.g. yearly/
circulation taxes)
X x x x x (tax at state and
regional level)
•	 Road use
(e.g. motorway
taxes, road vignette)
— passenger car
x (distance based —
only on parts of the
motorway)
x (vignette) x (distance based)
•	 Road use
(e.g. motorway
taxes, road vignette)
— commercial/
heavy goods
vehicles (HGV)
x (distance based) x (distance based) x (vignette) x x (distance based)
•	 Congestion charges
and city tolls/
bridges etc.
x x x
(Rome 2001, Bologna
2005 and Milan 2008)
•	 Other means of
transport (ships,
airplanes, railways,
etc.)
x (luxury tax —
aircraft, etc.)
Annex 2
72 Environmental taxation and EU environmental policies
Table A2.1	 Overview of environmental taxes in EU‑28 Member States and non‑EU EEA member
countries (cont.)
Germany Greece Hungary Ireland Italy
•	 Flights and flight
tickets
x (2011) x x (2009, was
abolished in April
2014)
Pollution
Measured or estimated
emissions to air
x (pollution charge
scheme)
X (air pollution tax)
•	 Measured or
estimated nitrogen
oxide (NOx)
emissions
x x (1998)
•	 Measured or
estimated sulphur
oxide (SOx)
emissions
x x (1998)
•	 Other measured or
estimated emissions
to air (excluding
carbon dioxide
(CO2))
•	 Ozone‑depleting
substances
(e.g. ozone
depleting
chemicals (ODC),
chlorofluorocarbons
(CFCs) or halons)
and HFC
x (ODC)
Measured or estimated
effluents to water
x x
•	 Measured or
estimated effluents
of oxydisable matter
(biochemical oxygen
demand (BOD),
chemical oxygen
demand (COD))
x x
•	 Other measured or
estimated effluents
to water
x
Non-point sources of
water pollution
•	 Pesticides (based
on e.g. chemical
content, price or
volume)
x (2000: ad-valorem
pesticides tax)
•	 Artificial fertilisers
(based on
e.g. phosphorus or
nitrogen content or
price)
•	 Manure
Waste management
•	 Collection,
treatment or
disposal
•	 Landfill x (2014) x (2013) x (2002) x (tax at regional
level)
•	 Incinerator
•	 Individual products
•	 Packaging x
•	 Batteries/
accumulators
x
•	 Tyres x
•	 Plastic bag x (2002)
Annex 2
73Environmental taxation and EU environmental policies
Table A2.1	 Overview of environmental taxes in EU‑28 Member States and non‑EU EEA member
countries (cont.)
Germany Greece Hungary Ireland Italy
•	 Products containing
PVC/phthalates
•	 Electric and
electronic products
(bulbs, fuses,
monitors, etc.)
x
•	 Lubricating oils/
waste oils
x
•	 End-of-life vehicles
•	 Noise (e.g. aircraft
take-off and
landings)
x
Resources
•	 Water abstraction x (regional tax,
administered by the
Länder/states)
x
•	 Harvesting of
biological resources
(e.g. timber, hunted
and fished species)
x (water consumption
tax)
•	 Extraction of
raw materials
(e.g. minerals, oil
and gas)
x (regional tax,
administered by the
Länder/states)
x x (regions)
Annex 2
74 Environmental taxation and EU environmental policies
Table A2.1	 Overview of environmental taxes in EU‑28 Member States and non‑EU EEA member
countries (cont.)
Latvia Lithuania Luxembourg Malta Netherlands
Energy (including fuel for transport)
Energy products for
transport purposes
•	 Unleaded petrol x x x x x
•	 Leaded petrol x x x x x
•	 Diesel x x x x x
•	 Other energy
products for
transport purposes
(e.g. liquid
petroleum gas
(LPG), natural gas,
kerosene or fuel oil)
x x x x x
Energy products for
stationary purposes
•	 Light fuel oil x x x x x
•	 Heavy fuel oil x x x X x
•	 Natural gas x (2010) x (2011) x (2007) x (no consumption) x
•	 Coal/coke x (household use is
exempt)
x x (household use is
exempt)
x (no consumption) x
•	 Electricity
consumption
x (2007: household
use is exempt as
well as renewable
electricity)
x (2010: household
use is exempt as
well as renewable
electricity)
x x x
•	 Electricity
production/nuclear
fuels/radioactive
waste
x (subsidised
electricity tax — 2014
and limited to the
end of 2017)
x (Natural
Resources Tax —
use of radioactive
substances)
Greenhouse gases
•	 Carbon content of
fuels (carbon tax)
x (1995: air
pollution tax)
•	 emissions of
greenhouse gases
(including proceeds
from emission
permits recorded as
taxes in the national
accounts)
x x x x x
Transport (excluding fuel for transport)
•	 Motor vehicles
import or sale (one
off/registration
taxes)
x x (imports of vehicles
into Lithuania)
x x
•	 Use of motor
vehicles, recurrent
(e.g. yearly/
circulation taxes)
x x (only for
commercial vehicles)
x x x
•	 Road use
(e.g. motorway
taxes, road vignette)
— passenger car
x (vignette)
•	 Road use
(e.g. motorway
taxes, road vignette)
— commercial/
heavy goods
vehicles (HGV)
x x (vignette) x (HGV: Eurovignette
scheme)
x (HGV: Eurovignette
scheme)
Annex 2
75Environmental taxation and EU environmental policies
Latvia Lithuania Luxembourg Malta Netherlands
•	 Congestion charges
and city tolls/
bridges etc.
x x (Valetta 2007) x
•	 Other means of
transport (ships,
airplanes, railways,
etc.)
x x
•	 Flights and flight
tickets
x (abolished 2008) x (abolished 2010)
Pollution
Measured or estimated
emissions to air
x (2004: Natural
Resources Tax) — air
pollutants (PM10, SO2,
NOx, etc.) including
CO2 from stationary
installations)
x (1991: pollution
tax levied on a range
of air pollutants
including NOx, SO2,
etc.)
•	 Measured or
estimated nitrogen
oxide (NOx)
emissions
x x
•	 Measured or
estimated sulphur
oxide (SOx)
emissions
x x
•	 Other measured or
estimated emissions
to air (excluding
carbon dioxide
(CO2))
•	 Ozone‑depleting
substances
(e.g. ozone
depleting
chemicals (ODC),
chlorofluorocarbons
(CFCs) or halons)
and HFC
x (substances
depleting the ozone
layer)
Measured or estimated
effluents to water
x (Natural
Resources Tax)
x (pollution tax
levied on a range of
pollutants discharged
into waters)
x x (pollution levy for
direct discharge into
surface waters)
•	 Measured or
estimated effluents
of oxydisable matter
(biochemical oxygen
demand (BOD),
chemical oxygen
demand (COD))
x
•	 Other measured or
estimated effluents
to water
Non-point sources of
water pollution
•	 Pesticides (based
on e.g. chemical
content, price or
volume)
•	 Artificial fertilisers
(based on
e.g. phosphorus or
nitrogen content or
price)
•	 Manure x (1998–2005)
Waste management
•	 Collection,
treatment or
disposal
Table A2.1	 Overview of environmental taxes in EU‑28 Member States and non‑EU EEA member
countries (cont.)
Annex 2
76 Environmental taxation and EU environmental policies
Table A2.1	 Overview of environmental taxes in EU‑28 Member States and non‑EU EEA member
countries (cont.)
Latvia Lithuania Luxembourg Malta Netherlands
•	 Landfill x x (planned to be in
force in 2016)
x (abolished in 2012
and reinstated in
2014)
•	 Incinerator x (2015)
•	 Individual products
•	 Packaging x (Natural Resources
Tax)
•	 Batteries/
accumulators
x x (pollution tax) x (eco-contribution
scheme)
x (abolished in
2013/replaced by
packaging waste
management charge
since 2013))
•	 Tyres x x (pollution tax) x (eco-contribution
scheme)
•	 Plastic bag x x (pollution tax) x (eco-contribution
scheme)
•	 Products containing
PVC/phthalates
x x (eco-contribution
scheme)
•	 Electric and
electronic products
(bulbs, fuses,
monitors, etc.)
•	 Lubricating oils/
waste oils
x x (eco-contribution
scheme)
•	 End-of-life vehicles x x
•	 Noise (e.g. aircraft
take-off and
landings)
x
Resources x
— Water abstraction
•	 Harvesting of
biological resources
(e.g. timber, hunted
and fished species)
x (Natural Resources
Tax)
x x x (tap water tax
=1994
groundwater
extraction tax was
abolished in 2011
groundwater levy
charged by provinces)
•	 Extraction of
raw materials
(e.g. minerals, oil
and gas)
x (Natural Resources
Tax)
x (petroleum and
natural gas; as well
as other natural
resources)
x (tax on cement —
2011)
Annex 2
77Environmental taxation and EU environmental policies
Table A2.1	 Overview of environmental taxes in EU‑28 Member States and non‑EU EEA member
countries (cont.)
Poland Portugal Romania Slovakia Slovenia
Energy (including fuel for transport)
Energy products for
transport purposes
•	 Unleaded petrol x x x x x
•	 Leaded petrol x x x x x
•	 Diesel x x x x x
•	 Other energy
products for
transport purposes
(e.g. liquid
petroleum gas
(LPG), natural gas,
kerosene or fuel oil)
x x x x X
Energy products for
stationary purposes
•	 Light fuel oil x x x x x
•	 Heavy fuel oil x x x x x
•	 Natural gas x (2013) x (2013) x (2007: household
use is exempt)
x (2006) x
•	 Coal/coke x (2012: household
use is exempt)
x x (household use is
exempt)
x (2009: household
use is exempt)
Xx
•	 Electricity
consumption
x x (2012) x (2007: renewable
electricity is exempt)
x (2008: household
use is exempt)
x (2007)
•	 Electricity
production/nuclear
fuels/radioactive
waste
x (2012: tax on
radioactive waste;
however, Poland
does not generate
any nuclear power at
current)
x (2014: extraordinary
contribution on the
energy sector)
x (2003: tax on
installing nuclear
equipment)
Greenhouse gases
•	 Carbon content of
fuels (carbon tax)
x (1990: air
pollution tax)
x (2015) x (1996) including
fluorinated
greenhouse gases
•	 Emissions of
greenhouse gases
(including proceeds
from emission
permits recorded as
taxes in the national
accounts)
x x x x x
Transport (excluding fuel for transport)
•	 Motor vehicles
import or sale (one
off/registration
taxes)
x x x x x
•	 Use of motor
vehicles, recurrent
(e.g. yearly/
circulation taxes)
x (only for
commercial vehicles)
x x x (only for
commercial vehicles)
x
•	 Road use
(e.g. motorway
taxes, road vignette)
— passenger car
x (distance based
— on parts of the
motorway)
x (distance based) x (vignette) x (vignette) x (vignette)
•	 Road use
(e.g. motorway
taxes, road vignette)
— commercial/
heavy goods
vehicles (HGV)
x (distance based) x (distance based) x (vignette) x (distance based) x (distance based)
•	 Congestion charges
and city tolls/
bridges etc.
x x
•	 Other means of
transport (ships,
airplanes, railways,
etc.)
x x
Annex 2
78 Environmental taxation and EU environmental policies
Table A2.1	 Overview of environmental taxes in EU‑28 Member States and non‑EU EEA member
countries (cont.)
Poland Portugal Romania Slovakia Slovenia
−− Flights and flight
tickets
x
Pollution
Measured or estimated
emissions to air
x (1990: a range
of different air
emissions including
SO2, NO2, CO2, etc.)
x (a range of different
air emissions
including NOx, SOx,
dust, cadmium))
x (a range of different
air emissions
including SO2, NO2,
CO, etc.
•	 Measured or
estimated nitrogen
oxide (NOx)
emissions
x x x
•	 Measured or
estimated sulphur
oxide (SOx)
emissions
x x x
•	 Other measured or
estimated emissions
to air (excluding
carbon dioxide
(CO2))
x (persistent organic
pollutants, dust,
heavy metals)
x (VOC)
•	 Ozone‑depleting
substances
(e.g. ozone
depleting
chemicals (ODC),
chlorofluorocarbons
(CFCs) or halons)
and HFC
x (ODC) x (fluorinated
greenhouse gas)
Measured or estimated
effluents to water
x x (range of different
water pollutants are
taxed)
x x
•	 Measured or
estimated effluents
of oxydisable matter
(biochemical oxygen
demand (BOD),
chemical oxygen
demand (COD))
x x (BOD, COD, etc.) x x
•	 Other measured or
estimated effluents
to water
x x (nitrates, arsenic,
etc.)
x
Non-point sources of
water pollution
•	 Pesticides (based
on e.g. chemical
content, price or
volume)
•	 Artificial fertilisers
(based on
e.g. phosphorus or
nitrogen content or
price)
•	 Manure
Waste management
•	 Collection,
treatment or
disposal
•	 Landfill x x x (2014) x x (2004)
•	 Incinerator x
•	 Individual products
•	 Packaging x (EPR — 'eco-valor') x x
•	 Batteries/
accumulators
x x (EPR — 'eco-valor')
•	 Tyres x (EPR — 'eco-valor') x x
Annex 2
79Environmental taxation and EU environmental policies
Table A2.1	 Overview of environmental taxes in EU‑28 Member States and non‑EU EEA member
countries (cont.)
Poland Portugal Romania Slovakia Slovenia
•	 Plastic bag x (2015) x
•	 Products containing
PVC/phthalates
•	 Electric and
electronic products
(bulbs, fuses,
monitors, etc.)
x (2008: EPR —
'eco‑valor')
x (fee on low
efficiency light bulbs)
x
•	 Lubricating oils/
waste oils
x x x
•	 End-of-life vehicles x (EPR — 'eco-valor') x
•	 Noise (e.g. aircraft
take-off and
landings)
x
Resources
•	 Water abstraction x (2009: water
resource fee)
x x
•	 Harvesting of
biological resources
(e.g. timber, hunted
and fished species)
x
•	 Extraction of
raw materials
(e.g. minerals, oil
and gas)
x (gravel, sand and
energy products and
2012: cooper and
silver)
x (2014) x (2012)
Annex 2
80 Environmental taxation and EU environmental policies
Table A2.1	 Overview of environmental taxes in EU‑28 Member States and non‑EU EEA member
countries (cont.)
Spain Sweden United Kingdom
Energy (including fuel for transport)
Energy products for
transport purposes
•	 Unleaded petrol x x x
•	 Leaded petrol x x x
•	 Diesel x x x
•	 Other energy
products for
transport purposes
(e.g. liquid
petroleum gas
(LPG), natural gas,
kerosene or fuel oil)
x x x
Energy products for
stationary purposes
•	 Light fuel oil x x x
•	 Heavy fuel oil x x x
•	 Natural gas x (2013) x x (household use is
exempt)
•	 Coal/coke x x x (household use is
exempt)
•	 Electricity
consumption
x x x (household use is
exempt — Climate
change levy)
•	 Electricity
production/nuclear
fuels/radioactive
waste
x (2013: nuclear and
hydropower)
x (2013: tax on
the production of
radioactive waste;
and 2013: tax on the
storage of radioactive
waste) — regional
taxes
x (2000: thermal
power capacity tax
of nuclear power
stations (replacing
the nuclear power
tax) and fee to
nuclear fuel fund))
Greenhouse gases
•	 Carbon content of
fuels (carbon tax)
x (1991) x (climate change
levy (CCL) (2001);
CRC Energy Efficiency
Scheme (2012),
carbon price support/
carbon price floor
(CSP/CPF) (2013)
•	 Emissions of
greenhouse gases
(including proceeds
from emission
permits recorded as
taxes in the national
accounts)
x x x
Transport (excluding fuel for transport)
•	 Motor vehicles
import or sale (one
off/registration
taxes)
x (different tax
rates can be set by
the autonomous
communities)
x (abolished 2000)
•	 Use of motor
vehicles, recurrent
(e.g. yearly/
circulation taxes)
x (different tax
rates can be set by
the autonomous
communities)
x (2006) x
•	 Road use
(e.g. motorway
taxes, road vignette)
— passenger car
x (distance based)
•	 Road use
(e.g. motorway
taxes, road vignette)
— commercial/
heavy goods
vehicles (HGV)
x (distance based) x (HGV —
Eurovignette scheme)
x (HGV road user levy
— 2014)
Annex 2
81Environmental taxation and EU environmental policies
Spain Sweden United Kingdom
•	 Congestion charges
and city tolls/
bridges etc.
x x (Stockholm 2007,
Gothenburg 2013)
— plus charges on
bridges
x (London, Durham,
M6 toll road)
•	 Other means of
transport (ships,
airplanes, railways,
etc.)
x x
•	 Flights and flight
tickets
x
Pollution
Measured or estimated
emissions to air
x (implemented at
regional/autonomous
communities level)
•	 Measured or
estimated nitrogen
oxide (NOx)
emissions
x (implemented at
regional/autonomous
communities level)
x
•	 Measured or
estimated sulphur
oxide (SOx)
emissions
x (implemented at
regional/autonomous
communities level)
x
•	 Other measured or
estimated emissions
to air (excluding
carbon dioxide
(CO2))
−− Ozone‑depleting
substances
(e.g. ozone
depleting
chemicals (ODC),
chlorofluorocarbons
(CFCs) or halons)
and HFC
x (2014: fluorinated
greenhouse gas)
x (ODC)
Measured or estimated
effluents to water
x (implemented at
state level as well
as at autonomous
communities level)
x (water pollution
charge for ships)
•	 Measured or
estimated effluents
of oxydisable matter
(biochemical oxygen
demand (BOD),
chemical oxygen
demand (COD))
•	 Other measured or
estimated effluents
to water
Non-point sources of
water pollution
•	 Pesticides (based
on e.g. chemical
content, price or
volume)
x (1984)
•	 Artificial fertilisers
(based on
e.g. phosphorus or
nitrogen content or
price)
x (abolished in 2010)
•	 Manure
Waste management
•	 Collection,
treatment or
disposal
•	 Landfill x (implemented
in 9 autonomous
communities)
x (2000) x
Table A2.1	 Overview of environmental taxes in EU‑28 Member States and non‑EU EEA member
countries (cont.)
Annex 2
82 Environmental taxation and EU environmental policies
Spain Sweden United Kingdom
•	 Incinerator x (implemented
by autonomous
communities,)
x (2006 and abolished
in 2010)
•	 Individual products
•	 Packaging x (EPR fee)
•	 Batteries/
accumulators
x (waste
management fee)
•	 Tyres x (EPR fee)
•	 Plastic bag x (implemented at
regional/autonomous
communities level)
x (England, Wales,
Northern Ireland and
Scotland)
•	 Products containing
PVC/phthalates
•	 Electric and
electronic products
(bulbs, fuses,
monitors, etc.)
x (EPR fee)
•	 Lubricating oils/
waste oils
•	 End-of-life vehicles
•	 Noise (e.g. aircraft
take-off and
landings)
x
Resources
•	 Water abstraction x (implemented
at autonomous
communities level)
x (water abstraction
charges managed by
nations)
•	 Harvesting of
biological resources
(e.g. timber, hunted
and fished species)
•	 Extraction of
raw materials
(e.g. minerals, oil
and gas)
x x
Table A2.1	 Overview of environmental taxes in EU‑28 Member States and non‑EU EEA member
countries (cont.)
Annex 2
83Environmental taxation and EU environmental policies
Table A2.1	 Overview of environmental taxes in EU‑28 Member States and non‑EU EEA member
countries (cont.)
Iceland Liechtenstein Norway Switzerland Turkey
Energy (including fuel for transport)
Energy products for
transport purposes
•	 Unleaded petrol x x x x x
•	 Leaded petrol x x x x x
•	 Diesel x x x x x
•	 Other energy
products for
transport purposes
(e.g. liquid
petroleum gas
(LPG), natural gas,
kerosene or fuel oil)
x x x x x
Energy products for
stationary purposes
•	 Light fuel oil x x x x x
•	 Heavy fuel oil x x x x x
•	 Natural gas x x x x x
•	 Coal/coke x
•	 Electricity
consumption
x (2009, planned to
expire at the end of
2015)
x x x x
•	 Electricity
production/nuclear
fuels/radioactive
waste
x (2009: tax on
geothemal water)
x
Greenhouse gases
•	 Carbon content of
fuels (carbon tax)
x (2010) X (2008) x (1991) x (2008)
•	 Emissions of
greenhouse gases
(including proceeds
from emission
permits recorded as
taxes in the national
accounts)
x x x x
Transport (excluding fuel for transport)
•	 Motor vehicles
import or sale (one
off/registration
taxes)
x x x x (special
consumption tax)
•	 Use of motor
vehicles, recurrent
(e.g. yearly/
circulation taxes)
x x x x x
•	 Road use
(e.g. motorway
taxes, road vignette)
— passenger car
x (vignette) x (vignette)
•	 Road use
(e.g. motorway
taxes, road vignette)
— commercial/
heavy goods
vehicles (HGV)
x (distance-based
charging scheme)
x x (distance-based
charging scheme)
x
•	 Congestion charges
and city tolls/
bridges etc.
x x x (Bergen 1986, Oslo
1990)
x x
•	 Other means of
transport (ships,
airplanes, railways,
etc.)
x x x (airplanes)
Annex 2
84 Environmental taxation and EU environmental policies
Table A2.1	 Overview of environmental taxes in EU‑28 Member States and non‑EU EEA member
countries (cont.)
Iceland Liechtenstein Norway Switzerland Turkey
•	 Flights and flight
tickets
Pollution
Measured or estimated
emissions to air
x (VOC) x x (VOC — 2000)
•	 Measured or
estimated nitrogen
oxide (NOx)
emissions
x (2007)
•	 Measured or
estimated sulphur
oxide (SOx)
emissions
x
•	 Other measured or
estimated emissions
to air (excluding
carbon dioxide
(CO2))
•	 Ozone‑depleting
substances
(e.g. ozone
depleting
chemicals (ODC),
chlorofluorocarbons
(CFCs) or halons)
and HFC
x (trichloroethene
(TRI),
tetrachloroethene
(PER),
hydrofluorocarbons
(HFC),
perfluorocarbons
(PFC))
Measured or estimated
effluents to water
•	 Measured or
estimated effluents
of oxydisable matter
(biochemical oxygen
demand (BOD),
chemical oxygen
demand (COD))
•	 Other measured or
estimated effluents
to water
Non-point sources of
water pollution
•	 Pesticides (based
on e.g. chemical
content, price or
volume)
x
•	 Artificial fertilisers
(based on
e.g. phosphorus or
nitrogen content or
price)
•	 Manure
•	 Waste management
•	 Collection,
treatment or
disposal
•	 Landfill x x x x
•	 Incinerator x (1999 and abolished
in 2010)
x
•	 Individual products
•	 Packaging x (recycling fee) x (1994: beverage
containers)
x x
•	 Batteries/
accumulators
x (recycling fee) x x
•	 Tyres x (recycling fee) x
•	 Plastic bag
Annex 2
85Environmental taxation and EU environmental policies
Iceland Liechtenstein Norway Switzerland Turkey
•	 Products containing
PVC/phthalates
•	 Electric and
electronic products
(bulbs, fuses,
monitors, etc.)
x
•	 Lubricating oils/
waste oils
x (recycling fee) x x
•	 End-of-life vehicles x (recycling fee) x x
•	 Noise (e.g. aircraft
take-off and
landings)
x x
Resources
•	 Water abstraction x
•	 Harvesting of
biological resources
(e.g. timber, hunted
and fished species)
X
•	 Extraction of
raw materials
(e.g. minerals, oil
and gas)
x
Table A2.1	 Overview of environmental taxes in EU‑28 Member States and non‑EU EEA member
countries (cont.)
Annex 2
86 Environmental taxation and EU environmental policies
References used for compilation of
overview table
Bahn-Walkowiak, B. and Steger, S., 2015, 'Resource
Targets in Europe and Worldwide: An Overview',
Resources, 4, 597–620.
BIO Intelligence Service, IEEP, Eunomia,
Umweltbundesamt, Arcadis, 2012, Use of Economic
Instruments and Waste Management Performances, Final
Report to European Commission, DG Environment,
Brussels.
BIO Intelligence Service, in collaboration with Arcadis,
Ecologic, Institute for European Environmental Policy
(IEEP), Umweltbundesamt (UBA), 2014, Development
of Guidance on Extended Producer Responsibility (EPR),
Final Report to DG Environment of the European
Commission, Brussels.
Bragadóttir, H., von Utfall Danielsson, C., Magnusson,
R., Seppänen, S., Stefansdotter, A. and Sundé, D., 2014,
The Use of Economic Instruments in Nordic Environmental
Policy 2010–2013, Nordisk Ministerråd, Copenhagen.
Danish Ecological Council, no date, Fact sheet Tax on
pesticides, Copenhagen.
EC, DG Taxation and Customs Union, Excise Duty
Tables, Part II — Energy products and Electricity,
http://ec.europa.eu/taxation_customs/taxation/excise_
duties/energy_products/rates/index_en.htm.
EC, DG Taxation and Customs Union, Taxes in Europe
database, http://ec.europa.eu/taxation_customs/
taxation/gen_info/info_docs/tax_inventory/index_
en.htm.
EC, DG Taxation and Customs Union, Taxes in Europe
database List of minor taxes, http://ec.europa.eu/
taxation_customs/resources/documents/taxation/gen_
info/info_docs/tax_inventory/list_minor_taxes_en.pdf.
EC, DG Climate Action, Assessment of climate change
policies in the context of the European Semester,
http://ec.europa.eu/clima/policies/g-gas/progress/
studies_en.htm.
EEA, 2015, Evaluating 15 years of transport and
environmental policy integration — TERM 2015: Transport
indicators tracking progress towards environmental
targets in Europe, EEA Report No 7/2015, Copenhagen
Hogg, D., Andersen, M.S., Elliott, T., Sherrington, C.,
Vergunst, T., Ettlinger, S., Elliott, L. and Hudson, J.,
2014, Study on Environmental Fiscal Reform Potential
in 12 EU Member States, Final Report to European
Commission, Directorate-General Environment,
Brussels.
Hogg, D., Andersen, M.S., Elliott, T., Sherrington, C.,
Vergunst, T., Ettlinger, S., Elliott, L., Hudson, J., ten Brink,
P., Withana, S., Razzini, P., Hjerp, P., Illes, A., Geeraerts,
K. and Ghiurca, A., 2015, Study on Environmental
Fiscal Reform Potential in 14 EU Member States, Final
Report to European Commission, Directorate-General
Environment, Brussels.
Hogg, D., Elliott, T., Elliott, L., Ettlinger, S., Chowdhury, T.,
Bapasola, A., Norstein, H., Emery, L., Andersen, M.S., ten
Brink, P., Withana, S., Schweitzer, J.-P., Illes, A., Paquel,
K., Ventosa, I.P. and Sastre, S., 2016, Study on Assessing
the Environmental Fiscal Potential for the EU 28, Final
report for European Commission, Directorate-General
Environment, Brussels.
Norden, 2014, 'Economic Policy Instruments for Plastic
Waste A review of Nordic perspectives', TemaNord
2014:569, Copenhagen.
Nordenergi, 2014, Nordic Tax Report 2014 electricity sector,
prepared by Nordenergi WG Taxes and Levies, Helsinki.
OECD, 2001, Environmentally Related Taxes in OECD
Countries — Issues and Strategies, Paris.
OECD/IEA, 2014, Energy Prices and Taxes, Quarterly
Statistics, Organisation for Economic Co-operation and
Development, Paris.
OECD, 2013, Environmental Performance Reviews Italy
2013, Organisation for Economic Co-operation and
Development, Paris.
OECD, 2014, Environmental Performance Reviews Iceland
2014, Organisation for Economic Co-operation and
Development, Paris.
OECD, 2014, Environmental Performance Reviews Sweden
2014, Organisation for Economic Co-operation and
Development, Paris.
OECD, 2015, Environmental Performance Reviews Spain
2015, Organisation for Economic Co-operation and
Development, Paris.
OECD, 2015, Environmental Performance Reviews: Poland
2015, Organisation for Economic Co‑operation and
Development, Paris.
Annex 2
87Environmental taxation and EU environmental policies
PWC, 2015, Excise duties in Denmark 2015 — Overview over
payment and reimbursement of excise duties in Denmark,
Denmark.
Vollebergh, H., 2014, Green tax reform: Energy tax
challenges for the Netherlands, PBL Netherlands
Environmental Assessment Agency, The Hague.
Withana, S., ten Brink, P., Kretschmer, B., Mazza, L.,
Hjerp, P., Sauter, R., 2013, Evaluation of environmental
tax reforms: International experiences, A report by the
Institute for European Environmental Policy (IEEP)
for the State Secretariat for Economic Affairs (SECO)
and the Federal Finance Administration (FFA) of
Switzerland, Final Report, Brussels.
Withana, S., ten Brink, P., Illes, A., Nanni, S., Watkins, E.,
2014, Environmental tax reform in Europe: Opportunities
for the future, A report by the Institute for European
Environmental Policy (IEEP) for the Netherlands
Ministry of Infrastructure and the Environment, Final
Report, Brussels.
Websites
ACEA (European Automobile Manufacturers'
Association), http://www.acea.be.
EC, DG Taxud, 'Taxes in Europe' database (TEDB), http://
ec.europa.eu/taxation_customs/taxation/gen_info/
info_docs/tax_inventory/index_en.htm.
Eurelectric, http://www.eurelectric.org.
OECD, Database on instruments for environmental
policy, http://www2.oecd.org/ecoinst/queries/Default.
aspx.
www.tolltickets.com.
http://roadpricing.blogspot.dk/2012/08/truck-tollshgv-
road-user-charging-in.html.
European Environment Agency
Environmental taxation and EU environmental policies
2016 — 87 pp. — 21 x 29.7 cm
ISBN 978-92-9213-755-7
doi:10.2800/296823
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