Www.seri.at Global effects of a European environmental tax reform WIOD Conference on Industry-Level...
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www.seri.at
Global effects of a European environmental
tax reform
WIOD Conference on Industry-Level Analyses of Globalization and its Consequences26 May 2010
Christine Polzin (SERI)Dr Christian Lutz (GWS)Dr Stefan Giljum (SERI)
2
Content
1. Background: The PETRE project
2. The GINFORS Model
3. Results
4. Policy recommendations
3
Content
1. Background: The PETRE project
2. The GINFORS Model
3. Results
4. Policy recommendations
4
What are the global impacts of a European environmental tax reform?
Resource PProductivity, EEnvironmental TTax RReform and sustainable growth in EEurope
• Environmental impacts:•Material extraction•Energy-related CO2 emissions
•Economic impacts:•economic growth•International trade & sectoral competitiveness
http://www.petre.org.uk/
5
Content
1. Background: The PETRE project
2. The GINFORS Model
3. Results
4. Policy recommendations
6
GGlobal ININterindustry FORFORecasting SSystem (GINFORS)
GINFORS:• Economy-energy-environment simulation model • Global multi-country approach• Multi-sector approach• Links modules for bilateral trade, macroeconomic
behaviour, industrial output from IO tables and energy use and prices
• Includes a global dataset on material extraction (physical data)
7
Data sources and coverage
data sources global coverage
UN COMTRADE 2 regions (OPEC, ROW)OECD IO (41 sectors)
OECD STAN, SNA DT
National sources (CN, TW)
macro OECD/IMF 52 countriesenergy/CO2 IEA 52 countries
material SERI 52 countries
population UN 52 countries
model type
input-output and sector
22 countries (more than 80% of world GDP)
tradeOECD (BTD, 25 sectors, Services)
50 countries (> 95% of world GDP, trade, energy consumption)
cou
ntr
y m
od
els
8
Country coverage
country models OPEC ex. Indonesia ROW
9
Baseline and policy scenarios
Baseline = Business as usual scenario• Socio-economic and economic-environmental relations
of the past will continue in the future
ETR scenarios • ETR tax in all EU non-ETS sectors = ETS price• Aviation included in EU ETS• 100% auctioning of power generation ETS permits• 50% auctioning of all other ETS permits in 2013,
100% auctioning by 2020• Material taxes (5% ad valorem in 2010, 15% by
2020)
10
Policy scenarios
S1H • High energy prices• ETR with 100% revenue recycling: all revenues are used to
reduce the employers’ social security contributions (income tax, etc)
• 2020 EU GHG emissions target (20%) met
S3H • High energy prices• ETR with 100% revenue recycling • International cooperation • 2020 EU GHG target (30%) • Emerging economies introduce a CO2 tax which is recycled
via income tax reductions
11
Content
1. Background: The PETRE project
2. The GINFORS Model
3. Results
4. Policy recommendations
12
GDP continues to grow in all 4 regions in the baseline scenario
Average annual growth rates
1995-2000
2000-2005
2005-2010
2010-2015
2015-2020
In % (based on USD PPP, 2004)
EU-27 3.1 1.9 2.2 2.5 2.2
OECD (non-EU) 3.8 2.6 2.0 3.0 2.9
Emerging Economies
6.2 8.0 8.7 8.3 6.8
RoW 3.8 4.9 5.1 3.7 2.9
World 4.2 4.8 4.4 4.9 4.4
GDP development in the baseline scenario (average annual growth rates)
13
Global economic weight will shift away from the old industrialised countries
Shares in world GDP
2000 2005 2010 2015 2020
In % (based on USD PPP, 2004)
EU-27 25.4 22.4 20.4 18.4 16.8
OECD (non-EU) 41.3 37.5 33.8 31.2 29.3
Emerging Economies
27.9 31.4 37.0 42.0 46.0
RoW 5.9 9.2 9.5 9.0 8.5
Shares in world GDP, baseline scenario
14
Global economic growth is only marginally affected by an ETR
Total value of GDP,
baseline (in billion USD 2000, PPP)
Absolute deviation of HS1 from
baseline in 2020
Percentage deviation of HS1 from
baseline in 2020
Absolute deviation of HS3 from
baseline in 2020
Percentage deviation of HS3 from
baseline in 2020
EU-27 15,931 -92 -0.6 -297 -1.9
OECD (non-EU) 27,840 28 0.1 -78 -0.3
Emerging Economies
43,699 53 0.1 -688 -1.6
RoW 8,033 6 0.1 -266 -3.3
World total 94,926 -3 0.0 -1,313 -1.4
GDP impacts in different world regions. 3 scenarios (in bn USD 2000, PPP)
15
Exports continue to grow in the baseline scenario
Average annual
growth rates
2000-2005
2005-2010
2010-2015
2015-2020
In % (based on USD, 2000)
EU-27 3.7 3.1 2.6 2.9
OECD (non-EU) 7.7 5.1 3.1 2.5
Emerging Economies
5.1 9.3 5.4 6.1
RoW 8.7 8.3 5.3 5.8
Export developments in different world regions, baseline scenario
16
Export impacts are stronger with global cooperation
Total value of exports,
baseline, 2020
(PPP bn USD)
Absolute deviation of HS1 from
baseline in 2020
Percentage deviation of HS1 from
baseline in 2020
Absolute deviation of HS3 from
baseline in 2020
Percentage deviation of HS3 from
baseline in 2020
EU-27 7972.0 -60.1 -0.8% -264.2 -3.3%
OECD (non-EU) 5505.1 14.1 0.3% -29.5 -0.5%
Emerging Economies
11036.0 19.8 0.2% -159.2 -1.4%
RoW 4913.9 7.4 0.2% -73.2 -1.5%
Export impacts in different world regions, three scenarios
17
-30
-25
-20
-15
-10
-5
0
5
10
% d
evia
tion
fro
m b
asel
ine
Resource-intensive sectors loose out
EU Exports: impacts of scenario SH3
18
Continuous trend of increasing global resource extraction
0
20
40
60
80
100
120
2000 2005 2010 2015 2020 2025 2030
billi
on to
nnes
Construction minerals
Industrial minerals
Non-ferrous metals
Iron ores
Natural Gas
Crude Oil
Coal
Forestry products
Agricultural products and fish
Global used material extraction of different material categories, baseline
19
Material extraction continues to grow
50
55
60
65
70
75
80
85
2000 2005 2010 2015 2020
billi
on to
nnes
Baseline
S1H
S3H
Global used material extraction, 3 scenarios
20
A European ETR and global cooperation can decrease material extraction
Total extraction, baseline,
2020 (in billion tonnes)
Absolute deviation of S1H in 2020
(in billion tonnes)
Percentage deviation of S1H from
baseline in 2020
Absolute deviation of S3H in 2020
(in billion tonnes)
Percentage deviation of S3H from
baseline in 2020
EU-25 6.8 -0.10 -1.47 % -0.24 -3.6 %
OECD (non-EU)
18.7 0.02 0.10 % -1.03 -5.5 %
Emerging Economies
31.5 0.01 0.03 % -2.23 -7.1 %
RoW 24.2 -0.02 -0.08 % -0.79 -3.3 %
Global 81.2 -0.09 -0.11 % -4.30 -5.3 %
21
CO2 emissions remain constant in the EU but increase elsewhere
0
5
10
15
20
25
30
35
40
45
2000 2005 2010 2015 2020 2025 2030
billi
on to
nnes
RoW
Emerging Economies
OECD (non-EU)
EU-27
Energy-related CO2 emissions in 4 regions, baseline (bn tonnes)
22
22
24
26
28
30
32
34
36
2000 2005 2010 2015 2020
billi
on to
nnes
Baseline
S1H
S3H
Global CO2 emissions can hardly be reduced with EU measures alone
23
CO2 emissions can be substantially reduced with global cooperation
Total CO2
emissions in baseline, 2020 (in Mt)
Total change in
HS1 in 2020(in Mt)
Relative change in HS1, % in
2020
Total change in
HS3 in 2020(in Mt)
Relative change in HS3, % in
2020
EU-25 3776.3 -318.8 -8.4 % -722.4 -19.1 %
OECD (non-EU)
10244.6 10.4 0.1 % -1829.1 -17.9 %
Emerging Economies
14835.5 2.3 0.02 % -2741.9 -18.5 %
RoW 5854.9 0.4 0.01 % -141.4 -2.4 %
Global 34526.7 -272.8 -0.8 % -5398.6 -15.6 %
Impacts of an ETR on energy-related CO2 emissions in HS1 and HS3
24
Content
1. Background: The PETRE project
2. The GINFORS Model
3. Results
4. Policy recommendations
25
Combating climate change with global cooperation and global climate treaties
• Large emerging economies will increase their share in CO2
emissions
• Unilateral action by the EU is insignificant in terms of global
environmental sustainability
• Participation of all OECD and emerging countries
• Avoid carbon leakage
26
CO2 emission targets are not sufficient to address climate change
• Targets to reduce EU CO2 emissions (by 20-30%) are not
sufficient.
• Measures are needed to increase resource productivity and to
limit resource consumption.
• Focus on CO2 is too narrow (e.g. biofuels, nuclear energy)
• Address our unsustainable use of resources (root cause of
climate change)
• Concerted action
27
Shared responsibility between producers and consumers
• Increasing importance of embodied emissions in trade
• Multi-regional IO models show that our CO2 emissions would
be higher (developing countries produce on our behalf)
• Distribute costs to reduce GHG emissions between
producers and consumers
• Per capita allocations or global carbon tax
28
Address the conflict between economic and development goals
• In important EU policy strategies (“Global Europe”, “Raw
Materials Initiative”) the goals of access to and supply of raw
materials and natural resources prevail over the objective of
their sustainable and equitable use
• Increase technical and financial assistance for climate change
mitigation and adaptation
• Placing access to resource efficient technologies outside the
purview if IPR restrictions into the public domain / international
public buyouts of patents on such technologies
29
Thank you!
www.seri.atwww.gws-os.dewww.materialflows.net
30
Scenarios
Baseline with low energy prices (LEP) LB: • International energy prices: PRIMES 2007 (60 $2005/boe in 2020)• GDP and CO2 adjusted to PRIMES 2007/WEO 2007• ETS price: 18 Euro2008/t CO2 in 2020
Baseline HB:• Baseline as above but exogenous real oil price is assumed to rise after
2008 consistent with a $113/boe in nominal terms in 2010 and then to rise as in the PRIMES baseline (LEP above).
• Gas and coal prices follow the oil price.• Energy prices consistent with IEA/WEO 2008 baseline
Scenario 1: LS1• 2020 EU GHG emissions target (20%) met• Low energy prices (baseline LEP)• ETS price = ETR tax rate• ETS: 100% auctioning in 2020• Material tax (15% ad valorem tax in 2020)• 100% revenue recycling: employer’s social security contributions (ETS
material tax and carbon tax on corp. rev)/income tax (carbon tax on hh)• No further policy measures (RES, efficiency package etc.)
31
Scenarios (part II)
Scenario 2: HS1
• 2020 EU GHG 20% target met
• High energy prices
• CO2 price: 68 Euro 2008/t
Scenario 3: HS2
• As Scenario 2
• 10% recycling in low carbon technologies (RES and building insulation)
• CO2 price: 61 Euro 2008/t
Scenario 4: HS3
• As Scenario 2
• International cooperation
• 2020 EU GHG emissions target (30%!) met
• CO2 price: 184 Euro2008/t (OECD)
• CO2 price: 46 Euro2008/t (emerging economies)