Assessing Fiscal Policy For Greenhouse Gas Abatement In The Uk And The European Union

This paper is based on a working paper, 'Fiscal policy and GG abatement in four EU economies and in Switzerland: existing and proposed policies in Germany, France, the Netherlands, Switzerland and the UK', prepared by the author, Nick Johnstone (now at the International Institute for Environment and Development, UCL, London) and Stefan Speck at the Wuppertal Institute. Both papers report research undertaken in the project 'Greenhouse gas abatement through fiscal policy in the European Union', funded by the Commission for the European Communities, DG XII/D5 Project PL932358, Research Area in, Phase 2. The support of DG XII for the research is gratefully acknowledged along with the contributions of the co-operating organisations: C3ED, University of Versailles, France; SEO, University of Amsterdam, Netherlands; INFRAS, Zürich, Switzerland; and the Wuppertal Institute for Climate, Environment and Energy, Germany. The views expressed in the paper is strictly that of the author. Please note that this is a working paper: comments are gratefully received. Please do not quote without the permission of the author.This paper outlines the fiscal policies adopted by the UK to reduce greenhouse gas (GG) emissions and compares them very briefly with those in some other European states, in particular Germany, France, the Netherlands, the UK and Switzerland. It reviews existing taxes and subsidies and new policies being proposed following acceptance of the Rio Convention on Climate Change. The paper concludes with a discussion of the issues raised by the use of fiscal policy to attain environmental objectives and a brief critical review of the policies, including the European Commission's proposed carbon/energy tax.