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E.U. to Debate Shift in Energy, Carbon Tax

The European Union is considering a change to its energy tax policy that could make renewable fuels cheaper than fossil fuels, according to a Reuters report.

The proposed policy change would affect $294 billion in current energy taxes, and would be phased in from 2013 to 2018.

Two significant changes would be implemented: the tax would be based on the amount of energy content in a given volume of fuel, and a tax on carbon dioxide would be included. Currently, energy taxes are based solely on fuel volume, not energy density.

According to the report, the potential carbon tax would fall between 4 to 30 euros per ton of CO2. But exemptions might be carved out for farmers, and for heavy industries that compete with overseas firms that do not face carbon restrictions.

Currently, coal is the least taxed energy source under E.U. policy, while bioethanol is one of the highest.

Several E.U. countries already have their own carbon tax policies, but the political union has resisted attempts to institute blanket changes to energy taxation policies. Changes may be possible now, however, as Europe looks for ways to raise revenues in order to bail out faltering economies like Greece, Spain and Portugal, without increasing already unpopular austerity measures.

Although member nations have traditionally resisted attempts by the E.U. to wrestle away control of energy policy, such attempts have a greater chance of succeeding now that the financial crisis has increased the need for international cooperation and revenue generation, according to the article.

The proposal is set to be discussed June 23rd.

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5 thoughts on “E.U. to Debate Shift in Energy, Carbon Tax

  1. Interesting to see the EU pulling together “now that the financial crisis has increased the need for international cooperation and revenue generation.” Will the Financial Crisis and the BP Oil Spill give the US the political stomach for carbon taxes? I’m curious to see….

  2. Andy,

    I could only wish that the US would show the political will to enact a fair carbon tax, or an effective cap-and-trade system. But the sad truth is, that Washington is too beholden to special interests. And with corporations free to spend as much as they like on political ads during any election, individual congressional senators and representatives will fear too much for their own job futures.

    The best that we can currently hope for is that somehow the Senate climate change bill gets passed in the near future with no additional weakenings imposed on it. To that end, please call your senators to tell them you support passage of the bill.

    And then next year, or the year after that, we can come back to the table to try and get a few more baby steps accomplished. Time will tell if that approach will be fast enough. But it’s our only real alternative to allowing the oil, coal, & gas lobbies to convince the Senate to do nothing.
    Please, call your Senators. Really. NOW – while you’re thinking about it.

  3. Andy Mannle is right. A revenue-neutral carbon tax would not only avoid the evasion and market manipulation of cap and trade, it would reduce emissions, incentivize “green” R&D AND return the revenue to families already struggling under the weight of the current economic downturn. It’s time for our representatives in Washington to put good public policy above political expediency and take another look at the solution that the vast majority of the world’s leading economists and scientists agree is best: a carbon tax. It’s a win for the environment and a win for the American people.

  4. At this point, I’m alot less concerned about the makeup of any carbon reduction scheme. A carbon tax would be ok. Cap and trade would be ok. Cap and dividend would be ok.

    Even some of the details are not too worrisome to me, as long as whatever scheme gets adopted is not so full of exeptions and special interest loopholes that it becomes completely worthless.

    Any bill that addresses climate change and renewable energy is better than nothing! Congress, are you listening? We the people want action. For crying out loud, DO SOMETHING!

  5. Furthermore, the adoption of, say, a cap and trade scheme now, whether it is strong or weak, would not preclude the additional adoption of a carbon tax down the road. Remember, the options are not mutually exclusive.

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