Green Paper on market-based instruments for environment and related policy purposes (debate) 
President
The next item is the report by Anne Ferreira, on behalf of the Committee on the Environment, Public Health and Food Safety, on the Green Paper on market-based instruments for environment and related policy purposes.
Anne Ferreira
rapporteur. - (FR) Mr President, Commissioner, ladies and gentlemen, first of all I should like to express particular thanks to the shadow rapporteurs and the draftsmen of opinions for their valuable assistance.
Today we can be satisfied with the balanced report adopted in the Committee on the Environment, Public Health and Food Safety, which is the result of joint efforts. The European Union is unquestionably committed to the environment, both internally and at international level.
Having set a number of objectives in order to meet the urgent environmental needs facing us, the European Union has to devise ways of achieving them. To do that, it has, over the years, adopted legislation that is regularly revised and applicable in the Union. It invests in research, raises public awareness and encourages good practice by the Member States.
Now we are suggesting looking at another possibility, that of market-based instruments. The report is based on the Commission paper, which contains a number of proposals and ideas that I welcome. Firstly, it endeavours to improve on a text that, in my view, focuses a little too much on climate change. That is certainly a crucial issue, but we must not ignore the whole picture, all the fields of human activity whose impact on the environment is also very important.
Furthermore, I did not, unfortunately have any information from the consultation that might have helped us in our work. In the Green Paper, the Commission is proposing to achieve the environmental targets at a lower and a reasonable cost. That should be possible with the economic instruments which are, moreover, a flexible way of achieving the aims set.
Finally, the report suggests that the Commission should draw up an action plan or other system for a market-based instrument for the environment. I have a question for the Commission: can it tell us what stage it has reached in its discussions and whether the consultation results available to it at the moment will reinforce or amend the proposals in the Green Paper? I believe that is a very important question.
As regards the implementation of the market-based instruments, we must be guided by certain principles. We must, of course, apply the 'polluter pays' principle, ensure that the market-based instruments complement each other and complement other instruments, and that they are consistent and appropriate to the areas covered. That is the aim. In other words, we must not be systematic, but must show a great deal of ingenuity.
With regard to specific instruments, which I do not have time to discuss here, I must emphasise that Parliament is sceptical about the proposal on biodiversity, for the simple reason that it seems to us difficult, if not impossible, to compensate for a fairly unusual ecosystem in another country.
As for internalisation of the costs, that is a principle on which we have to base ourselves and for which we have to take steps. At the moment, very little account is taken of the environmental costs of human activities, particularly industrial and economic activities, in other words, to use a more technical term, the external costs. The transport sector is a typical example.
I note that last June the Commission was to put forward a proposal for revision of the 'Eurovignette' directive, particularly by making the road transport charge variable. That principle of variability must be applied more and more when devising market-based instruments for the environment. The Commission is proposing a similar system for energy taxes, in which they would be made up of two components, an energy component and an environmental component.
If the revision of the directive achieves its purpose, it should also ensure that competitiveness with other means of transport is restored and that modes that emit less CO2 are used.
Finally, there is one point to which I should like to draw particular attention: the competitiveness of the European economy. Of course we agree on this, but we have to be careful. The question that arises here is whether inaction would have a social, economic and environmental cost, as well as a political cost.
Androula Vassiliou
Member of the Commission. - Mr President, I would like to thank Parliament and, in particular, its rapporteurs for its very constructive reaction to the Commission's Green Paper on market-based instruments.
Last year, this Green Paper was presented together with Commissioner Dimas with the purpose of launching a broad public debate on advancing the use of market-based instruments for environment and energy-related policy purposes in the Community. The Green Paper starts from the broadly shared view that not only market-based instruments, such as taxes, charges and tradable permit schemes, but also targeted subsidies, provide a flexible and cost-efficient means of reaching given policy objectives.
I am pleased that Parliament supports this approach. Equally, I am pleased to see that Parliament shares the view that market-based instruments cannot be seen and used in isolation and should be combined with regulatory instruments.
Parliament's report is a very useful and very comprehensive contribution to the discussion about the use of market-based instruments, both at Community and national level. Its scope is even broader, covering issues such as the greening of gross domestic product and the review of the EU Emissions Trading Scheme. While these issues are obviously linked to the subject of the Green Paper and highly important in their own right, they were left out of the Green Paper, as they were covered in other Commission documents elaborated in parallel.
The Commission will take account of the numerous comments and requests made by Parliament in the context of its work on the various issues mentioned in the Green Paper and on further specific initiatives.
As far as imminent actions foreseen for this year are concerned, I can inform you that the Commission is planning to revise the Energy Taxation Directive in the autumn with the objective of ensuring that it contributes more effectively to meeting the EU energy and climate change targets.
Most importantly, and in line with the request of Parliament, one of the main aspects will be to achieve better complementarity with the EU Emissions Trading Scheme. In my view, it is very important to provide for the best possible synergies between the revised EU Emissions Trading Scheme and energy taxation in such a way as to ensure that the EU meets its climate change and energy goals in the least costly way.
Our aim is to present the proposal in time for Parliament to render an opinion before the end of its current mandate. There are areas where effective action can only be taken by legislation at EU level. This concerns, for example, the taxation of energy use - which I have just spoken about - and the EU Emissions Trading Scheme for greenhouse gas emissions.
There are, however, other areas where Member States can take effective action themselves and where they can cooperate and benefit from experiences gained in other Member States. To this end, the Green Paper suggests the creation of a forum on market-based instruments, which would allow knowledge to be shared across sectoral boundaries and Member States.
In conclusion, I would like to thank Parliament for its constructive contribution to the debate about the further use of market-based instruments, which is of use to all policymakers, whether here in Strasbourg, in Brussels or in the national capitals.
John Purvis
Draftsman of the opinion of the Committee on Economic and Monetary Affairs. - Mr President, Ms Ferreira has produced an excellent and balanced response to the Commission's Green Paper on market-based instruments for environmental purposes, and as draftsman of the Committee on Economic and Monetary Affairs' opinion under the enhanced cooperation procedure, I am very pleased that we have been able to collaborate with Ms Ferreira and contribute significantly to this report.
In our view, the emissions trading scheme (ETS) is the most cost-efficient, demand-sensitive and objective market-based instrument available for actually reaching the EU's greenhouse gas emissions reduction target of 20% by the year 2020. The ETS should be the cornerstone of the market-based instruments mix, and I welcome the Commission's proposals to improve and expand it. The scheme should have a progressively tightening cap designed to reach that 20% objective in 2020. It should also be spread as widely as possible among significant emitters.
Auctioning should be the main means of allocating emissions targets, in order to avoid the disadvantages for competition of grandfathering. Auctioning is more economically efficient. It encourages new entrants, innovation and technological and operational improvements.
Madam Commissioner, I particularly stress that we feel that energy taxation, indeed taxes and subsidies in general, should remain only a very secondary and complementary greenhouse gas reduction tool for these emissions that cannot be covered directly or indirectly by the Emissions Trading Scheme. For this reason, we find paragraph 26 of the report inconsistent with the overall message of giving priority to the Emissions Trading Scheme.
Finally, the Commission must urgently negotiate reciprocal agreements with other jurisdictions. Mutual and equivalent international commitments covering sectors that are vulnerable to competition would be greatly preferable to the adoption of border tax adjustments to offset trade distortions.
Neena Gill
Draftsman of the opinion of the Committee on Industry, Research and Energy. - Mr President, whilst a great deal is said about climate change but little is happening in terms of concrete measures, I think the EU needs to set a global example. Therefore, greater use of market-based instruments is crucial, as they are cost-effective means to reduce carbon emissions and increase energy efficiency.
These indirect taxes, tradable permits and subsidies, I think, will assist the European Union to achieve its emissions targets. However, while recognising that Member States need to retain flexibility over their own tax systems, any tool or aid that can support our industries and consumers to make greener choices is to be welcomed, and our policies must be such that they incentivise behavioural change.
Therefore, it is imperative that market failures are corrected and that we have carbon-based pricing to reflect environmental damage as part of the 'polluter pays' principle. Reduced VAT on environmentally friendly products can assist the vulnerable in society, especially the elderly, who are now more than ever at risk of energy poverty.
Furthermore, any revenues raised through auctioning should be reinvested to tackle energy poverty and fund further environmental programmes.
Anders Wijkman
on behalf of the PPE-DE Group. - Mr President, this is, as already has been said, an important report and I want to congratulate Ms Ferreira.
We know that our current economic model fails to integrate environmental costs into market prices. Already at the Stockholm Conference in 1972 the 'polluter pays' principle was established and agreed upon. But, as we know, it has not been implemented in most countries.
This report is very important. It responds to the many market failures we experience in several areas, where of course climate change is the most obvious problem today. The report suggests plenty of initiatives in many key areas. In general most of those proposals are well-drafted. However, I think more effort could have been made by us all to try to shorten the report and merge some of the individual paragraphs; very similar demands are now being put forward. I think the report would have benefited and become much clearer.
On behalf of my group and as has already been said by Mr Purvis, I have to mention that we have difficulties with a few paragraphs. One is paragraph 26. You cannot favour an emissions trading system and at the same time ask for a general CO2 tax at European level. It is inconsistent. Secondly, we have some problems with paragraph 24. While we agree with most of the contents, it is, in our opinion, too general in its language and somehow gives the impression that auctioning revenues would be or should be part of the EU budget in the future. That is not something we can support. But, apart from that, we are in general in support and once again congratulations to Ms Ferreira.
Gyula Hegyi
on behalf of the PSE group. - (HU) 'Let's make the world different,' say the people on the left who think our world should be changed. We cannot reconcile ourselves to casino capitalism - so-called development, but accompanied by the destruction of natural values. The twentieth century showed us that utopias are bound to fail without proper economic and social frameworks. The environmental basis of the 'green tax' and the whole tax policy can help create a better world to live in by providing a market economy and sustainable instruments. As for the increased imposition of taxes on raw materials, a single energy tax could compel everyone to reduce their dependence on energy imports, use their cars less, and invest in public transport, trams and railways. If the taxation balance was shifted from wages to consumption, a very new kind of workplace would develop and a lifestyle closer to nature and culture would have a bigger part to play, instead of consumer madness. The imposition of tax on harmful emissions and non-recyclable waste will reduce environmental pollution and the endemic diseases that accompany it, and so reduce the number of premature and unnecessary deaths. A switch-over to green taxation will be acceptable as a form of peaceful revolution. Of course, the level of taxation will not rise, as Europe is already too heavily taxed. A reduction in energy consumption would enhance the competitiveness of our goods. With green taxation, we can make the leap from the generally materialistic world of the twentieth century to a more sensible world, richer in environmentally friendly and human values. If there is one thing on which we, the European representatives of 27 countries, can all agree, it is green taxation. Let us make the world different, but through carefully considered and bold reforms.
Frédérique Ries
on behalf of the ALDE Group. - (FR) Mr President, Commissioner, I should also like to congratulate our rapporteur, Mrs Ferreira, on her excellent work and on her close cooperation with the shadow rapporteurs on this important issue.
I shall focus here on the two main points of the resolution, the system of exchanging CO2 quotas and green taxation. Turning first of all to emission quotas, it is disturbing to note, as has been said over and over again, that industrial CO2 emissions were up by 1% in 2007, last year, when the European Union at the spring summit had set itself the ambitious target of a 20% reduction in greenhouse gases by 2020. In short, the machinery is jammed and - to put it nicely and euphemistically - we have to get it started again, because it is time to get into a virtuous circle.
I see two courses of action. The first is to support the European Commission, which is in favour of payment for emission quotas. The second starts from the idea that the present system relating only to CO2 is too narrow, and that other air pollutants will have to be incorporated gradually, starting no doubt with NOx and SO2.
I also wonder about the favourable arrangements that still apply to the shipping sector. Unlike the situation that will soon apply in the aviation sector, it is not subject to any Community or international legislation on CO2 reduction, a double standard that we can no longer afford.
Another cornerstone of the resolution is green taxation, environmental taxes, the revolution that Mr Eguy mentioned. The position of the Liberals and Democrats on that question is clear. Instruments based on the Community market should not be confined to the system of exchanging emission rights. We have to consider other systems and, as author, I am very much in favour of paragraph 27, which revives the idea of introducing a 'carbon' tax to offset a reduction in fossil fuel subsidies.
On the other hand - and I agree with Mr Purvis and Mr Wittman on this point - the ALDE Group will not support the last sentence of paragraph 26, which asks the Commission to submit a proposal on this Community CO2 tax by the end of 2008. We prefer the Union to complete its ambitious package of 'energy and climate' legislation.
In conclusion, we have to stop being hypocritical and be very aware of the cost of our ambition. If CO2 emissions are to be cut by a third, for example, every person in European must emit eight times less carbon dioxide. These blunt statistics show that, over and above the use of these market-based instruments to protect the environment, we cannot escape our own personal responsibility, and the Union will need to work very hard to stay on course, so that sustainable development is not just a fad but the model for all of us in the future.
Alessandro Foglietta
on behalf of the UEN Group. - (IT) Mr President, ladies and gentlemen, I should like to thank Mrs Ferreira for her excellent work.
Taking global responsibility to combat climate change is a crucial task that has to be achieved at various levels: not just in the world of enterprises and institutions, but among individuals as well. As European citizens, we can substantially reduce our ecological footprint and achieve major results simply by means of small measures, including our purchasing choices, that can have a global and significant impact. The Member States can encourage, or make it easier for, people to choose ecological products through market-based instruments.
As well as promoting research into new technologies it is important to ensure that these technologies are made available to consumers and disseminated widely enough to bring about environmental benefits for the community. It is a pity that 16 countries representing the planet's largest economies, meeting in Paris on 16 and 18 April, did not manage to reach agreement on a joint resolution aiming to cut global greenhouse gas emissions by 50% by 2050.
However, we are hopeful that the subsequent negotiations in Kobe and Hokkaido will lead to more success in this area, especially as I believe that climate change has to be combated at a global level; otherwise, it will merely place a heavy burden on European enterprises causing them to become less competitive than their rivals from outside Europe without achieving the aim of an environmental improvement at global level.
We have to use market-based instruments as economic levers if we are to move towards environmentally friendly production systems that are sustainable in the long term; in that respect, I welcome the Commission's Green Paper. The European Union has to foster the dissemination in the Member States of market-based instruments that make it possible to internalise the environmental costs of products and to promote energy efficiency and the thermal insulation of buildings. I consider that it is essential for the European Union to achieve the goal of 20% of consumption from renewable sources by 2020.
Margrete Auken
on behalf of the Verts/ALE Group. - (DA) Mr President, I would like to thank Mrs Ferreira for a good report on an important subject and for enjoyable and excellent cooperation. If the EU is actually going to live up to the many fine words spoken in connection with our targets for the climate and the environment, it is crucial that we politicians take responsibility and make the difficult decisions of behalf of our electorate. One of the effective tools that we have at our disposal is to limit consumption levels that create pressure on the environment by making the polluter pay. This is an excellent principle that everyone is agreed on but that has so far not been taken seriously in cases where it really does cost the polluter. For example, motorists' costs have never been reflected in the cost of transport. One of the first things that we should do is to internalise what are popularly referred to as 'external costs'. This would be a significant step forwards. It is of course also possible to go further in controlling the consumption of polluting substances through even tougher financial means, and let me say here that I simply do not understand why it is not possible to combine CO2 charges with an emission trading scheme. I simply do not understand this.
The use of an environmentally sound pricing policy is an effective way of using the market within environmental policy, not as a substitute for mandatory requirements and bans, but alongside them; this has also been suggested by the Commission. Concerns are often raised that the use of these market-based methods could have a skewed social impact. However, there is a need to be aware of hypocrisy. Consumption taxes usually have a fair impact, as the richest are also those who consume the most and who therefore pay the most. If there is a desire to do something about the difficulties being experienced by the poor in paying for essential consumption, there are many other methods that can be used which do not involve green taxes. For example, ordinary taxation, social and wage policies are much more appropriate if we take our responsibility for caring for the less well off seriously.
One method that will not work here is based on the establishment of a type of basic consumption that is made cheaper or even free. Firstly, consumption will always be relatively high; however, the worst aspect of the model is that it does not provide any incentive to make savings. Thus, in spite of everything, progressive taxation using green taxes is better. However, the very best thing to do is to keep these market-based instruments free of other considerations if they are really to be effective in the battle to save the environment, climate and nature. It is a good thing that concern for social distortion is so great; however, in this case it is a question of saving our living space for our descendents.
Jens Holm
on behalf of the GUE/NGL Group. - (SV) We will shortly be reaching a decision on the report by the Committee on the Environment, Public Health and Food Safety and Anne Ferreira on the Green Paper on market-based instruments for environment and related policy purposes. It is an excellent report and it has my full support.
Let me first make a personal comment. We are talking about market-based instruments here. Personally I am tired of the talk of market-based instruments in environmental policy. We do not need any more influence from companies or the market. We need more political control. We need more planning. We need, for example, tougher emissions requirements, we should be able to use public procurement for environmental purposes and environmental taxes and charges. It is in fact here that we have market-based instruments, because it is all about introducing taxes and charges on things which exacerbate environmental problems, internalising environmental problems in other words. These instruments are a good example of how we take political responsibility for environmental problems instead of leaving it to the market.
Let me give some concrete examples of particularly important aspects in this report. A minimum tax on CO2, a CO2 tax combined with a clear reduction requirement, is likely to be the most effective way of getting emissions down. My own country was the first in the world to introduce a CO2 tax. That was in the early 1990s. Without claiming that Sweden is at the forefront in all climate areas, the CO2 tax has actually been one of the main reasons behind the reduction in our CO2 emissions. It is high time that more countries did the same. In paragraph 26 of this report we call for precisely such a CO2 tax.
In general we call for more support for Member States to introduce environmental taxes. I believe today that there is an entirely unique opportunity to push for a CO2 tax and other environmental taxes. In the most recent years, awareness has increased enormously worldwide. In the report we also state that the Member States themselves determine this area. Of course this is entirely correct. It is within their field of competence.
Another issue is the Emission Trading Scheme. We have to admit that the first trading period 2005-2007 has been nothing other than disastrous. The scheme has not succeeded in reducing emissions and many polluters have even received overly generous allocations and made huge profits from this scheme.
In this report we therefore call for auctioning of emission permits, we demand an emissions cap which is consistent with the reduction target of 30%, and restrictions and tough requirements for the use of flexible mechanisms. It is hoped that doing this will enable the trading scheme to start working. If this does not succeed, we should consider replacing the trading scheme with something else entirely, for example steep taxes on emissions.
In this context it is important to remember that now that aviation is to be included in emissions trading, we can no longer limit anti-aviation measures to the trading system alone. Parallel measures such as a tax on air fuel and charges on nitrogen oxide emissions, NOx, are a must, and this is precisely what we are calling for in this report. Here I would like to take the opportunity to ask the Commission a question: You previously said that you would present measures against airline nitrogen dioxide emissions, against NOx, and that this would happen this year. Can you tell us what is happening with that? Do you have a date when these measures will be in place? Considering the fact that air transport has almost doubled its emissions in recent years, many of us here would like to see concrete measures. We really cannot wait any longer!
These instruments are a good example of how we are taking political responsibility for climate change. Taxes and charges enable us to speed up the necessary reductions in emissions and hopefully solve the entire climate problem. Let us do so! This is our duty to our children and all other living beings on this beautiful planet.
Johannes Blokland
on behalf of the IND/DEM Group. - (NL) Mr President, my compliments to Mrs Anne Ferreira on her report on market-related instruments for environmental purposes. One of the pillars of the proposal before us is the 'polluter pays' principle. This is an important premise in that it allows for an equitable sharing of the burdens. This is also one reason why I am in favour of all external costs, and thus environmental costs too, being passed on to the consumers of manufactured and consumer goods. It makes for a realistic picture and fair competition.
In November of last year I attended the conference entitled Beyond GDP. A broad discussion was held there of ways in which indicators other than gross domestic product alone might be used to measure social wellbeing, because in practice social and environmental factors play a part here, as well as economic factors. You may be doing very nicely financially, but if you live in a densely populated city with too much air pollution, your quality of life is not all that wonderful. I am glad that Mrs Ferreira makes this point in her report too.
Lastly, I would like to express my support for two specific paragraphs in her report, paragraphs 58 and 59, on internalising environmental factors in the pricing of water and, secondly, a legislative framework to reduce the level of waste generated in the medium term.
Bogusław Sonik
(PL) Mr President, the threat to the world's environmental balance requires us to take steps that will result in changes to our models of growth and a new lifestyle in our societies.
Business activity has ecological costs that are often not taken into consideration in financial accounting. Despite the fact that the polluter pays principle, one of the pillars of the European Union's environmental policy, is in force throughout the Community, its application in certain countries leaves much to be desired.
The European Union is introducing a series of items of legislation and rules to improve the state of the environment, and it is vital to introduce new market instruments. Economic taxes in the European Union could play a very significant role in achieving environmental protection objectives within the EU. So far, the only system in place is the emissions trading system for carbon dioxide. This would appear to be insufficient.
Other market instruments should be considered. It is very important that income from ecological taxes should be used to prevent negative impacts on the environment and on human health. It would seem that a gradual harmonisation of environmental taxes throughout the EU is essential. Ecological taxation in Member States is very varied. Leaving solutions for these issues in the hands of Member States runs the risk of distortions in competitiveness between companies.
When introducing new market instruments a number of basic guidelines have to be followed: the public have to accept them, the taxes cannot be seen as yet another obligation imposed by the European Union and also the taxes have to be introduced gradually.
Some EU Member States already have their own market instruments, for example, energy saving certificates or green energy certificates. However, all Member States should give strong support to low-carbon technologies, energy saving and renewable technologies.
Finally, I would like to point out that the European Union is a leader in the area of environmental protection and I believe it has a responsibility to set an example to the rest of the world.
Genowefa Grabowska
(PL) Mr President, I would like to congratulate the rapporteur on an excellent approach to the issue of environmental protection. I would also remind you that we have known since the UN report entitled 'Our Common Future', which was prepared by Margot Wallström, that it is our responsibility to future generations, to our children and grandchildren, to leave the natural environment in the best possible condition.
The involvement of the European Union in this area is already very good, but the European Parliament is also keeping its finger on the pulse. We have a special temporary Committee on Climate Change, we have good legislation, and we enact regulations, directives and decisions. Now the time has come to strengthen other mechanisms, especially financial incentives and taxes, and also to step up information campaigns and preventive measures.
For these actions to be effective, there has to be a Community approach. Member States have to overcome their reluctance and their resistance to tax harmonisation, at least as far as the environment is concerned. Even though they are used for sensible purposes, ecological taxes are not at all popular at present. Just like all taxes, they are disliked. For this reason we have to make all possible efforts at European and national levels to make ecological payments and taxes socially acceptable.
What we need are activities that inspire a high level of ecological awareness. We need incentives that will ensure that good practices are used widely and will promote pro-ecological social behaviour. After all, no one complains when, in the European Parliament shop, we are asked to pay five cents for a plastic bag. This is of fundamental importance - not the financial dimension of this action, but the moment of reflection that accompanies it, when the customer thinks whether to take the plastic bag, or to leave it and reduce the amount of rubbish on the planet. This is a good way to make people think. People will accept financial charges, taxes and other environmental levies, but only when they believe they are sensible and can see a positive outcome.
Holger Krahmer
(DE) Mr President, I welcome market-based instruments as a means of implementing policies, including environmental policy. I would, however, make the point that no policy instrument is effective simply because it carries the label 'market-based'.
All the instruments that we use to achieve policy objectives must meet certain criteria. For example, is the instrument appropriate to the given objective? If we confuse different objectives we will not achieve any of them properly. If part of the thinking behind an environmental measure is that it should be a means of making money, we are already on uncertain ground because the measure is liable to be distorted for a variety of reasons. Does a given instrument actually help to achieve an objective? That question needs to be closely - and regularly - examined. Is a given instrument compatible with others that already exist? What about efficiency - the relationship between cost and benefit?
Reading this report, I am doubtful in some cases whether the criteria I refer to have been met. Emissions trading systems work very well in theory but the reality is somewhat different. The EU Emissions Trading Scheme is in a state of chaos. Fortunes have been wiped out and the actual aim of the scheme has not been achieved. Fair enough, you may say, this is the experimental phase and we have not yet got it right; but we certainly cannot afford much more of this expensive experimentation.
The policy on taxation of energy use also illustrates my point. Taxation really has no place in an EU Green Paper about market-based instruments. The mere fact that an instrument influences sections of the market does not make it market-based. I have no objection in principle to tax measures being used to achieve environmental objectives but I will support their introduction only if they meet the criteria I have mentioned.
My case is that we should set out the objectives to be achieved; the choice of means to achieve them should then be left to those involved in the market.
Wiesław Stefan Kuc
(PL) Mr President, Commissioner, the market-based instruments for environmental policy purposes, as described by the rapporteur, come down in large part to taxes and charges. As she rightly points out in paragraph 28 it could happen that they do not fulfil the stated objectives but, instead, become just a means to increase tax revenue.
The matters that have been discussed in some detail are aimed just at the future. The question is: according to the polluter pays principle, who is to clean the soil, water and air that have been polluted by past industrial waste or by outdated pesticides, asbestos, phosphorus pentachloride and other compounds?
I think that the green bonds referred to in paragraph 67 would be very good for this purpose. Companies involved in this process could be allocated tasks that had not otherwise been dealt with and would carry them out with the help of the financial markets. The introduction of such bonds, which could be called green bonds, would make it possible to resolve many problems associated with the introduction of market-based instruments into the area of environmental protection. It is an excellent idea and I congratulate Mrs Ferreira.
Caroline Lucas
Mr President, I welcome Ms Ferreira's excellent work and cooperation, thanks to which we have before us a report that gives a comprehensive and honest appraisal of the potential and limitations of market-based instruments.
Market instruments clearly have a role to play. Making economic logic align with environmental and social reality by applying the 'polluter pays' principle should be a powerful way of steering patterns of production and consumption towards sustainability. For example, if the true environmental and social costs of freight transport were internalised within prices paid along the supply chain, we might finally see an end to the madness that sees more or less identical products being pointlessly traded back and forth between distant countries.
Applying such principles at the level of individuals via a system of personal carbon trading could be an extremely effective way of influencing consumer behaviour. But, as Ms Ferreira's report rightly makes clear, market instruments must not be seen as a replacement for other forms of environmental standards and regulation. Their usefulness also depends crucially on the way in which they are designed.
The emissions trading system is a case in point. I would like to warn colleagues that, if we listen to a lot of what the industry is telling us, we will end up with a scheme that is no more than trading backwards and forwards for the sake of trading, as we have seen with the first two phases, completely losing sight of any environmental objectives. To be effective, the scheme has to have a tough cap deriving from the 30% emissions reduction target, restrictions on the entry of outside credits and full auctioning of allowances from the outset.
Finally, I would like to mention one other welcome thread running through the report - the recognition that traditional economic growth as measured by GDP is no longer an adequate or accurate measure of true well-being. A conference was held on this topic in Parliament earlier this year and I look forward to the Commission's report in the autumn.
Nils Lundgren
(SV) Mr President, environmental issues have justifiably become one of the biggest political issues of our time and they have also, justifiably, become one of the most important areas for EU cooperation.
Firstly, cross-border environmental pollution in Europe cannot be tackled at national level, and this gives the EU a clear role here. Secondly, the EU is the world's largest economy, with enormous production and foreign trade, and the Member States are united in taking responsibility for the environmental consequences of this fact. This combination of size and agreement on fundamental environmental targets gives the EU the opportunity to exercise a global influence which can be of major importance.
However, the report does not inspire trust. It makes no distinction between consumption of finite resources and impact on climate. The rapporteur also shamelessly uses the climate question as an argument for supranationalism, bureaucracy and protectionism, making an all-out call for joint taxation, a review of the notion of free competition and tariff increases. There is no realisation that countries must seek solutions in competition with each other. Then to cap it all, there is the usual officious statement that we must adopt a new lifestyle in our western societies.
Appalling! Our job is to ensure that the environmental costs of consumption are reflected in the prices consumers pay. Free citizens choose their lifestyles for themselves.
Françoise Grossetête
(FR) Mr President, yesterday, in this Parliament, I was questioned by a 16-year-old high-school student, who asked me, 'Is Europe prepared to make great sacrifices to save the planet?'. This young student was very worried about climate change and was asking us how far we could go. It was an expression of the distress felt by idealistic young people who expect a lot of us.
Well, we have market-based instruments that have been put in place: the Community system for the exchange of greenhouse gas emission quotas, and the 'Eurovignette' directive in the transport sector. These instruments have certain advantages because they set a value on environmental costs and help towards the achievement of environmental targets, at a lower cost, and they encourage businesses to make a longer-term commitment, which ultimately sustains employment. These instruments can help to reduce the damaging effects that environmental taxes could have on competitiveness in some sectors.
The promotion of sustainable development and the efforts to combat climate change should not be just a deterrent, through taxes and charges, but also an incentive, by facilitating a quicker transition to virtuous and eco-friendly behaviour. Everyone has to make the effort; that is why environmental costs need to be internalised.
It must also be stressed that environmental taxes should not be regarded as a way of increasing tax revenue, but as a means of preventing all harmful pollution and damage to the environment, at a reasonable cost.
Finally, in future debates on the 'energy-climate' package in the European Parliament, we shall have to give serious consideration to putting in place a border adjustment instrument, which will in particular help avoid any carbon leaks. We need to fulfil the obligation to reduce CO2 emissions, whilst preserving economic competitiveness. In that connection, I emphasise the importance of the 'carbon' tax. That is often a taboo subject, but I still think it is worthwhile and should be considered.
Marusya Ivanova Lyubcheva
(BG) We ought to come up with a combination of solutions, a general model and principles. The report makes this clear in an excellent way. To protect the environment is cheaper than to rehabilitate it, but the failure to use fair market tools means to provide hidden subsidies to polluters. The green toolbox needs flexibility if we are to have certainty and make sure we do not default on other indicators and increase the burden for citizens. Trade instruments need to be combined with promoting investment in new technology, with offsetting instruments for overcoming deficits.
Individual countries do matter. Bulgaria, for example, will be facing problems in the future. The closing down of certain parts of the nuclear power plant in Kozloduy lead to an increase in generation at thermal power plants, electricity prices went up. This increases emissions, yet the low GHG allowances work like penalties and consumers are paying the increased price. Unless carbon dioxide allowance are reallocated and in the absence of sufficient compensation to off-set the decommissioned power units, the application of the other trade instruments will bring about more problems. Environmental economics has its social dimensions and we should not wait until 2010 or 2013 before we act.
Magor Imre Csibi
Mr President, I would like to stress that tackling climate change requires more extensive actions than those focusing on transport and energy.
Avoiding deforestation should also be at the core of the EU climate change mitigation strategy, as a highly cost-effective way of reducing greenhouse gas emissions fairly quickly. Avoiding deforestation can be achieved only by a mix of regulatory approach and market-based instruments.
Civil society has repeatedly exposed the way the EU actively contributes to global deforestation by allowing illegal timber to freely enter its market. It is vital that the EU introduces legislation to ensure that only timber and timber products from legal sources are placed on the EU market. This regulatory approach should be complemented by a set of market-based instruments specifically designed for forestry, such as charges for premature harvesting of forests or incentives for sustainable forest management. However, in order to use market-based instruments more widely in forestry, we need to clarify which instruments work best, to what extent they can be used and how they can be correlated with regulatory law.
I call on the Commission to present an analysis of the most appropriate market-based instruments for the forestry sector, and to outline the suitable context for these instruments to be used and combined with other policy tools.
Zbigniew Krzysztof Kuźmiuk
(PL) Mr President, Commissioner, I would like to draw attention to just two matters in this debate.
First of all, the way that the burden associated with counteracting climate change has been allocated within the European Union framework is highly unfair. For example, carbon dioxide emission limits were allocated to individual Member States without taking into account the backwardness in their development, which, in Poland among other countries, has resulted in a sharp increase in the cost of electricity and, as a result, a visible jump in the costs of production and also living costs.
Secondly, the implementation of the climate package, according to the estimates of the European Commission itself, will come to about EUR 50 billion per annum. In a situation where the majority of the fastest growing nations of the world, such as China, India and Brazil, as well as economic powerhouses such as the United States, are not too bothered about climate change, it could well happen that the European economy will stop being competitive in world markets, which means it will be necessary to introduce instruments to protect European output, burdened as it is by such high additional costs.
Silvia-Adriana Ţicău
(RO) We should emphasize the fact that the European Union will be able to meet its objectives of reducing pollutant emissions only by the cooperation and firm commitment of local communities.
They should know the market instruments used for purposes related to environmental policies and other related policies.
The trade in emission certificates, the Directive on Fuel Quality, the EURO standards for vehicles, the Directive on Purchases of Clean and Energy-efficient Road Vehicles, the EURO 6 standard for vehicles are only some of the Commission's initiatives.
In October, the Commission will come up with a proposal to review the Commission on Eurovignette, based on internalizing external costs, including environmentally-related costs.
As a Rapporteur for the opinion of the TRAN Committee for the draft Directive regarding clean and energy-efficient road vehicles, I consider it important to calculate the costs of a vehicle for its entire useful life, taking into consideration not only the initial purchase price, but also the price of the fuel used, carbon dioxide emissions, etc.
I hope many local authorities will actually participate in these consultations.
Marios Matsakis
Mr President, I offer many congratulations to Ms Ferreira for an excellently balanced report. Our environment is suffering under the insults inflicted as a result of an ever-increasing world population and man's uncontrolled appetite for materialistic consumption. The climate is changing, biodiversity is suffering and natural resources are diminishing. The rapporteur, having fully understood the task at hand, is rightly supporting the view that the main market instruments needed to remedy the situation are financial incentives and taxes.
Consequently, I fully support the idea of an EU environmental taxation system, which will inevitably have to be uniform amongst the Member States. At the same time, an effectively revised carbon emissions trading scheme will, I am sure, help to improve matters significantly.
Of course, one should never forget the fact that making citizens adopt environmentally friendly lifestyles is not just a market-based issue: creating an environmentally caring consciousness also involves proper education and learning from an early stage and continuing throughout life.
Leopold Józef Rutowicz
(PL) Mr President, environmental protection covers many areas and its effectiveness depends on synchronisation and judicious application of the tools that are available, and this includes economic instruments.
The instruments associated with the Green Paper present a series of measures without offering systemic solutions. One example of this is support for savings in fuel used for communal transport and other purposes, which are legitimate. However, the sudden increase in the price of environmentally-friendly electricity rings some alarm bells, as does the fact that in large measure it is created using hydrocarbons. The proposed carbon dioxide emission charges punish the consequences but do not address the cause. The promotion of clean sources of energy, such as water, wind, solar power and atomic energy, together with stability in their prices, would have a significant impact for society, the economy and environmental protection and should be an area where systemic measures are undertaken. Mrs Ferreira's report raises this issue.
Nina Škottová
(CS) As we heard in many previous speeches, carbon dioxide is an important and perhaps a key player in so-called ecological price determination, and is presented as the cause of climate change. I want to draw your attention to the fact that, according to scientific research, carbon dioxide in the atmosphere increases not before the earth heats up but only after it heats up. This warming process correlates with the sun's activity so that warming is an effect rather than a cause. As a result, the main emitters of carbon dioxide after warming are the oceans. Of course, I am not against a reduction in carbon dioxide emissions caused by human activity but I think that we have to accept our responsibility for pollution that has health-related and other consequences, rather than responsibility for climate change. We should call a spade a spade.
Mieczysław Edmund Janowski
(PL) Mr President, Commissioner, this a good report. I do not want to repeat the points that have been raised already, but I would like just to draw attention to a few particular issues.
Firstly, human beings are not the most important part of the 'environment' and humans do not own the water, the soil and the earth. Humans only use them, we are just tenants. We must keep this fact in mind. Issues that affect the environment know no borders - air, water and the soil are not subject to frontiers - so our activities also have to go across frontiers. This applies at European Union level, but it also applies throughout the whole world. Otherwise our activities will not achieve their objective.
I would like to emphasise one other matter. Apart from these fiscal issues and economic pressures, it is very important to raise people's awareness, starting from children. Otherwise we will not have energy-saving technical devices, houses, cars and vehicles. I would like to thank you, Commissioner, for the progress so far and I would ask you to take further steps in this direction.
Sylwester Chruszcz
(PL) Mr President, Commissioner, I would like to thank Mrs Ferreira for the report she has presented. It considers issues that, as this debate has illustrated, will become increasingly important in the future.
In today's debate, we have discussed how we have to have an ecological mind-set. I am convinced that there is considerable ecological awareness in the European Union and in individual Member States. People want to live ecologically, they want to have an ecological lifestyle and they are very ecologically aware.
However, let us not forget that many European Union countries, such as Bulgaria and Poland, lived for many decades under a different system. Our economies were based on another method of obtaining energy. The regulations on the system of environmental taxes could therefore reduce the competitiveness of these economies and, as a result, reduce environmental awareness.
Avril Doyle
Mr President, with our clear focus on thriving but low-carbon economies to meet global targets for CO2 emission reductions as we face our most serious environmental challenge of climate change, a wide range of market-based instruments - including taxation - have a vital role to play, being based on the widely accepted environmental principle of the polluter pays.
However, over-emphasis on taxation - with the frequent calling on the Commission to come forward with legislation for the same throughout this report, for example, paragraph 26, which 'calls on the Commission to put forward a legislative proposal for a Community minimum tax on CO2 before the end of 2008' - makes the report as a whole unacceptable to me, despite the excellent work and the many recommendations I can support. I am firmly of the view that such taxation is a matter for each Member State.
Androula Vassiliou
Member of the Commission. - Mr President, I would like to thank the honourable Members for their comments and the views they expressed during the debate. I will try to comment on some of the comments made.
Ms Ferreira commented on the lack of information about the replies to our debate. I would like to inform you that we received 170 replies, which are being analysed at the moment, and we hope to have a summary of these replies by the end of the summer, in which case we shall, of course, provide you with this summary.
Mr Wijkman raised the point of inconsistency between emission trading systems and the carbon tax. I would like to say that, in the revision of the Energy Taxation Directive, one of the objectives is precisely to deal with and tackle any possible inconsistency.
Two Members raised the issue of possible border tax adjustments to prevent carbon leakage in case international negotiations fail. I would like to say that the main and priority goal of the Commission is to reach a successful post-Kyoto international agreement to address climate change.
On the issue of tax on air kerosene, the issue has already been discussed with the Member States. It proved to be a very sensitive issue and no progress was made. Two Member States apply a tax of this type, but I must point out that it also raises questions of international law. The Commission does not intend to submit any proposal for such a tax.
On the use of reduced VAT rates to achieve environmental goals, the Commission services are currently studying the issue.
Finally, I would like to say that a number of the comments made by honourable Members fall within the work of different Commissioners. I have taken note of all your comments and I shall convey them to the Commissioners concerned. They will be analysed and taken into consideration in the follow-up action to the Green Paper.
Anne Ferreira
rapporteur. - (FR) Thank you, Commissioner, thank you, ladies and gentlemen, for your very thorough and interesting contributions. We appreciate that the taxation debate is not closed and I should like just to mention three points at this stage in the discussions.
Firstly, the proportion accounted for by energy taxes. On average they represent 76% of environmental taxation, compared with 21% for transport.
Secondly, domestic consumers, who have to pay by far the largest proportion of environmental taxes, when other sectors of the economy are the biggest consumers of energy, water and transport.
Thirdly, the proportion of GDP of Member States represented by environmental taxes has declined over the past five years. That gives us something else to think about in our future deliberations.
I certainly regret what the EPP is asking for on paragraph 26, in which we were proposing a minimum Community tax on CO2. It seems to me that we need to continue along that path if we want to prevent dumping in the European Union. The idea is not to take over tax powers from the Member States, it is to have minimum tax harmonisation. That is necessary and it has been underlined.
Apart from the fact that Member States are asking for further progress towards tax coordination, I should also like to draw attention to another point in the report. The reduction in taxes on employment cannot be linked only to the reduction in environmental taxes, as the Commission is proposing. In my view, it should be part of a more general reform, with principles of solidarity and social justice. I am well aware that that is not yet a competence of the States, but let us think about it here and give the Member States some information.
The final point that I think is important is the domestic dimension. The measures we take here should not have an adverse effect on households that are already on low incomes and make the position of other households more insecure.
That is what I wanted to say in conclusion. Thank you, Commissioner; I can assure you of our support in drawing up future legislation on these matters.
President
The debate is closed.
The vote will take place today at 12 noon.
Written statements (Rule 142)
András Gyürk  
in writing. - (HU) In order to achieve their environmental aims the Member States nowadays give preference almost exclusively to direct regulation, even though there are many other regulatory instruments available. We feel more focus should be given to market-based environmental protection incentives. We believe that the concepts of the market, competition and protection of the environment are not mutually exclusive.
The significance of market incentives is that the aim of environmental quality can be achieved more cheaply and more effectively with them, and other social objectives can be achieved at the same time. Unfortunately, the European Union has not done much to encourage market-based incentives, though the emissions trading scheme could be given as an exception. It is therefore comforting that the Green Paper contains a survey of hidden opportunities for these topical incentives. We might add, however, that the survey should have gone a lot further.
A wider use of market-based regulation should go hand in hand with a reduction in ineffective direct regulation. Since economic incentives are income-generating, we have to examine just how these instruments, primarily imposed on labour, can generate taxes. This subject warrants intensive debate. We are also convinced that the EU's ambitious environment policy objectives cannot be fulfilled without going further in the field of market incentives.
