Is emissions trading reducing appeal of ‘green taxes’?

July 15, 2009

The idea of ‘green taxation’ appears to be losing popularity, and the growing appeal of emissions trading may be responsible. The EU’s statistical office Eurostat says green taxes measured as a proportion of GDP fell to an eight-year low of 2.5% in 2007, with taxation on transport accounting for just a quarter of that.

[mailchimp_signup][/mailchimp_signup]This confirms the findings of an independent report which said governments are more attracted to emissions trading than direct taxation. However,
this report was based on research carried out before government budgets were squeezed by the financial crisis.

The findings add to T&E’s fears that aviation’s entry into the EU Emissions Trading Scheme could prevent other necessary measures to combat the impact of air travel. T&E has argued that carbon prices in the ETS will inevitably be set
at levels that allow energy- and resource-intensive industries to remain competitive interna-
tionally, and will therefore be set too low to cover all of aviation’s impacts.