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OECD Green Talk Live: Taxing Energy Use - Reforming energy tax systems to achieve environmental goals

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With almost no emissions from energy use priced at levels required to keep global temperature increases below 2 degrees Celsius, there is still considerable scope, and an urgent need, to improve the use of taxation to reduce pollution and combat climate change.

Green Talks Live on Taxing Energy UseHow do energy and carbon taxes differ across countries, different fuels and sectors? What should be done to reduce emissions and reach global climate goals at minimum cost?

Watch environmental tax economists from the OECD Centre for Tax Policy and Administration to discuss the key findings from the publication, Taxing Energy Use 2018, which measures the magnitude and coverage of energy and carbon taxes in 42 OECD and G20 countries and provides a first appreciation of changes in energy and carbon taxes over time.

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OECD Green Talk Live: Taxing Energy Use - Reforming energy tax systems to achieve environmental goals

  1. 1. TAXING ENERGY USE 2018 OECD #GreenTalks LIVE 14 February 2018 @OECDtax @OECD_ENV
  2. 2. CONTEXT  Tax and the environment  Taxing Energy Use TAXING ENERGY USE  Highlights of the “Companion to the Taxing Energy Use database”  Summing up Q&A TEU 2018 – Green Talk: Outline 2 Join the discussion on Twitter: #GreenTalks @OECD_ENV @OECDtax
  3. 3. Tax and the Environment at the OECD Carbon pricing Other environmental taxes & tax incentives Country work 3 Effective Carbon Rates, Taxing Energy Use Working papers on political economy aspects and carbon price design Applying insights of analytical work to country contexts (e.g. Mexico, Costa Rica, Slovenia) Working papers on “Diesel differential”, “Company Car support”, “Energy affordability” Other analytical work
  4. 4. First released in 2013 with OECD country profiles Unique in its detail on tax rates by sector and by fuel, presented in the same way for all countries for comparability. Second report in 2015, with profiles for 7 non- OECD countries Increasing coverage to 41 OECD and G20 economies representing 80% of global energy use. Third report in 2018, with updated profiles for 42 OECD and G20 economies and comparison of 2012 and 2015 taxation patterns. Intention to update regularly Taxing Energy Use 4 2013 2015 2018
  5. 5. Today’s release: Taxing Energy Use 2018 5 1. Report: Taxing Energy Use 2018 Companion to the Taxing Energy Use Database 2. Country notes: graphical profiles for every country available at http://oe.cd/TEU2018
  6. 6. 6 Taxing Energy Use 2018 Highlights Key findings for 2015 Energy taxes differ strongly between countries, sectors and fuels, but almost all taxes are too low Despite its large environmental impact, coal is taxed at the lowest rates, or fully untaxed Outside of road transport, rates are below a low-end estimate of climate costs for 97% of emissions Road fuel taxes are higher, but too low to account for other external costs (e.g. air pollution, congestion) Taxes tend to be higher where GDP per capita is higher, but with some notable exceptions
  7. 7. 7 Taxing Energy Use 2018 Highlights Key findings for 2015 Fuel tax reforms in some large economies increased the share of emissions taxed above climate costs in road transport Some countries are removing lower tax rates on diesel compared to gasoline …progress towards more consistent application of the ‘polluter-pays’ principle remains slow Despite some encouraging initiatives on a country-level …
  8. 8. 8 Diagnosis for 2015: Zero or very low rates for the majority of emissions 50% 97% 30
  9. 9. 9 Diagnosis for 2015: Large inter-country differences, in and outside of road transport
  10. 10. 10 Diagnosis for 2015: Large differences between fuels (coal!)
  11. 11. 11 Diagnosis for 2015: Large differences between sectors
  12. 12. 12 Diagnosis for 2015: Higher rates in road transport does not mean ‘high enough’
  13. 13. 13 Comparing 2015 to 2012: Fuel taxes increased in the middle of distribution
  14. 14. 14 Comparing 2015 to 2012: Little change outside of road transport in aggregate numbers
  15. 15. 15 Comparing 2015 to 2012: Road fuel taxes up in some countries, eroding rates in others
  16. 16. 16 Comparing 2015 to 2012: Larger %-changes for non-road, but from lower base
  17. 17. Three cuts of the 2015 data – three messages for 2015: 1. Distribution of taxes on energy use: low taxes 2. Fuel averages by country: large differences by fuel and by country 3. Profile by sector and fuel: large differences by sector Comparing 2015 to 2012 – some but limited change 1. Comparing distributions – some change ‘in the middle’ 2. Comparing at the country level – rising rates in some countries Taxing Energy Use 2018 - Summary 17
  18. 18. Paris Collaborative on Green Budgeting 18 • Launched at One Planet Summit, 12 Dec 2017 in Paris • Endorsed by France and Mexico • To be convened by OECD, working in close partnership with governments Work towards alignment of national budgetary processes with the Paris Agreement and other environmental goals.
  19. 19. RECENT AND FORTHCOMING PUBLICATIONS  Effective Carbon Rates (2016, 2018)  Working papers on political economy aspects (e.g. incidence of energy taxes, affordability, competitiveness impacts).  Working papers on carbon pricing design (e.g. permit allocation and investment incentives, CIT and technology choice, road transport taxation)  Country analysis (e.g. tax reform in Mexico, Costa Rica) Tax and the environment at OECD 19
  20. 20. The next OECD Green Talks LIVE will discuss: Leveraging the smart grid to optimise energy consumption Can providing real-time information help consumers to reduce their environmental footprint? 15 March 5pm (Paris time) Register at: bit.ly/OECDGreenTalks 20 Thank you for joining us #GreenTalks @OECD_ENV @OECDtax

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