150612 paris oecd final version

Ministry of Finance Sweden

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Decoupling Growth From Emissions Lessons Learned From + 20 years of Swedish CO2 Taxation

Parallel Session IV B. Competitiveness Impacts

6th International Tax Dialogue Global Conference Tax and the Environment

1-3 July 2015 OECD Conference Centre - Paris, France

Susanne Åkerfeldt Senior Advisor Ministry of Finance, Sweden [email protected] +46 8 405 1382

mailto:[email protected]


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CO2 emission cuts are urgent ….

How can we do it? Pricing carbon

through CO2-taxation?


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Swedish Energy and CO2 Taxation 1924 – 2015

Basic Design and Development Raising revenues, driving fossil fuel

consumption down while enabling growth and avoiding carbon leakage ….


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Swedish Energy and CO2 taxation 1924 – 2015, Basic Design and Development (I)

• Excise duties on energy – two components: – Energy tax on fuels and electricity. – CO2 tax on fossil fuels.

• Energy tax: – Introduced in: 1924 petrol ; 1951 electricity ; 1957 oils and coal ; 1964 LPG ;

1985 natural gas ; 2013 low blended bio in motor fuels.

• CO2 tax: – Based on fossil carbon content of fuels. – Introduced in 1991, along with existing energy tax. Part of major general tax

reform. – CO2 tax achieves cost effective emission reductions.


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Swedish Energy and CO2 Taxation 1924 – 2015, Basic Design and Development (II)

• CO2 tax: Same level of for fossil motor and heating fuels, per ton fossil CO2.

• Two levels of CO2 tax for heating fuels, per ton CO2

– high for households and service (27 €1 in 1991; 123 € in 2015) – low for sectors at risk of carbon leakage = industry, agriculture and heat

production in combined heat and power plants. • In 1991: 7 €; in 2015 outside EU ETS 74 €, within EU ETS industry and CHP 0 €.

• The alternative would have been an overall much lower tax level for all operators, resulting in significantly lower environmental results.

• Border Tax Adjustments have never been an alternative considered in Sweden.

• Energy tax: Two tax levels for heating fuels and electricity – high for households and service.

– low for industry (within and outside EU ETS) and agriculture.

1 Exchange rate 1 € = 9,0932 SEK is used throughout this presentation (Official rate per 1 October 2014, 2014/C344/03)


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Development of the Swedish CO2 Tax General Level and Industry Level

CO2 tax levels Euro per tonne

Considered proposal for 2016

Note: From 2008 industry outside EU Emissions Trading Scheme (EU ETS)


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Real GDP and CO2e Emissions1 in Sweden, 1990–2013

Sources: Swedish Environmental Protection Agency, Statistics Sweden

1 CO2 = approx. 80 % of

total CO2e emissions.

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GDP CO2e

Real GDP and CO2e Emissions Index, 1990=100

+58%

-23%


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Business Sectors in Sweden Facts and Effects

• Industry within EU Emission Trading Scheme (EU ETS): Generally energy intensive. – No CO2 tax from 2011, lower energy tax. Replaced earlier tax reduction schemes.

• Industry outside EU ETS: Generally less energy intensive. – Increased tax levels: 30 % CO2 tax 2013, 60 % CO2 tax 2015. – In general low costs for energy and high costs for labour and capital.

• Large shares of the SE industry’s use of energy consist of bio energy (36 %, mainly paper and pulp) and electricity (35 %).

– Low energy tax on electricity for industry. – Steady decline in specific energy use (amount of energy used per monetary unit of value added).

• District heating is a major provider of space heating in Sweden – 80 % of space heating in the service sector (offices, shops etc.) in 2011. – 69 % of in-put in district heating is bio-fuels and waste.


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True and False about the Swedish Way (I)

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True and False about the Swedish Way (II)

• “A CO2 tax reduces emissions in a cost-effective way” TRUE Since the introduction of the Swedish CO2 tax in 1991 …..

– Total CO2 e emissions has dropped with significantly.

– The use of fossil fuels for household heating has dropped by 70 %.

– No signs of strong negative effects on employment and growth. Not led to a “bigger state” (Taxes as a percentage of GDP has declined by 15 %.)


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Recent and Future Steps in Sweden

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Swedish Experiences Conclusions

150612 paris oecd final version

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