1. Green fiscal policy: Reducing GHG emissions and mobilizing revenue
Jacqueline Cottrell, Vice President, Green Budget Europe

2. Definition of green fiscal policy
“…a range of taxation and pricing measures which can raise fiscal revenues while furthering environmental goals.”
“…can contribute to poverty reduction directly by helping address environmental problems...and indirectly by generating or freeing up resources for anti-poverty programmes…or for pro-poor investments…”
“…an important part of the development policy toolkit.”
Source: OECD / DAC 2005http:// development/ pdf

3. Rationale: “Getting the prices right”
GDP and CO2e emissions in Sweden
Carbon tax rates in Sweden
Source:

4. Green fiscal policy instruments – examples
Revenue-generating
Revenue-spending
Revenue neutral
Taxes or charges on energy / carbon / electricity / fuels
Tax exemptions, tax reductions
Tax reform / tax shifting packages
Reform of fossil fuel subsidies
Feed-in-tariffs for renewable energies
Differentiated import duties or taxes, e.g. on vehicles
Emissions trading systems (auctioned permits)
Below market rate loans and grants
Emissions trading systems (free permits)

5. Fossil fuel subsidy reform in Indonesia
Million USD
Sources: Ministry of Finance, Indonesia (2018) and

6. Environmental protection tax in Vietnam
Year
Revenue % GDP
Revenue (% total tax revenue)
CO2 emissions (compared to BAU)
High tax scenario CO2 emissions (compared to BAU)
2012
0.34
2.64
-1.7%
-7.5% on BAU
2013
0.32
2.24
2014
0.30
2.22
Source: Huong 2014
Source: Willenbockel 2011
2015
0.64
3.65
2016
0.98
5.35
Source for data on tax revenues: Ministry of Finance, Vietnam

7. Potential of fossil fuel subsidy reform to raise revenues and reduce emissions is substantial
In 2015, if fossil fuel prices had been at an efficient level – i.e. not subsidized and priced in line with health and climate externalities – the IMF suggests the following impacts:
CO2 emissions 28% lower than BAU [for some countries, this exceeds their Paris mitigation targets]
A 46% reduction in premature global air pollution deaths
Fiscal gains worth almost 4% of global GDP
Annual welfare gains worth 1.7% of global GDP
Source: IMF WP/19/89

8. Potential of carbon pricing – taxes and trading systems – is not yet realized
Less than 5% of global emissions covered by carbon pricing initiatives are priced at a level consistent with achieving the targets of the Paris Agreement
51% of global emissions are priced at less than USD 10 / tCO2e
Nonetheless, governments raised USD 44 billion in carbon pricing revenues in 2018, more than half from carbon taxes = an increase of USD 11 billion on 2017
Potential to raise substantially more revenue with GF policies which also facilitate the achievement of NDC targets is considerable
Source: World Bank 2019 – State and Trends of Carbon Pricing

9. Thank you for your attention
Thank you for your attention! Jacqueline Cottrell Vice President, Green Budget Europe Senior Policy Advisor, Green Budget Germany Tel:
Source of image: