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How green is the European Semester process?

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How green is the European Semester process? Patrick ten Brink Senior Fellow and Head of Brussels Office, IEEP with thanks for inputs by Sirini Withana, IEEP, & – PowerPoint PPT presentation

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Title: How green is the European Semester process?


1
How green is the European Semester process?
  • Patrick ten Brink
  • Senior Fellow and Head of Brussels Office, IEEP
  • with thanks for inputs by Sirini Withana, IEEP,
  • Building, inter alia, on the study for the
    Greens/EFA Group of the European Parliament by
    Withana, S., Kretschmer, B., Farmer, A. (2013)
    Environmental policy in the European Semester
    Assessing progress to date. IEEP Brussels.
  • 24 November 2014

2
Presentation Structure
  • I. Key insights on mainstreaming environmental
    issues in the European Semester overview
  • Annual Growth Surveys (AGS)
  • Country-specific recommendations (CSRs)
  • II. Inputs to the European Semester
  • Studies on EHS, ETR EPR
  • III. Conclusions and Next Steps

3
Overview of environmental issues covered in AGS
2014
Environmental issue addressed Link to economic policy context
MS should ensure longer-term investment inter alia in energy and climate action Priority area 1 Pursuing differentiated growth-friendly fiscal consolidation
Shift tax burden from labour taxes to inter alia taxes on pollution and reduce EHS As above
Full implementation of the third energy package by 2014, complete the internal energy market, inter alia to contribute to the cost effectiveness of renewable energy support schemes Priority area 3 Promoting growth and competitiveness for today and tomorrow
Promote resource efficiency by improving waste and water management, recycling and energy efficiency As above
Improve waste and water management to exploit full growth potential of the green economy As above
Job opportunities through greening the economy Priority area 4 Tackling unemployment and the social consequences of the crisis
4
AGS Recurring environment-related themes
  • Completion of the internal energy market and the
    economic benefits associated with it (e.g.
    enhanced security of supply, lower energy prices)
    as well as improving energy efficiency with
    potential employment and competitiveness effects
  • Infrastructure in the energy and transport
    sectors as growth-inducing investment,
    stimulating jobs in the short term and laying the
    foundation for future growth
  • Reforming taxation by phasing out EHS and
    stimulating job markets by shifting taxes away
    from labour and towards less distorting taxes,
    e.g. environmental taxes
  • Resource efficiency as well as the need to
    improve waste and water management
  • The growth and job potential associated with the
    green economy
  • Environmental issues seen as facilitators for
    growth, economic and labour market recovery
  • Clear focus on consolidating budgets and creating
    growth and jobs rather than on the wider goals
    set out in the Europe 2020 Strategy

5
CSRs Recurring environment-related themes
  • Environmental tax reform
  • Energy (and electricity) infrastructure
  • Transport infrastructure
  • Renewable energy and energy efficiency
  • Better energy market design (completion of the
    internal market, implementation of the Third
    Package)
  • Progress towards greenhouse gas emission
    reduction targets
  • Limited number of recommendations on water and
    waste management

6
Assessment of CSRs
  • CSRs mirror AGS and their focus on fiscal
    consolidation and stimulating growth
  • Environmental coverage mostly in relation to
    climate change and energy
  • Resource efficiency not considered per se apart
    from ETR and limited references to water and
    waste management
  • No full account taken of the growth-stimulating
    potential of environmental policy measures such
    as improved resource efficiency

7
  • Developing Inputs to the European Semester
  • Examples of studies on EHS, ETR and EPR

Fedrigo-Fazio, D., Withana, S.,
Hirschnitz-Garbers, M., and Gradmann, A. (2013).
Steps towards greening in the EU, Monitoring
Member States achievements in selected
environmental policy areas - EU summary report,
prepared for DG Environment. Brussels. 2013.
http//ec.europa.eu/environment/enveco/resource_ef
ficiency/pdf/Greening.pdf
Oosterhuis F., Ding H., Franckx L., P. Razzini
et al. (2014). Enhancing comparability of data on
estimated budgetary support and tax expenditures
for fossil fuels. A report by IVM, Bio, VITO and
IEEP for the European Commission DG
Environment. Final Report. Brussels. 2014.  
Withana, S., ten Brink, P., Franckx, L.,
Hirschnitz-Garbers, M., Mayeres, I., Oosterhuis,
F., and Porsch, L. (2012). Study supporting the
phasing out of environmentally harmful subsidies.
A report by the Institute for European
Environmental Policy (IEEP), Institute for
Environmental Studies Vrije Universiteit (IVM),
Ecologic Institute and VITO for the European
Commission DG Environment. Final Report.
Brussels. 2012. http//ec.europa.eu/environment/en
veco/taxation/pdf/report_phasing_out_env_harmful_s
ubsidies.pdf
Eunomia and Aarhus University (2014) Study on
Environmental Fiscal Reform Potential in 12 EU
Member States - Final Report to DG Environment of
the European Commission, http//ec.europa.eu/envi
ronment/integration/green_semester/pdf/EFR-Final2
0Report.pdf
8
Overview of needs for subsidy reform identified
  There are no particular concerns relating to this aspect of the subsidy.
  There are some concerns with this particular aspect of the subsidy and further attention is useful.
  There are significant concerns with this particular aspect of the subsidy and further attention/reform is needed.
9
EHS Fossil Fuels Study a further input
  • Direct budgetary support to energy users EU
    EUR 1 bn/yr.
  • The largest single items identified are the tax
    reimbursements for energy intensive industries in
    Austria and Germany, and the Fuel Allowance in
    Ireland.
  • Direct support to producers (inc. public
    infrastructure) lt 5 bn/yr.
  • The main support schemes are for coal production
    (in Germany and Poland) and the Italian CIP
    6/92 mechanism (mainly benefitting
    cogeneration).
  • Tax expenditures in excise taxes (using the
    benchmark of the tax rates as proposed in Energy
    Tax Directive proposal) lt 28 bn/yr
  • For most Member States, the estimated support
    levels are between EUR 100 mln and several
    billions of euros per year.
  • Tax expenditures using alternative benchmark
    highest prevailing rate per unit of energy in the
    MS. gt 200 bn/yr in EU
  • This benchmark leads to much higher estimated
    amounts (more than EUR 10 billion per year in
    several Member States).
  • VAT reductions fossil fuels /or fossil-based
    electricity - few MS.
  • Total amounts particularly significant in UK (gt
    EUR 4 bn/yr) Italy (gtEUR 1 bn/yr).
  • Tax expenditures corporate income tax and
    royalty schemes
  • Estimates available only for two countries
    Germany and the UK royalty reductions available
    EUR 350 MEUR/yr in each of them.

10
ETR Eunomia et al., I and II
Eunomia and Aarhus University (2014) Study on
Environmental Fiscal Reform Potential in 12 EU
Member States - Final Report to DG Environment of
the European Commission, http//ec.europa.eu/envi
ronment/integration/green_semester/pdf/EFR-Final2
0Report.pdf
11
European Policy Review, EPR
  • Advice and recommendations
  • Economic, fiscal and financial elements
  • Budgetary expenditure
  • Market-based instruments
  • Environmentally harmful subsidies
  • State aids
  •  
  • Waste management
  •  
  • Support to SMEs
  •  
  • Air quality
  •  
  •  

Source Fedrigo-Fazio, D., Withana, S.,
Hirschnitz-Garbers, M., and Gradmann, A. (2013).
Steps towards greening in the EU, Monitoring
Member States achievements in selected
environmental policy areas - EU summary report,
prepared for DG Environment. Brussels. 2013.
http//ec.europa.eu/environment/enveco/resource_ef
ficiency/pdf/Greening.pdf
12
  • Conclusions and next steps

13
Conclusions
  • Mainstreaming of environmental issues limited so
    far
  • Overriding concerns are growth, jobs and fiscal
    consolidation as apparent all along the process
  • Where environment is mentioned, focus is on
    classical win-win options such as ETR, energy and
    transport infrastructure etc.
  • Exploitation of win-wins not comprehensive and
    key EU policy areas ignored
  • Biodiversity and ecosystem services (evidenced
    economic importance)
  • Important Europe 2020 topics side-lined such as
    recycling, eco-innovation
  • Range of initiatives inputting to the European
    Semester
  • European Semester part of a context for resource
    efficiency

14
The European Semester in (ETR) Context
Legislative specific minimum requirement e.g. Energy Tax Directive value added tax (VAT)
Legislative general requirement e.g. 'principle of recovery of the costs of water services' under the Water Framework Directive
Legislative possibility e.g. strengthen Eurovignette Directive
Legal approaches across the European Union
Special legal framework e.g. initial Schengen (limited number of countries under international treaty distinct from EU treaties).
Existing legal framework e.g. Enhanced cooperation under EU Treaties little used to date (patents, discussion on financial transaction tax, FTT)
Legal approaches for a subset of EU Member
States Enhanced cooperation
Political intention to promote ETR Open Method
of Coordination (OMC)
Diversity to coordination to harmonisation
Formal/structured OMC e.g. country specific recommendations under the European Semester
Flexible/light OMC e.g. Green public procurement (GPP)
Voluntary policy coordination e.g. Cars CO2 reform of EHS
Multi-country cooperation and coordination
Coalition of like-minded countries to be defined depending on interests e.g. climate and energy, resource efficiency and circular economy, pollution and health etc.
National, regional and local approaches
Learning from others (copy-catting)
Inspired by and/or based on other countries states initiatives
Own initiatives developed according to own needs
Withana, S., ten Brink, P., Illes, A., Nanni, S.,
Watkins, E., (2014) Environmental tax reform in
Europe Opportunities for the future, A report by
the Institute for European Environmental Policy
(IEEP) for the Netherlands Ministry of
Infrastructure and the Environment. Final Report.
Brussels. 2014. http//www.ieep.eu/work-areas/envi
ronmental-economics/market-based-instruments/2014/
06/environmental-tax-reform-in-europe-opportunitie
s-for-the-future
15
and next steps - recommendations
  • Future AGS wider interpretation of priority
    areas and/or separate priority area for the
    environment
  • Future CSRs wider coverage of environmental
    issues in support of Europe 2020 Strategy
    (biodiversity, ES, water, air etc.)
  • Increase ownership and engagement of MS, e.g.
    through regular exchanges between MS on best
    practices
  • Engage the European Parliament
  • Civil society and other stakeholders take
    Commissions fact finding missions to MS as an
    opportunity to input

16
Thank you for your attention
  • Contact
  • Patrick ten Brink, ptenbrink_at_ieep.eu
  • Reports citations See links throughout.
  • IEEP is an independent not for profit institute
    dedicated to advancing an environmentally
    sustainable Europe through policy analysis,
    development and dissemination.
  • New Book! Paying the Polluter - Environmentally
    Harmful Subsidies and their Reform 
  • by F. Oosterhuis and P ten Brink (eds).
  • http//www.ieep.eu/news/2014/05/new-book-out-now-p
    aying-the-polluter-environmentally-harmful-subsidi
    es-and-their-reform
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