EU energy tax "would have double dividend"

Study for European Commission backs earlier forecasts of higher employment, lower emissions

Harmonising energy tax rates around the EU could boost employment and cut emissions to a greater extent than previously thought, according to a new European Commission study. The findings will help the Commission force the tax back up the EU's political agenda after the summer in discussions on changes to the bloc's treaty. The so-called "Monti" tax proposal was made by the Commission in 1997 (ENDS Daily 13 March 1997) but is being vetoed by Spain.

Carried out by UK consultants AEA Technology Environment and the University of Bath, the study looked at the EU's manufacturing industry and assumed that tax receipts would be translated into lower labour costs. Under this scenario the sector would create 120,000 jobs by 2010 - or around 0.4% of the total EU workforce when the effect of the tax on other sectors is included. The tax would also cause fossil carbon emissions to fall by 2%.

The expected effects are marginally more positive than three previous estimates produced for the Commission in 1997, using a completely different methodology. These forecast that employment would rise by 0.11% to 0.33% and that emissions would fall by between 0.5% and 1.5% (ENDS Daily 13 October 1997).

The authors of the new study say the fact that the figures are of the same magnitude demonstrates the "robustness" of their models and suggest a "useful role" for the tax in creating a double-dividend of job creation and emission reductions. Previously, some analysts have questioned whether such win-win expectations were realistic (ENDS Daily 27 June 1997).

The Commission will hope the study provides impetus for EU states to convince Spain that its concerns over the tax are unfounded, or to agree new treaty rules allowing the proposal to pass by majority voting. The study claims that jobs would be created in all 15 of the EU's member states if the tax were introduced - including 10,000 in Spain. Most new opportunities would arise in engineering firms supplying emission-saving technologies, it says.

Follow Up:
European Commission, tel: +32 2 299 1111, and the report.

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