Norwegian White Paper stresses "green" taxes

Government proposes carbon dioxide charge on industry of Ecu12 per tonne

The Norwegian government today issued its long-awaited White Paper on climate change together with an associated set of tax reforms.

Describing the package as "a good starting point for creating an integrated national climate policy" in accordance with the Kyoto agreement, environment minister Guro Fjellanger said: "The most significant measure will be a shift from 'red' to 'green' taxes. Such a shift implies increased levies on pollution and environmentally damaging forms of energy, and lower taxes on labour and income."

Taxes on carbon dioxide and methane emissions in particular are proposed to increase sharply, and in all sectors of the economy. Previously exempt industries (or those now paying less) would be charged NKr100 (Ecu12) per tonne of carbon dioxide, albeit with "substantial" compensation - diminishing over time - to minimise "negative effects on profitability" for the process industries, fishing and aviation.

In a separate statement, the finance ministry also specifies smelting, petrochemicals, oil refineries, cement and allied building materials, timber manufacturing, aviation and domestic maritime transport as sectors to be affected by the tax reform.

All industrial activities producing waste methane will be taxed at NKr300 per tonne, but with reductions if the gas is recycled as energy. The government will reserve the right to introduce tax incentives and/or penalties to encourage the use of substitutes for ozone-depleting CFCs.

The government also reiterates its opposition to controversial plans to build two gas-fired power plants at Kårstø and Kollsnes, "given today's technological solutions" and reckoning that the installations would emit 2.1m tonnes of CO2 annually.

"Norwegian emissions of climate gases shall not be more than 1% higher in the period covered by the [Kyoto] agreement, 2008-2012, than they were in 1990", Ms Fjellanger said. "This means that we must actually achieve a reduction of 6% in relation to 1996 levels in order to fulfil the terms of the agreement. The building of gas power plants would make it even more difficult to reach these goals. Instead, the government will strengthen initiatives on energy-saving, renewable energy sources and the use of heat pumps."

Given the government's shaky position as a minority coalition, the final shape of any legislation based on today's White Paper remains unclear. Some of the tax reforms, however, are likely to be popular, as the green taxes will fund increases in personal income tax exemptions and reduced employers' contributions.

Follow Up:
Norwegian environment ministry, tel. +47 22 24 57 00.

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