Picking Our Environmental Battles: Removal of Harmful Subsidies or Carbon Taxation?

In this paper, we compare the effects of removing harmful fossil fuel subsidies with the replacement of the energy taxation by a carbon tax in Portugal. Since energy taxes focus on the energy content of the different energy products eliminating these provisions only brings their prices in line with their energy content. On the other hand, replacing the energy tax system with a tax on the emissions content of the energy products aligns the fossil fuel prices with their emissions content. We show that while replacing the energy with a carbon tax is a policy of a magnitude about eight times as large as the removal of the harmful subsidies, the effects of emissions are twenty times larger and the adverse economic and distributional effects only about twice as large. Accordingly, replacing the energy tax with a carbon tax is a much more cost-effective way of reducing emissions. This may suggest that focusing on the removal of harmful fossil fuel subsidies may be an environmental red herring.

Firm-specific responses to energy policies in Dutch horticulture

Reducing the usage of fossil fuels is a central issue in ongoing policy debates. This in particular holds for Dutch horticulture, given its energy-intensive production. We analyse differences in energy usage and price responsiveness of horticultural firms by estimating energy demand functions using a Bayesian random coefficient model. Beyond, the effects of a proposed energy tax are assessed. Allowing for firm-specific energy price coefficients gives a better model fit compared to conventional models with fixed slope parameters. This confirms that firms respond differently to energy prices, which is taken into account in simulating the effects of more restrictive energy policies. The results show that larger-sized firms use less gas per square meter yet also point at a considerable spread in additional energy expenses between firms.

Green Tax Reform and Employment Double Dividend in Australia Should Australia Follow Europe’s Footsteps? A CGE Analysis

Australia has one of the highest per capita carbon emissions, and its energy sector contributes significantly to the country’s carbon emissions. Renewable energy and climate change call for a shift from fossil fuels to low-carbon technologies for energy production. Policies aiming to reduce carbon emissions are perceived by many people as leading to higher living costs, but changes in energy policies can also lead to economic gains in the presence of revenue recycling. This article applies a computable general equilibrium approach to study the effect of energy tax in the Australian economy. Four different scenarios of green tax reform (GTR) are simulated to test the employment double dividend (EDD) potential. All four scenarios simulate changes in energy tax and one of four tax revenue recycling policies including (a) value added tax reduction, (b) payroll tax reduction, (c) goods and services tax (GST) reduction and (d) a mixture of all three recycling policies. The results show strong EDD potential of GST and payroll tax reduction when used along with energy tax in a revenue-neutral GTR approach. The study also presents a comparison of an optimal EDD inducive policy design between the European and Australian GTR approaches. JEL classifications: H23, C68, H21, Q48

Philosophy of energy and energy transition in the age of the petro-Anthropocene†

The purpose of this article is to present the multidimensional issue of an ‘energy transition’ from a philosophical, that is, conceptual and analytical, point of view. The argument of this article is that ‘energy transition’ is not simply a technological and economic problem but also an epistemological, cultural, anthropological and even metaphysical one. Energy transition does not only consist of changing the kind of energy that is produced and consumed to power our modern middle-income societies, from fossil fuels to renewable energies. Energy transition asks us to understand what is implied in cultural and social terms by such a shift from ‘grey’ to ‘green’ sources of energy that does not only entail qualitative transformation but also could imply quantitative curtailment. What will be the consequences of our necessary departure from ‘petromodernity’, that is, from the mode of living that came with fossil fuels in modern times that shape our current age of the Anthropocene? To address this question, different dimensions of the philosophy of energy will be studied: epistemological, phenomenological, anthropological, critical and metaphysical. In conclusion, we will, first, propose the notion of a ‘negative energy tax’ to address the problems of ‘energy injustice’. We will then refer to Bataille to provide an ontology of energy that can help to redefine our assumptions and expectations regarding energy spending.