A Carbon/Energy Tax for Sustainable Development

Abstract

In May 1992, just before the Rio Conference, the European Commission² adopted a proposal for a taxation on carbon dioxide emissions and energy. This co-ordinated tax, the first ever proposed to a group of nations, was not subsequently adopted by the Member States of the European Union. Since then, many observers have held that such a project could be considered, like similar initiatives in other countries, to be ‘clinically dead’ . This paper summarises the reasons why the famous sentence of Mark Twain could be quoted about such a proposal: ‘the rumours of my death have been greatly exaggerated’ .

The introductory section defines carbon/energy taxation and suggests an analytical framework that is consistent with the concept of sustainable development. The second section describes the evolution of the discussions in international forums from 1992 to 1997. It is argued that the issue of carbon/energy taxation has been continually addressed in the post-Rio process, whether at the level of the European Union, the United Nations Commission on Sustainable Development or the United Nations Framework Convention on Climate Change. The third section of this paper presents the main arguments that have been raised against carbon/energy taxation. It intends to demonstrate that, overall, obstacles can be overcome and that such a project remains critical to the implementation of the Rio agreements. In the fourth section the paper investigates what can be expected in the future from an institutional perspective.

The authors are both members of the Federal Planning Bureau in Belgium. Nadine Gouzée has been the Representative of the Belgian Government to the Commission on Sustainable Development (CSD) and to the United Nations General Assembly Special Session (UNGASS). Stéphane Willems has represented Belgium in the Ad Hoc Group Berlin Mandate (AGBM). The views of the authors are not necessarily those of the Federal Planning Bureau.