European Commission Adopts Market-Based Policy Paper

Mar 28: Following what is being called the successful Spring European Council meeting that set very ambitious goals in the area of energy and climate change, the European Commission (Commission) adopted a Green Paper on the use of market-based instruments for environment and energy related policy purposes. Since market-based instruments have proven to be cost-effective means of achieving policy goals, the paper aims to stimulate a broad public debate on how taxes, tradable emissions rights and other market-based instruments can be used more widely and effectively for environmental and energy policy purposes at Community and national level.

Environment Commissioner Stavros Dimas said, "Market-based instruments such as emissions trading, environmental taxes and targeted subsidies harness the power of market forces to protect the environment. This more flexible and cost-effective approach has proved its value but it is still underutilized. In launching this Green Paper our goal is to promote the use of market-based instruments whenever they are appropriate to the circumstances so that Europe's environment is protected most effectively."

The Green Paper covers a wide range of areas where market-based instruments (mainly taxes, emissions trading rights) can be further promoted, in particular in energy use, transport's impact on the environment and in other specific areas of environmental policy such as sustainable management of water, waste management, protection of biodiversity and reduction of air pollution. In particular it focuses on possible ways forward to make the Energy Taxation Directive more directly supportive of the Community's energy and environmental objectives. The Green Paper also suggests the creation of a new forum that could encourage and facilitate exchanges of experience and best practice between Member States on the use of market-based instruments and co-ordination of national approaches as well as national experiences with Environmental Tax Reforms.

The Green Paper concludes that there should be an increased use of market-based instruments to achieve environmental and other policy objectives, both at Community and national levels. The Commission is inviting reactions to the Green Paper from other EU institutions, Member States, all stakeholders and the public. It will decide on appropriate follow-up in the light of the responses received.

Access a release including background and link to the Green Paper and related information (click here). [*All]