Energy-related taxation as an environmental policy tool—the Finnish experience 1990–2003

• DOI: 10.1016/j.enpol.2004.04.015
• Publication Date: 2004-06-02T17:49:16Z
• Authors: Jarmo Vehmas
• Keywords: 13. Climate action; 0202 electrical engineering, electronic engineering, information engineering; 02 engineering and technology; 7. Clean energy

Abstract Finland has over 10 years experience of environment-based energy taxation. The design and level of the CO 2 and energy tax scheme has been changed several times on an ad hoc basis. In recent years, Finland has introduced more and more tax “departures”, i.e. deviations and exceptions from an “ideal” type of environmental tax. Examples of this include fuel-specific and user-specific exemptions or lowered tax levels taxes on electricity production from non-fossil energy sources, plus refund systems for fossil fuel and electricity users. Thus, it is apparent that Finnish energy taxation aimed at improving the environment has developed ineffectively. Increases in the level of CO 2 tax on fossil fuels have served mostly fiscal purposes with reduced CO 2 emissions being only a side benefit. No systematic follow-up or ex post analysis on the impacts of the CO 2 and energy taxes has been carried out. From the perspective of greenhouse gas mitigation, the discussion on economic instruments has shifted from CO 2 taxation towards emissions trading in the international context of the European Union and the Kyoto Protocol.