A European Semester that serv rves people and the planet 28th EESC - PowerPoint PPT Presentation

Thinking ahead: A European Semester that serv rves people and the planet 28th EESC Europe 2020 Steering Committee Meeting Dr Constanze Adolf Brussels, 7 February 2017

Outline  EU Semester – A CSO perspective  How to adequately balance the three pillars of the Semester?  The EU Semester post-2020  Recommendations 07 February 2017 G REEN B UDGET E UROPE 2

Green Budget Europe grow · engage · shape  Founded 2008  EU wide experts platform  Promoting Market-Based Instruments Our vision:  An ecological and social market economy, in which "prices tell not only the economic, but also the ecological truth" (Ernst Ulrich von Weizsäcker)

Assessing the Country Reports OR: The European Semester in a CSO perspective 07 February 2017 G REEN B UDGET E UROPE 4

5

Nr r 5 guid idelines for r the employment policies of f the Member states for r 2015 (EU (EU 2025 2025/1848 pr pr 5 5 Oc October 2015 2015)  The tax burden should be shifted away from labour to other sources of taxation less detrimental to employment and growth, while protecting revenue for adequate social protection and growth enhancing expenditure 07 February 2017 G REEN B UDGET E UROPE 6

A well-designed tax system allows  to raise sufficient revenues to finance socially-desired public expenditure  and support growth, jobs, and investment.  Aim of the Semester:  Develop growth-friendly tax structures  Improve tax governance / design in their efficiency and fairness dimensions. 07 February 2017 G REEN B UDGET E UROPE 7

Increase taxes on activities harmful Tax what you burn…. to the environment ….not what you earn

Energy tax reform is the least damaging compared to VAT and direct taxes Ene Energy tax reform has has a a sm smalle ller neg negative impact on on GDP GDP And no no wor orse em emplo loyment impact than a a dir direct tax or or indirect tax 0 0.1 2013 2014 2015 2016 2017 2018 2019 2020 Change in GDP from baseline, % -0.1 0 Change in employment 2013 2014 2015 2016 2017 2018 2019 2020 from baseline, % -0.2 -0.1 -0.3 -0.2 -0.4 -0.3 -0.5 -0.4 -0.6 -0.5 Energy tax Direct Indirect Energy tax Direct Indirect Source: Vivid Economics (2012). Carbon taxation and fiscal consolidation: the potential of carbon pricing to reduce Europe’s fiscal deficit s. Download.

Environmental Fiscal Reform: low hanging fr fruit Carbon and energy taxes can increase governmental revenue … with less detrimental impact on growth and unemployment than other forms of taxation … and they contribute to a reduction of trade deficits by increasing incentives to substitute imported fuels by renewables and through energy saving

Macroeconomic Imbalance Climate, environmental, social and energy goals 07 February 2017 G REEN B UDGET E UROPE 11

Breakdown of f tax revenue by country ry and by main tax categories (percentage of f GDP) 2014 12 Source: Eurostat, 2016 (online data code: gov_10a_taxag)

Stagnating share of f environmental taxes ( in in % of f total l revenues fr from taxes and so socia ial l contr trib ibutio ion ) Share of total revenue from taxes and social contributions Relative to GDP 13 Source: Eurostat, 2016 (online data code: env_ac_tax)

10,1% in increase in in ratio of f la labour to environmental taxes, , EU EU-27 between 2000 and 2011 This clearly counteracts the EU goal to “green the tax system” 14

Climate and Energy in Annual Growth Surveys Environmentally Harmful Subsidies Environmentally Tax Reform Renewable Energies and Energy Efficiency Circular Economy and Resource Efficiency 2011 2012 2013 2014 2015 2016 15 source : European Commission Annual Growth Surveys 2011-2016

2015 2015 and and 2016 Country ry Reports of the EC 16 source : European Commission, DG Environment (2015 and 2016) Country Reports

Country ry-Specific Recommendations 2012-2016 2015 2016 2012 2013 2014 0 4 Energy 0 8 17 BE, CZ, PL, UK 1 1 Implement a tax shift / 12 11 8 green taxes LU LV CZ, ES, IE, HU, IT, LI, LU, LV 0 0 Remove / reduce 0 0 3 environmentally harmful BE, FR, IT subsidies source: GBE analysis on the basis of the CSRs 2012-2016

EU Semester: A window of opportunity 07 February 2017 G REEN B UDGET E UROPE 18

“ Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate- resilient development” Paris Agreement, Article 2 07 February 2017 G REEN B UDGET E UROPE 19

Will the European Semester gain a wider role? G REEN B UDGET E UROPE

Will the European Semester gain a wider role?  Circular Economy Package (COM/2015/614)  Resource productivity increase to 30% by 2030 could create over two million jobs  Overall savings potential of € 630 billion per year for European industry  Potential GDP boost by up to 3,9%  A reduction of total annual GHG emissions by 2.4% source: EC Communication “Towards a circular economy: A zero waste programme for Europe”,( COM(2014) 398 final/2) 07 February 2017 G REEN B UDGET E UROPE 21

Example: Energy Efficiency European Commission proposed 30% binding target for Energy Efficiency by 2030 which could create  400.000 new jobs  12% less gas imports  EUR 70 bn less import of fossil fuels  EUR 8,2 bn less health costs 07 February 2017 G REEN B UDGET E UROPE 22

Hybrid legal architecture Stability and TFEU Art. 121 Europe 2020 Growth Pact + Six-Pack headline targets Medium-term Budgetary Macroeconomic Integrated Guidelines Objectives (MTO) scoreboard Fiscal Macroeconomic Thematic surveillance surveillance surveillance Stability or Convergence National level National Reform Programmes Programmes Annual Growth Survey EU level Country Specific Recommendations 23

Scoreboard of f In Indicators 2017 Auxiliary In Indicators 24

Scoreboard of f In Indicators 2017 Auxiliary In Indicators Resource efficiency indicator to be included in scoreboard of indicators RATIONALE: • Further economic growth will only be possible if absolute decoupling from resource use is achieved • Increasing resource efficiency leads to job creation and an increased supply security • Increasing resource efficiency leads to lower environmental impacts, better health and a higher level of well-being • Circular Economy has got to be embedded in the Semester • The tax burden needs to be shifted from labour to resource use and the use of eco-system services 25

Proposals for cli limate re-integration in into the Semester:  Mainstreaming Europe 2020 and look towards 2030  Ensure macroeconomic relevance is recognised 26

The EU Semester Post-2020 2020 07 February 2017 G REEN B UDGET E UROPE 27

Reform of of th the Economic and Monetary Union (5 (5-Presidents ‘ Report) 28

Reform of of th the Economic and Monetary Union (5 (5-Presidents ‘ Report) In the absence of stable price signals and decisive global political commitment to limit climate change, a hard landing is more likely. source: European Systemic Risk board (2016): Too late too sudden: Transition to a low carbon economy and systemic risk 29

Reform of of th the Economic and Monetary Union (5 (5-Presidents ‘ Report) The warming of the planet poses serious risks to many economic sectors, and that it is difficult for investors to know which companies are most vulnerable to climate change. (…) Without correct information, investors may incorrectly price or value assets, leading to a misallocation of capital. Paris Agreement (Art 2 on financial source: Task Force on Climate-Related Financial Disclosures (2016): flows) Recommendations of the Task Force on Climate-related Financial Disclosures. 30

Stakeholder consultations / Experts groups (e.g. national Recommendations stakeholders, EU Semester Alliance or SDG Watch Report by national environmental agencies Report on progress Paris Agreement on (Art 2 on financial • GHG emissions flows) reduction • Circular Economy • Europe 2020 • SDGs (?) Analysis of • GHG emissions reduction • Circular Economy • Europe 2020 • SDGs (?) 31

Conclusions: A performance-based EU Semester needs  Meaningful stakeholder involvement  To catalyse just transition  Tailored financing and investment frameworks (Environmental Fiscal Reform and divestment)  Link to Energy Union  To link to next MFF to serve higher climate long-term just transition goals 07 February 2017 G REEN B UDGET E UROPE 32

TELL ME…. …what you tax and what you spend, and also what you don’t tax and don’t spend - and I’ll tell you what your true objectives are! Dr Anselm Goerres, GBE President 33

Thank you for your attention! Constanze Adolf Constanze.adolf@green-budget.eu www.green-budget.eu Follow us on Twitter @greenbudget_EU 07 February 2017 G REEN B UDGET E UROPE 34

It is all there…. (…) In this context, the Commission has repeatedly emphasized the A Roadmap for moving to a competitive low carbon economy in 2050 COM(2011) 112 positive employment benefits if revenues from the auctioning of ETS allowances and CO2 taxation are used to reduce labour costs, with the potential to increase total employment by up to 1.5 million jobs by 2020.