Ministers make little headway on carbon tax, landfills

Little progress on two key legislative proposals, on the carbon/energy tax and landfills, was achieved at the EC Environment Council on 24-25 March. But Ministers did agree two Directives, on sulphur emissions from large combustion plant and noise from earthmoving machinery, and in a joint meeting with Transport Ministers agreed to push forward with work on marine pollution.

Negotiations on the proposed carbon/energy tax are now in their fourth year. The UK's opposition to the very idea of a mandatory tax is very much intact, but several other Member States have major reservations as well.

A new proposal by the Greek Presidency of the Council did little to break the deadlock. The Greeks built on ideas developed last autumn by Belgium, their predecessor in the Presidency, for a "burden sharing" formula. The EC is already committed to meeting its promise to stabilise CO2 emissions at 1990 levels by 2000 by means of equitable burden sharing - meaning that individual Member States' contributions to the overall target should in some way reflect their current emissions and state of social and economic development. The formula devised by Belgium, based on the per capita CO2 emissions and GDP of each Member State relative to the EC average, would have exempted the four "cohesion" countries - Eire, Greece, Spain and Portugal - from the need to introduce the tax immediately (ENDS Report 225, p 36 ).

Greece kept this formula, but added to it several proposals. The first was that the tax should be introduced at $3 per barrel of oil equivalent, but instead of being increased by $1 per year, as the European Commission had originally proposed, that it remain at $3 pending a review in 1997. The review would take into account action taken by other industrialised countries in the interim.

Secondly, Greece proposed that Member States should be allowed to make reductions in the level of the carbon/energy tax to the extent that they already levy taxes designated as "environmental" - meaning that the proceeds are used for some form of environmental improvement. They would be able to redesignate existing taxes on energy and fuels for inclusion in this tax credit, provided that the revenues are earmarked for "environmentally benign use".

The Greeks also enlarged on the original Commission proposal that revenues from the carbon/energy tax could be used by Member States to subsidise investments in energy efficiency, to cover the labour costs involved in other climate change amelioration projects such as afforestation and cuts in emissions of other greenhouse gases.

The Presidency's formula also provided for exemptions from the tax for energy-intensive industries until similar measures were introduced by other industrialised nations. The exemptions could take the form of delayed application of the tax or rebates of up to 80%.

The proposals appear to have attracted little support at the Council. Concern continues to be expressed by Germany, the Netherlands and the UK in particular that the formula to exempt the cohesion countries from paying the tax would detract from the efforts that are being made in the wider international sphere to persuade countries such as India and China to control their CO2 emissions even though these are at a low per capita level.

The Greek initiative did, though, force an agreement that a high-level group should be established to continue work on the tax - notably the issues of burden sharing, tax credits and exemptions, the balance between the carbon and energy components of the tax, relationships between the tax and excise duties, and the possible impacts of the tax on the EC's competitiveness. The group, which has been asked to report before the next Environment Council in June, may act as a counterbalance to another group set up by Ecofin, the EC's Finance Ministers, which is dominated by fiscal experts.

The UK has insisted all along that a case cannot be made for an EC tax until it is clear that Member States' current programmes for controlling CO2 will not together achieve a stabilisation of the EC's emissions by 2000. One satisfactory outcome of the Council's conclusions for the UK this time was that Member States agreed - not for the first time, it must be said - to submit projections of their CO2 emissions by 2000 to Brussels. This is to be done by May so that the Commission can prepare an assessment of the EC's projected emissions in 2000 for the June Council.

Although all the Member States have now submitted some emission projections, the Commission says that it cannot tell from these what the position will be in 2000. Germany, for example, used a baseline of 1988 and submitted CO2 projections for 2005.

Another proposal to make little headway was the draft Directive on landfills. As explained in detail last month, the UK's insistence that the Directive should not phase out co-disposal is a major stumbling block to agreement, and another has been created by recent Greek demands that small landfills in isolated rural areas and islands should be exempted from control. Numerous finer points also remain to be resolved (ENDS Report 229, pp 37-38 ).

UK officials say that their demands on co-disposal have received a sympathetic hearing from their counterparts in other EC states, but that this has yet to be translated into political acceptance of the UK's position. Only Eire and Portugal overtly support the UK at present - not enough to avert a ban on co-disposal if the matter was taken to a qualified majority vote.

Greece now appears to be coming round to the view of other Member States that small landfills should not be exempted from the Directive but only from certain of its provisions. But there is no agreement yet on what criteria - area, population served, location or waste inputs - should be used to define small landfills. New demands from Germany and France for underground waste storage sites to be exempted from the Directive, and from the Netherlands for an exemption for sites taking dredged spoil, have introduced complications to the negotiations, and the prospect of an agreement at the June Council appears to have receded.

One success of the meeting was a unanimous agreement on a Directive which will apply sulphur emission limits to large combustion plant in the 50-100MW range. The UK and, until the last minute, Spain, had been objecting to the proposal (ENDS Report 229, p 35 ), but it now goes to the European Parliament for a second reading.

Ministers also agreed a Directive setting tighter limits on noise from earthmoving machinery. The UK was alone in abstaining from the decision on the grounds that the noise limits would be too costly and the timetable for introducing them too rapid.

An initial debate was held on the draft Directive on integrated pollution prevention and control (ENDS Report 225, pp 37-39 ). No fundamental objections were raised, and future negotiations will focus on points of detail. Germany, though, has reservations about how the proposal can be fitted with its federal system of government, and is also keen to see the rapid establishment of uniform EC-wide limits on releases from industrial processes subject to IPPC in order to create a level playing-field. In view of the slow progress made in establishing EC-wide standards under existing framework Directives on water and air pollution, that demand is not a trifle unrealistic.

In a joint half-day meeting with Transport Ministers, the Environment Council took stock of action taken to date on marine safety and pollution
following the oil pollution disasters off the Shetlands and Spain at the turn of 1992/3.

A new Commission proposal, yet to be published, will make port state inspections of ships visiting Community ports mandatory, and introduce a record of the condition of inspected ships.

Member States promised last year to submit proposals to the Commission for environmentally sensitive waters in which certain vessels could be restricted or banned. Not all have done so, including the UK, which is waiting for the report of Lord Donaldson's inquiry into the Braer disaster off the Shetlands, due in May. Ministers agreed to continue work on the issue.

EC rules have already been drafted to require ships carrying dangerous cargoes and heading for ports in the Community to report to nearby ports, but Ministers accepted demands from the European Parliament that this requirement should be extended to vessels in transit through EC waters. The Commission was also asked to evaluate the need for further Community action on maritime transport of dangerous goods, and for a liability regime for marine pollution.

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