EUROPEAN COMMISSION EUROSTAT Directorate E: Sectoral and regional statistics Unit E-3: Environmental statistics and accounts Doc. ENV/ERT/TF/03(2010) Original in EN Background document for point 6 of the agenda Environmentally related subsidies proposed way forward Eurostat Unit E3 Task Force on Environmentally related transfers of the Working Group on "Environmental expenditure statistics" Meeting of 23-24 February 2010 Luxembourg, BECH Building, Room B2/464
Meeting Documents can be soon downloaded from the Environment statistics meetings CIRCA site at http://forum.europa.eu.int/public/irc/dsis/envirmeet/library Please note that, for environmental reasons, paper copies of meeting documents will not be available in the meeting room. The only exceptions will be documents that are not posted on CIRCA at least one week before the meeting.
ENVIRONMENTALLY RELATED TRANSFERS: PROPOSED WAY FORWARD FOR DEVELOPING A METHODOLOGICAL Draft for E u r o s t a t INSTITUT DE CONSEIL ET D'ETUDES EN DEVELOPPEMENT DURABLE ASBL (ancien nom Institut Wallon de développement économique et social et d'aménagement du territoire asbl) Boulevard Frère Orban, 4 à 5000 NAMUR Tél : +32.81.25.04.80 - Fax : +32.81.25.04.90 - E-mail : icedd@icedd.be
TABLE OF CONTENTS 1. Background...5 2. Tasks...6 3. Way forward and recommendations for discussion...7 3.1. Terminology...7 3.2. What should be included in the environmentally related transfers concept?...8 3.2.1. What does transfers mean?... 8 3.2.2. What does environmentally motivated mean?... 8 3.2.3. What does potentially damaging for the environment mean?... 9 3.3. Classifications...9 3.3.1. Classification for environmentally motivated transfers... 9 3.3.2. Classification of potentially damaging for the environment transfers... 10 ANNEXES TABLES FIGURES BOX Box 1 : Environmentally related transfers: terminology and proposed breakdown...7 Box 2 : Comparing and testing the suggested method for identifying environmentally related transfers...8 Box 3 : Testing and evaluating the mixed proposal to defining potentially damaging for the environment...9 Box 4 : Discussing advantages and disadvantages of using the CEPA and CRUMA classification...10
1. Background The Task Force (TF) on Environmental Protection Expenditure (EPE) of General Government and Specialised Producers identified at their last meeting in 2007, environmentally related subsidies as a priority area for developing economic accounts on environmental related transactions and activities. The members of the Working Group (WG) on Environmental Protection Expenditure (EPE), acknowledged this priority at the 22-23 May 2007 meeting, and agreed to establish an electronic discussion group for developing reflections on the area of environmental related subsidies. This group was formed in the spring 2008 and was led by Statistics Sweden. Participants were: SE, IT, AT, NO, DK, NL, ES, DE, UK as well as Eurostat, EEA and OECD. From 2008 to 2009, the reflection group discussed definitions, boundaries and data sources regarding environmentally related subsidies. Updates for the WG on EPE were prepared and presented by Statistics Sweden, as well as a paper was prepared by Statistics Sweden summing up the results of the discussions of the electronic reflection group. At the WG meeting on environmental related expenditure statistics held in March 2009, the members agreed to establish a TF on environmentally related transfers for developing a methodology for collecting data on environmentally related subsidies. This agreement was endorsed in June 2009 by the members of DIMESA (Directors meeting on Environmental Statistics and Accounts). In the meantime environmentally related transfers were also discussed at the London Group meetings in the context of the revision of the SEEA 2003. The work of the present TF will actively contribute to this revision process. The TF is supposed to relay the work of the electronic discussion group. This document wants to summarise the results of the electronic discussion group, organise the discussion of the issues which remain still open and propose a way forward for establishing guidelines for the collection of data. Further information on the environmental related transfers debate can be found in the following documents, on which the texts below are largely based: Statistic Sweden / Eurostat, Reflection Group on subsidies summary of discussions and recommendations for future work, 2009. Statistics Sweden / Eurostat, Revision of SEEA 2003: Issue paper: SEEA Subsidies related to the environment, 2008. Statistics Sweden / Eurostat, Revision of SEEA 2003: Outcome paper: SEEA transfers related to the environment. Environmentally motivated transfers, 2009 Statistics Sweden / Eurostat, Revision of SEEA 2003: Outcome paper: SEEA transfers related to the environment. Unresolved issues, 2009 Statistics Sweden, Transfers in the Environmental Accounts, presentation of Nancy Steinbach at the 15th Meeting of the London Group on Environmental Accounting, 30 November - 4 December 2009, Wiesbaden, Germany Subsidies_TF_way forward_final 26/02/2010 5/10 ICEDD asbl - MO
2. Proposed Tasks The TF will have to discuss all the following mentioned aspects in order to start developing Methodological Guidelines and Standard Tables for Environmentally Related Transfers: Terminology What transfers should be included in the environmental related transfers concept? o Which transfers can be identified and how can international harmonisation be achieved? o What does make a transfer environmentally motivated? o Testing of the suggested methods for potentially damaging for the environment transfers How to classify transfers for presentation and discussions purposes? (CEPA, taxes, etc.) Issues for discussion are in boxes. The outcome of the discussion should be a clear indication of the path to follow for developing a methodological guide and tables. Subsidies_TF_way forward_final 26/02/2010 6/10 ICEDD asbl - MO
3. Way forward and recommendations for discussion 3.1. Terminology From the work of the Reflection Group and the papers presented at the London Group, there seem to be agreement on the following terminology. Box 1 : Environmentally related transfers: terminology and proposed breakdown Environmentally related transfers (also: SEEA transfers related to the environment): 1. On-budget transfers: 1.1. Current transfers: 1.1.1. Current transfers from General Government to industry (i.e. SNA 2008 subsidy) 1.1.1.1. Environmentally motivated 1.1.1.2. Potentially environmentally damaging 1.1.2. Current transfers from General Government to others (households, organisations and non-profit organisations, municipalities and international receivers) (SNA 2008 Social benefits other than social transfers in kind, Social transfers in kind related to expenditure on products supplied to households via market producers, Other current transfers) 1.1.2.1. Environmentally motivated 1.1.2.2. Potentially environmentally damaging 1.2. Capital transfers from General Government (e.g.: SNA 2008 investments grants): 1.2.1. Capital transfers from General Government to industry 1.2.1.1. Environmentally motivated 1.2.1.2. Potentially environmentally damaging 1.2.2. Capital transfers from General Government to others (households, organisations and non-profit organisations, municipalities and international receivers) 2. Off-budget transfers: 1.2.2.1. Environmentally motivated 1.2.2.2. Potentially environmentally damaging 2.1. Preferential tax treatments 2.1.1.1. Environmentally motivated 2.1.1.2. Potentially environmentally damaging 2.2. External cost reference value estimate Subsidies_TF_way forward_final 26/02/2010 7/10 ICEDD asbl - MO
3.2. What should be included in the environmentally related transfers concept? Environmentally related transfers include transfers which can be environmentally motivated or potentially environmentally damaging. 3.2.1. What does transfers mean? The reflection group and the London Group agreed to use the following definition of transfers. Transfers are on budget as well as off budget current and capital transfers. On budget transfers are transfers which are included in the government budget. On budget current transfers include subsidies as defined by the SNA 2008 and current transfers to households and other organisations. On budget capital transfers are investments grants as defined by the SNA 2008. Off budget transactions (e.g. tax exemptions and price support transfers) should be included as well in the transfers concept. 3.2.2. What does environmentally motivated mean? The latest paper discussed at the London Group in December 2009 defines the selection criteria for defining an environmentally motivated transfer. This criteria, which is referred to as the motive base approach, states that is the motive behind or technical nature of the subsidy to be taken into account for allocating a transfer to the environmentally motivated transfers. This is coherent with the SERIEE criteria for defining the field of environmental protection (SERIEE 1994, 2007). An environmentally motivated transfer will be a transfer which is intended for protecting the environment (environmental protection motivated transfers) as well as saving natural resources (resource management motivated transfers). Box 2 : Comparing and testing the suggested method for identifying environmentally motivated transfers Countries are asked to test the suggested method for identifying environmentally motivated transfers. At a later stage, when the Task Force has tested the methods suggested so far, the relationship between environmentally related transfers and specific transfers as they are defined in the SERIEE (SERIEE 1994, 2009, 2039-2047) can be properly studied. The EPEA and the next-to-be-developed Resource Use and Management expenditure Accounts (RUMEA) will have many elements in common with these transfers. Subsidies_TF_way forward_final 26/02/2010 8/10 ICEDD asbl - MO
3.2.3. What does potentially damaging for the environment mean? Transfers which can potentially be harmful for the environment are part of the environmentally related transfers. It was agreed to include this kind of transfers in the same framework of environmentally motivated transfers. The definition of these transfers is necessarily different from the definition of environmentally motivated transfers, as no state would motivate transfers by them being environmentally damaging. The potential damage is an external effect of transfers given for other motives. So the former are defined based on a motive approach. The latter on the base of their negative effects on the environment. Two different routes were identified to define transfers which can potentially be harmful for the environment. One which is not yet tested is to take the transfers whose base is on the environmental tax base list. The second one is to base the definition on the analysis of emission intensities (or other indicators of environmental impacts), which has been performed in one country. The two methods can be pursued together, which is the suggestion that has been brought forward and will be tested in this Task Force. Austria received a grant to make a full inventory of its on-budget subsidies in order to see if it is possible to come up with selection criteria for discerning the clearly damaging subsidies. Many other countries in the EU have made pilot studies on how to collect environmentally relevant subsidy statistics, and it is anticipated that this Task Force can make use of the experience gathered from these. The European Commission is about to produce a roadmap for evaluating environmentally harmful subsidies, sector by sector, as requested by the 2006 EU Sustainable Development Strategy. It is not likely to give any indication on how to proceed to identify national overviews of environmentally related subsidies in time for the work that needs to be done in the Task Force. The mixed proposal (as was presented to the London group) is a multistage process which, when it comes to the identification of transfers which can potentially be harmful for the environment, mixes the two above mentioned approaches. Box 3 : Testing and evaluating the mixed proposal to defining potentially damaging for the environment In the Task Force, a time table and division of labour for national testing of the methods needs to be established. Which are the tax bases for which subsidies can be labelled clearly damaging for the environment? Which are other transfers which are obviously potentially damaging for the environment? Which are the categories of environmental indicators where data are available for testing the emission intensity method? 3.3. Classifications/Typology for presentation purposes 3.3.1. Classification/typology for environmentally motivated transfers No agreement has been found yet on the classification to be used for presenting environmentally motivated transfers. In the work done until now, the presentation has followed the typology used for environmentally related taxes, with an extra category for transfers for public transportation. Subsidies_TF_way forward_final 26/02/2010 9/10 ICEDD asbl - MO
From the work conducted so far, it seems that there are some large categories of transfers that can be difficult to allocate to some very specific environmental domains or the like. Examples of such categories found have been transfers to agriculture, to research and to foreign aid projects related to environmental issues. This is also evident for the transfers to public transports (that have been suggested to be a separate category outside of the motivated transfers). By identifying the environmentally related transfers that have been mentioned above, and dividing them by industry, the need for further classifications will have to be identified at a later stage, when the national tests have given the scope of the area. From the user side, recommendations have been given both to show some larger aggregates (such as environmentally motivated transfers by industry) but also to keep the details in the underlying material for specialists (where the budget lines are identifiable). Since there seems to be an agreement on using a motive based approach for defining which transfers are environmentally motivated, the use of the CEPA classification, coupled with the use of a classification for Resource Management Accounts (e.g. the CReMA used for the Environmental Goods and Services Sector, EGSS), can be tested at a later stage. The use of the CEPA classification (as well as of the classification to be adopted for the RUMEA account, such as CRUMA) has the advantage to allow the classification of environmental motivated transfers to be coherent with the EPEA and the next-to-be-developed RUMEA. Box 4 : Discussing advantages and disadvantages of using the CEPA and CRUMA classification Which are the advantages and disadvantages in using the CEPA, CReMA or CRUMA classification for environmentally motivated transfers? Which are the alternatives, if any? To which extent is it possible to classify environmental motivated transfers by environmental domain? 3.3.2. Classification of potentially damaging for the environment transfers The issue of classification of transfers which can be potentially damaging for the environment has not been discussed yet. Also in this case, the work on identifying and comparing data between countries will need to be tackled first, before the suitability of existing classifications can be assessed. 3.4. Work on how to establish a guideline for the collection of data The methods for distributing the transfers between industries need to be explicitly described in order to harmonise the data collection. Subsidies_TF_way forward_final 26/02/2010 10/10 ICEDD asbl - MO