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A more economic approach to further reduction in greenhouse-gas emissions and air pollution is needed
The Kyoto target on greenhouse-gas emissions should be reached comfortably and emission reduction will be helped by membership of the EU emission trading scheme. However, intentions to give away all permits for free will imply windfall gains for past polluters. Emission trading should be accompanied by an excise duty on household coal to dissuade households from using coal-fired heating which is not subject to the permit system. In addition, plans for new brown-coal power plants and relaxation of environmental regulation for mining brown coal should be reconsidered, both for environmental and cost reasons. More generally, artificially low prices are encouraging energy consumption and the policy of bringing retail energy prices to market levels should be completed. State spending on renewable energy is too high in relation to the estimated gains from lower air pollution and reduced greenhouse-gas emissions and should be cut back to economic levels. Though air pollution has been reduced significantly, levels remain relatively high. More cost-effective instruments need to be used in bringing levels down further. In this regard, the introduction of emission-related taxes on commercial vehicles is welcome and should be extended to all vehicles. The introduction of road pricing in urban areas should also be considered.
GHG emission projections for reference and high scenarios
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1990
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1995
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2000
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2005
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2010
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2015
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2020
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Reference scenario (million tonnes CO2 equivalent)
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187.5
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142.7
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141.8
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126.4
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128.3
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123.8
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121.2
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High growth scenario (million tonnes CO2 equivalent)
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187.5
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142.7
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141.8
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141.5
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141.7
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146.6
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145.9
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Note: Projections have been constructed on the basis of the original value of the total emission balance for 1990.
Source: Ministry of the Environment.
Air pollution emissions in 1990-2000
Source: OECD environmental data, Compendium (2002).
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