The European Citizens Initiative fits a broaderproject we called "Social Green New Deal". It's about starting a green new deal that has a social content as well.
We focused on Carbon Pricing because ETS mechanism (Emission Trading Scheme) has been adopted in the EU for years. This mechanism regulates 55% of CO2 emissions (1 billion and 800 thousand tons of CO2).
This means that there is control over emissions. Especially in the energy sector and in the steel and aluminium sectors. There is not a market, not a price. There is a quantitative control mechanism to limit emissions.
There are 2 million tonnes of CO2 left out. Those emissions come from the domestic sector, transports, agriculture and Small Medium Enterprises.
In these cases, it is not possible to kick off a quantitative mechanism. In fact, it is impossible to control the quantity of emissions. Thus the only possible mechanism is a market mechanism; so it's about putting a price on CO2 emissions.
Our proposal suggests to start from a price of 50 euros per ton in 2020. And arrive progressively, increasing the price by 10 euros each year, to reach 100 euros by 2025. The reference point are some estimates made by Steel/Stoern that give these figures. And are lower than those already adopted in Sweden (where the carbon tax is 118 euros for every ton of CO2).
We started the proposal from this market mechanism. To control emissions in these sectors. Then we added two other elements to our proposal.
Imports must be taxed as well. When goods come from outside the European Union, they must be taxed as their peers in the sectors considered.
If I import steel from Russia, at the border I have to pay a carbon price as the producers in the European Union have already paid. This border revenue can be as high as 50 million euros, which will be part of the european budget. By introducing a duty, we contribute to the European budget to start investment measures in renewable energy and so on.
There is an essential element. The levy on CO2 emissions must be returned to the economy. This can happen in two forms:
This applies to everyone. It goes from the EU to the national level, from the regional to the local level. It can ensure a socially equitable transition by supporting lower-income individuals and families. These individuals and families are the ones most burdened by energy taxes. At the same time, this can start a process of tax reform, so that there is more employment in the less advantaged population groups.
These are the three main features of our proposal. This is not a new tax. It's a tool to fix the market that doesn't price natural resources. With carbon pricing instead we give a price and we correct a market failure. Secondly, the dividend we can get from carbon taxes needs to be redistributed for the ecological transition. And third we can reduce the social inequalities that characterise all European countries.
That's why we talk about a Social Green New Deal because it's about a shift from fossil fuels to renewable energy. For clarity, if we make carbon price, subsidies will be a form of administrative investment. It will then be the market that will guarantee the switch to renewables. In fact, carbon price is a difference between what fossil fuels pay for and what renewables pay.
So carbon pricing is an incentive for renewables. 55 billions savings are currently thrown away to support not ecologically advanced sectors. The elimination of the European subsidy means eliminating this waste.
This, on the other hand, must be a tool to reduce the inequalities that have arisen since the Great Financial Crisis.
The "Social Green New Deal" serves to broaden the framework of our proposal. It can bring together all the forces interested in ecological and social objectives.