3 DIRECTORATE GENERAL FOR INTERNAL POLICIES POLICY DEPARTMENT A: ECONOMIC AND SCIENTIFIC POLICY ENVIRONMENT, PUBLIC HEALTH AND FOOD SAFETY EU Subsidies fr plluting and unsustainable practices STUDY Abstract The reprt prvides an verview f the envirnmental relevance f the largest fields f expenditure within the EU budget. Based n existing methdlgies, it assesses the sustainability level f key budget items in the EU sectral plicies. It als prvides recmmendatins in the cntext f a ptential refrm f subsidies that wuld cntribute t the alignment f the EU budget twards a mre sustainable grwth as called in the EU2020 Strategy. IP/A/ENVI/ST/ February 2011 PE EN
4 This dcument was requested by the Eurpean Parliament's Cmmittee n Envirnment, Public Health and Fd Safety. AUTHOR(S) Mr Arkaitz USUBIAGA, Wuppertal Institute fr Climate, Envirnment and Energy Mr Philipp SCHEPELMANN, Wuppertal Institute fr Climate, Envirnment and Energy Ms Bettina BAHN-WALKOWIAK, Wuppertal Institute fr Climate, Envirnment and Energy Mr Matthias ALTMANN, Ludwig-Bölkw-Systemtechnik GmbH Ms Ruta LANDGREBE, Eclgic Institute Mr Ralph PIOTROWSKI, Eclgic Institute RESPONSIBLE ADMINISTRATOR Catherine LAURANSON Plicy Department Ecnmic and Scientific Plicy Eurpean Parliament B-1047 Brussels LINGUISTIC VERSIONS Original: EN Executive summary: DE/FR ABOUT THE EDITOR T cntact the Plicy Department r t subscribe t its newsletter please write t: Manuscript cmpleted in February Brussels, Eurpean Parliament, This dcument is available n the Internet at: DISCLAIMER The pinins expressed in this dcument are the sle respnsibility f the authr and d nt necessarily represent the fficial psitin f the Eurpean Parliament. Reprductin and translatin fr nn-cmmercial purpses are authrized, prvided the surce is acknwledged and the publisher is given prir ntice and sent a cpy.
5 EU Subsidies fr plluting and unsustainable practices CONTENTS CONTENTS 3 LIST OF ABBREVIATIONS 5 LIST OF TABLES 7 LIST OF FIGURES 8 LIST OF BOXES 8 EXECUTIVE SUMMARY 9 1. INTRODUCTION Subsidies as a pervasive phenmenn Plitical cmmitments t remve EHS Changing unsustainable trends Scpe f the assessment AGRICULTURE Intrductin Imprtance f the Cmmn Agricultural Plicy Characteristics f the 2003 CAP Refrm and the 2008 "Health Check" Types f subsidies and funding instruments fr the agriculture sectr Current CAP debate (CAP pst-2013) Envirnmentally Harmful Subsidies Definitin and Classificatin f Envirnmentally Harmful Subsidies Assessment f Envirnmental Impacts Cnclusins and recmmendatins STRUCTURAL AND COHESION POLICY Allcatin structure and pririties f Structural and Chesin Funds Methdlgy f reprt The prgramming prcess f the chesin plicy The evaluatin prcess f the chesin plicy Results f the mid-term evaluatin f the Eurpean Reginal Develpment Fund Slw prgress in selectin f resurces and implementatin prcess The relatin between earmarking f funds and sustainable develpment Identificatin f ptentially envirnmentally harmful subsidies within the Eurpean Reginal Develpment Fund
6 Plicy Department A: Ecnmic and Scientific Plicy Prprtins within the envirnmental funding framewrk Rad-based transprt infrastructure investments Direct and indirect climate change mitigatin Further aspects: Waste incineratin and bidiversity Cnclusins and recmmendatins Earmarking t envirnmental pririties and green public prcurement f prjects Review f evaluatin prcess - clsing the knwledge gap Increase f plicy cherence - clsing the gvernance gap TRANSPORT AND ENERGY Methdlgy Definitin f a subsidy Identificatin and evaluatin f envirnmentally harmful actin Transprt Transprt in the EU budget Size f transprt expenditures in the EU budget Sustainability f EU transprt expenditures Energy Energy in the EU budget Size f energy expenditures in the EU budget Sustainability f EU energy expenditures Cnclusins and recmmendatins FISHERIES Intrductin Overview f fisheries subsidies in the Eurpean Unin Cnclusins and recmmendatins CONCLUSIONS AND RECOMMENDATIONS 70 REFERENCES 73 ANNEX 1: Tls fr the identificatin f envirnmental harmful subsidies 84 ANNEX 2: Agriculture 88 ANNEX 3: Transprt and energy 93 ANNEX 4: Fisheries 106 4
7 EU Subsidies fr plluting and unsustainable practices LIST OF ABBREVIATIONS ACP Africa, Caribbean and Pacific AES Agri-envirnmental scheme CAP Cmmn Agricultural Plicy CCS Carbn Capture and Strage CF Chesin Fund CFP Cmmn Fisheries Plicy CMO Cmmn market rganisatin CR Cmmittee f the Regins CSE Cnsumer Supprt Estimates CSG Cmmunity Strategic Guidelines EAFRD Eurpean Agricultural Fund fr Rural Develpment EAGF Eurpean Agricultural Guarantee Fund EFF Eurpean Fisheries Fund EHS Envirnmentally Harmful Subsidies EIA Envirnmental Impact Assessment ERDF Eurpean Reginal Develpment Fund ESA Eurpean system f accunts ESF Eurpean Scial Fund FIFG Financial Instrument fr Fisheries Guidance GATT General Agreement n Tariffs and Trade GDP Grss Dmestic Prduct 5
8 Plicy Department A: Ecnmic and Scientific Plicy IRENA Indicatr Reprting n the integratin f ENvirnmental cncerns int Agricultural plicy IUU Illegal, unreprted and unregulated fishing JRC Jint Research Centre NRP Natinal Refrm Prgrammes NSDS Natinal Sustainable Develpment Strategies NSRF Natinal Strategic Reference Framewrk NUTS Nmenclature f Territrial Units fr Statistics OECD Organisatin fr Ecnmic C-peratin and Develpment PSE Prducer Supprt Estimates RTDI Research, Technlgical Develpment & Innvatin SAPS Single Area Payment Scheme SDI Sustainable Develpment Indicatr SDS Sustainable Develpment Strategy SEA Strategic Envirnmental Assessment SPS Single (Farm) Payment Scheme TEN-E Trans-Eurpean netwrks Energy TEN-T Trans-Eurpean Netwrks Transprt TERM Transprt and Envirnment Reprting Mechanism WTO Wrld Trade Organizatin 6
9 EU Subsidies fr plluting and unsustainable practices LIST OF TABLES TABLE 1 Estimates f the annual public subsidies fr the perid TABLE 2 EU 2011 draft budget...20 TABLE 3 Main categries f PSE measures and their relative impacts n the envirnment.28 TABLE 4 Objectives, Structural Funds and instruments, TABLE 5 Allcatin f resurces within the envirnmental framewrk f Structural and Chesin Funds and share f funding in per cent, TABLE 6 Transprt in the EU budget...51 TABLE 7 EU transprt cmmitments in the cnvergence regins thrugh the Structural and Chesin Funds...52 TABLE 8 EU transprt cmmitments...52 TABLE 9 Summary f unsustainable EU budget expenditures in transprt...57 TABLE 10 Energy in the EU budget...58 TABLE 11 EU energy cmmitments thrugh the Structural and Chesin Funds...59 TABLE 12 EU energy cmmitments thrugh the Structural and Chesin Funds by tpic TABLE 13 EU energy cmmitments...60 TABLE 14 Summary f unsustainable EU budget expenditures in energy...64 TABLE 15 Set f Agri-Envirnmental Indicatrs...85 TABLE 16 Set f TERM indicatrs...86 TABLE 17 Set f indicatrs fr energy and envirnment...87 TABLE 18 Set f Sustainable Develpment Indicatrs
10 Plicy Department A: Ecnmic and Scientific Plicy UUTABLE 19 Overview f EFF cntributins and cre fisheries data per Member State LIST OF FIGURES FIGURE 1 CAP expenditure and CAP refrm path (2007 cnstant prices)...23 FIGURE 2 Structure f direct payments and market measures in FIGURE 3 Allcatin between themes f Chesin Plicy fr FIGURE 4 Pririty themes* in Natinal Cnvergence Operatinal Prgrammes fr the prgramming perid referring t Lisbn and Gthenburg themes...37 FIGURE 5 Pririty themes* in Natinal Cmpetitiveness Operatinal Prgrammes fr the prgramming perid within referring t Lisbn and Gthenburg themes...38 FIGURE 6 Prprtins f envirnmental funding fr different themes, FIGURE 7 Breakdwn f EU planned investments fr transprt in EU-27 accrding t mde, FIGURE 8 Breakdwn f EU funds fr transprt in CEE10 cuntries accrding t mde, FIGURE 9 Allcatin f climate change investments accrding t categry themes, FIGURE 10 EHS refrm tl...50 LIST OF BOXES Bx 1 Subsidies fr the raw tbacc sectr...29 Bx 2 Structural and Chesin Funds fr incineratin plants...46 Bx 3 Via Baltica expressway
11 EU Subsidies fr plluting and unsustainable practices EXECUTIVE SUMMARY Subsidies are a pervasive phenmenn intercnnected directly r indirectly t mst f the cnsumptin and prductin activities that take place in ur daily lives. Several sectrs benefit frm supprt given by natinal gvernments that in principle seek t achieve laudable bjectives, but that in many cases ends up having envirnmentally harmful sideeffects and ften benefiting pwerful rather than needy grups. Subsidies are nt inherently bad, nevertheless, when they are aligned twards sustainability, they might have t cmpete with ther unsustainable activities that als receive public supprt, which culd decrease their efficiency. The EU has cmmitted itself t gradually phase ut envirnmentally harmful subsidies (EHS) fr example thrugh the refrm f agricultural and fisheries plicies. Nnetheless, there is still a lt t d t have a mre sustainable EU budget and thus, cmpatible with the targets f the EU2020 Strategy. This reprt prvides an verview f the EU sectral plicies (agriculture, chesin plicy, transprt, energy and fisheries) that benefit frm public supprt and that, at the same time, are linked t the main unwanted side effects. Explicitly, the scpe is set n n-budget subsidies (i.e. subsidies visible in the EU budget as public expenditure). Agriculture The Cmmn Agricultural Plicy (CAP) cmprises market related expenditure and direct aids (first pillar, 42.5 billin) as well as expenditure n rural develpment (secnd pillar, 14.4 billin) in It is thus ne f the largest items f the EU budget. The 2003 CAP refrm remved a large part f the envirnmentally harmful subsidies by decupling agricultural supprt frm prductin levels. This reduced incentives leading t ver-prductin and intensificatin f farming methds. The new supprt-scheme is subject t "crss-cmpliance" cnditins relating t envirnmental, fd safety and animal welfare standards. Nnetheless, the envirnmental benefits delivered by these standards are disprprtinately small as cmpared t the prvided payments. Likewise, mst f the Member States have riented the decupled payments twards histric prductin levels, which particularly favurs large and intensive prducers instead f small farm units that supprt the deliverance f envirnmental benefits via traditinal farming. 9
12 Plicy Department A: Ecnmic and Scientific Plicy RECOMMENDATIONS The payment scheme shuld be rientated twards envirnmental cmpnents ging beynd the existing crss-cmpliance standards and thereby supprting traditinal farming methds rather than intensive prductin schemes. The envirnmental benefits delivered by crss-cmpliance standards are disprprtinately small as cmpared t the prvided payments. The adptin f measurable targets and the establishment f an utput mnitring mechanism wuld increase the effectiveness f the crss-cmpliance standards. Cnsidering the need t spend public mney fr public gds, the basic payments shuld be linked t the payments that remunerate the prvisin f public gds and maintain the natural capital. The remunerated public gds shuld be extended and take int cnsideratin a higher variety f public gds prvided by agriculture. Structural and Chesin Plicy The Eurpean Structural and Chesin Funds are mst essential t reduce scial and ecnmic disparities between the Eurpean regins. The chesin plicy earmarks 344 billin fr the prgramming perid , distributed amng its three pririties: cnvergence 1 (81.5%), reginal cmpetitiveness and emplyment 2 (16%) and territrial cperatin 3 (2.5%). The envirnmental expenditure amunts t 105 billin, the highest ever. Abut 21 categries (ut f 86) have an eclgical fcus, such as prmtin f clean urban transprt, renewable energy (wind, slar, bimass, hydrelectric, gethermal and ther), energy efficiency, assistance t SMEs fr the prmtin f envirnmentally-friendly prducts and prductin prcesses (ec-innvatin in SMEs), cycle tracks, etc. At large, the expenditure is mre riented twards end-f-pipe appraches such as management f husehld and industrial waste, rehabilitatin f industrial sites and cntaminated land (ca. 69% f the financial vlume), than twards preventin appraches such as integrated preventin and pllutin cntrl r risk preventin (ca. 31% f the financial vlume) f prjects. 1 Cnvergence cmprises prmtin f grwth-enhancing cnditins and factrs leading t cnvergence fr the least-develped Member States and regins. 2 Reginal cmpetitiveness and emplyment cmprises prmtin f ecnmic change thrugh innvatin and the supprt f the knwledge sciety, entrepreneurship, prtectin f the envirnment, and imprvement f their accessibility. 3 Territrial cperatin, including crss-brder and transnatinal cperatin, cmprises jint lcal and reginal initiatives, and interreginal c-peratin and exchange f experience. 10
13 EU Subsidies fr plluting and unsustainable practices Mre than 62% f the budget is selected fr infrastructure investments prjects in the field f transprt (i.e., envirnmentally-friendly transprt mdes such as railways) and waste and waste water. A further 13% refers t rehabilitatin and regeneratin prjects. It is striking that direct climate change investments nly amunt t 9.1% (2.6% f the ttal Structural and Chesin Funds budget), as well as that subsidies fr renewable energies represent 8.6% f the envirnmental budget (1.5% f the ttal budget). Supprt fr ecinnvatin is nly 2.4% (0.7% f ttal funding), while prjects within the field natural heritage and bidiversity amunt t 5% (1.5% f ttal). RECOMMENDATIONS The EU chesin plicy shuld supprt Eurpean pririties. Thus, investments shuld fcus n prjects that deliver the largest envirnmental benefits at Eurpean level. In this cntext, financial supprt given thrugh the Structural and Chesin Funds shuld be envirnmentally and cst effective in the lng term. Therefre, the EU shuld primarily supprt slutins that have prven envirnmental and cst effectiveness ver time. In rder t increase the cherence within and acrss Eurpean plicies, the Structural and Chesin Funds shuld be part and result f an integrated strategy. The systematic inclusin f the term resurce efficiency in chesin plicies is necessary t increase the cherence between plicies. The assessment f the effectiveness f the Structural and Chesin Funds requires mre transparency and better reprting frm Member States. In this cntext, the reprting methdlgy shuld rather fcus n results than n financial perfrmance. T this end, a cmprehensive system f envirnmental reprting mechanisms shuld be applied thrughut the whle prgramming cycle. The ex ante, mid-term and ex pst evaluatins shuld make use f the Sustainable Develpment Indicatrs (SDIs). The current indicatrs used primarily fcus n management and financial cntrl. Evaluatin shuld intrduce indicatrs fr measuring the envirnmental impacts. Green Public Prcurement shuld be incrprated as a cnditin fr granting funds. Transprt and energy Transprt and energy expenditure is related t several headings f the budget. Cmmitments fr transprt expenditures in the 2011 draft EU budget amunt t 13.8 billin. 85% f the cmmitments are thrugh the Structural and Chesin Funds including cntributins t Trans-Eurpean Netwrks Transprt (TEN-T) prjects, and 9% are fr TEN-T prjects directly. Transprt research has a 4% share, and inland, air and maritime transprt 1%. In general terms, the EU budget needs t allcate better the expenditure related t transprt and undertake a shift f resurces t mre sustainable transprt areas. As fr energy, the expenditures in the 2011 draft EU budget amunt t 2.9 billin. 54% f the cmmitments are thrugh the Structural and Chesin Funds including cntributins t Trans-Eurpean Netwrks Energy (TEN-E) prjects, 1% is fr TEN-E prject directly. 11
14 Plicy Department A: Ecnmic and Scientific Plicy Fusin energy has a share f 14%, energy research under different titles 12%, nuclear energy under different titles 12%, and cnventinal and renewable energies 4%. Althugh energy expenditure appears t perfrm well, the results f the assessment carried ut have t be interpreted cautiusly as several items have been left ut the assessment (e.g. fusin and fissin energy, carbn capture and strage) due t the uncertainty related t their sustainability. RECOMMENDATIONS Supprt fr the transprt sectr shuld ensure that there is n assciated increase f the greenhuse gas emissins. Thus, the EU shuld re-fcus its investment n urban and reginal public transprt, sustainable traffic management, cycling, rail transprt, and intermdal infrastructure shifting freight frm rad t rail. On the basis f the assessment carried ut, a shift f the investment shuld be encuraged frm nn-sustainable t sustainable energy surces, which wuld cntribute t the reductin f greenhuse gas emissins. A synpsis f existing sectral envirnmental and sustainability assessments (like TERM r the Energy and Envirnment Reprts f the Eurpean Envirnment Agency) is an essential recmmendable tl t deliver insights f plicy impacts and t vercme methdlgical and data cnstraints that limit cmparisns f specific sectral analyses. Mrever, fcused analyses f certain budget headings and budget titles with respect t sustainability indicatrs are als recmmended. Fisheries The Eurpean Fishing industry faces immense challenges in ecnmical, eclgical and scial respects. In an effrt t supprt the transitin f the sectr, the Eurpean Unin and its Member States grant subsidies t the fishing industry. A variety f subsidies have been eliminated, such as the cnstructin f new vessels, and funds have been redirected t prgrams aimed at reducing fleet capacity, but the verall fishing capacity has nt been sufficiently reduced t date. In fact, the EU has failed t meet the sustainability bjectives laid ut in the CFP. T many bats cntinue t chase t few fish; subsidies have cntributed t this. Likewise, it remains a challenge t align the respective management and cntrl systems in such a way that fisheries subsidies d nt cause harm t fish resurces, which wuld require an imprvement f the regulatry framewrk. 12
15 EU Subsidies fr plluting and unsustainable practices RECOMMENDATIONS Supprt t the fisheries sectr shuld be subject t the achievement f the bjectives f the CFP and t the fulfilment f reprting requirements by Member States. Thus, nn-cmpliance with the CFP rules shuld have an effect n the availability f funds. Mre effrts n the fstering transparency are needed t assess the extent t which the subsidy helps t achieve the bjectives f the CFP. Ptentially gd subsidies shall be fstered, such as participatin in the mnitring and cntrl regime f fisheries; scientific research fr stck assessments; reductin f impacts n marine habitats and ecsystems; research and training in the use f envirnmentally friendly fishing techniques r aquaculture activities; and retraining fishermen fr alternative emplyment pprtunities. Ptentially harmful subsidies shall be phased ut, such as cntributins t perating csts, prcessing activities r price supprt; aid fr individual fishing peratins and vessel mdificatin; and payments fr fishing access in third cuntry waters. Cnclusin EU subsidies in the fields f agriculture, chesin plicy, transprt, energy and fisheries have unintended harmful effects in the envirnment. The results f this study suggest a mre detailed assessment that wuld eventually lead t a phasing ut f envirnmentally harmful subsidies. T this end, it is necessary t assess in depth the direct and indirect effects f current EU subsidy framewrk and prceed t refrm. The EHS refrm tls culd be a gd basis fr the prpsed assessment (fr mre infrmatin see Valsecchi et al., 2009). A study drawing n cuntry-specific research and expertise within Member States pints ut that (t)here is general recgnitin that the structure f the budget des nt reflect the EU s plitical bjectives and plicy pririties. In brad terms, the cnsultatin indicates a need fr increased spending n the envirnment, energy and cmpetitiveness, research and knwledge as well as greater crss-plicy cherence in meeting EU gals in these areas ( ) (Bachtler et al., 2009). The assessment f several budget items has highlighted the need f mre transparency in terms f sund infrmatin and mnitring f the impacts f plicies. The Eurpean Transparency Initiative (Eurpean Cmmissin, 2006b; 2007h), which amng ther issues addresses the management and use f Cmmunity funds, culd be the basis fr this task. Likewise, there is a need t imprve mnitring systems and t increase reprting effrts frm Member States. This culd imprve decisin-making and enable a mre efficient assignment f ecnmic resurces. The current ecnmic situatin prvides a gd pprtunity t change trends and carry ut a shift frm envirnmentally harmful subsidies twards subsidies that culd supprt the EU2020 visin. Investments n envirnmentally friendly-agriculture, energy and resurce efficiency, renewable energies, sustainable mbility, ec-friendly technlgies, etc. culd imprve cmpetitiveness and increase emplyment in sectrs that are cnsidered t be crucial in the shrt, mid and lng term. 13
16 Plicy Department A: Ecnmic and Scientific Plicy RECOMMENDATIONS Carry ut a full EHS refrm tl analysis f the critical budget titles in rder t prvide clear and well-funded recmmendatins fr plitical actin t remve unsustainable elements f the EU budget. When granting funds, the EU shuld ensure that the envirnmental pillar is nt undervalued in benefit f ther interests, creating thereby win-win situatins. Increase the effrts in fstering sund infrmatin and transparency in line with the Eurpean Transparency Initiative. Encurage Member States t increase their effrt in reprting s as t imprve the assessment f the effectiveness f the funds ntably with respect t Structural and Chesin Funds and fisheries, and t prvide thereby the necessary infrmatin t allw an effective allcatin f funds. 14
17 EU Subsidies fr plluting and unsustainable practices 1. INTRODUCTION Subsidies are a pervasive phenmenn intercnnected directly r indirectly t mst f the cnsumptin and prductin activities that take place in ur daily lives. Sectrs such as agriculture, energy, water, transprt, manufacturing, frestry r fishery benefit frm supprt given by natinal gvernments that in principle seek t achieve laudable bjectives, but that in many cases ends up having envirnmentally harmful side-effects (OECD, 2005) and ften benefiting pwerful rather than needy grups (Myers and Kent, 2001). Currently there are n universally accepted definitins f what subsidies and envirnmental harmful subsidies (EHS) are. The existing definitins depend n the perspective and characteristics f the assessments and s d the issues cvered 4 (e.g. n-budget subsidies, ff-budget subsidies, internalisatin f externalities, etc.). A number f studies have examined envirnmentally harmful subsidies in recent years, fr example Valsecchi et al. (2009), FÖS (2008), IEEP et al. (2007), Brunner and Huytn (2007), OECD (2005) and Kjellingbr and Sktte (2005). Valsecchi et al. (2009) prvide the fllwing definitins fr EHS, based n the previus wrk f the OECD (1998; 2005): A result f a gvernment actin that cnfers an advantage n cnsumers r prducers, in rder t supplement their incme r lwer their csts, but in ding s, discriminates against sund envirnmental practices. All ther things being equal, the [envirnmentally harmful] subsidy increases the levels f utput/use f a natural resurce and therefre increases the level f waste, pllutin and natural explitatin t thse cnnected. The use f subsidies is nt new in the ecnmy. Histrically gvernments have tended t manipulate market prices thrugh the use f subsidies in rder t supprt ecnmic sectrs, institutins, business r individuals in the develpment f activities that therwise wuld have develped unfavurably. Public institutins have mainly addressed ecnmic and scial aspects thrugh the applicatin f subsidies, but since the first UN Cnference n the Human Envirnment (Stckhlm 1972) and the increasing prminence f the cncept f sustainable develpment, the imprtance f the envirnmental dimensin is cnstantly grwing and is currently an imprtant mtivatin fr the assignment f subsidies (van Beers and de Mr, 2001). Gvernment interventin in markets usually has a laudable mtivatin targeted at increasing the welfare f sciety. Examples f mtivatins behind subsidies include the prtectin f natinal sectrs frm external cmpetitin, the supprt f emplyment and incme f sme ppulatin segments, etc. (Barde and Hnkatukia, 2003). Unfrtunately, subsidies d nt always fulfil the intended purpse and have negative side effects. In this vein, these actins can result in failures that have cunterprductive effects in regard t ther plicies aimed at crrecting market failures r in unintended negative welfare effects that are larger than the psitive welfare effects achieved by the subsidy (van Beers and de Mr, 2001). Examples f these subsidies include: 1. agricultural subsidies that fster an intensive mdel f agriculture ften cnnected t lss f bilgical diversity and harmful emissins int sil, air and water; 2. energy subsidies prmting CO 2 -emissins; 15
18 Plicy Department A: Ecnmic and Scientific Plicy 3. subsidies fr fisheries that cntribute t vercapacities in fishing fleets and thus, endangering lcal fish ppulatins; 4. transprt subsidies that prmte unsustainable means f transprt, etc. Subsidies are nt inherently bad. There are subsidies that, fr instance, supprt the develpment f renewable energies, fster envirnmentally friendly agriculture r prmte sustainable means f transprt. Nevertheless, this expenditure is usually inefficient, as these measures need t cunteract the envirnmental damage caused by the EHS. This fact reduces the verall envirnmental gain f the applicatin f subsidies (Barde and Hnkatukia, 2003) Subsidies as a pervasive phenmenn There is n agreement n the ttal mnetary value f subsidies thrughut the wrld. Differences arise nt nly due t the lack f an agreed definitin fr the term subsidy, which in fact changes between sectrs and cuntries, but als fr the limitatin f cmplete data and fr a cmmn accunting framewrk that wuld increase the cmparability f different estimatins acrss sectrs and cuntries. Steenblik argues that effrts shuld be increased t prvide practical criteria t supprt the quantificatin f subsidies rather than t argue fr a cnceptually perfect definitin (IEEP et al., 2007). The OECD is currently wrking n a cmmn reprting framewrk that will supprt the partial vercming f these barriers (ibid.). The OECD estimates that an amunt nt lwer than $400 billin is given fr supprting different sectrs in OECD cuntries. The mst recent sectral data is fr 2002 (Barde and Hnkatukia, 2003; OECD, 2005). Van Beers and de Mr (2001) estimate the amunt f subsidies in OECD cuntries t be at $725 billin per year (fr the perid ) and $1,065 billin fr the whle wrld. This represents abut 4% f the wrld GDP. The structural differences f the public supprt given t different sectrs are shwn in Table 1. Table 1: Estimates f the annual public subsidies fr the perid billin $ OECD Nn-OECD Wrld Natural resurce sectrs Agriculture Water Frestry Fisheries Mining Subttal Energy and industry sectrs Energy Rad transprt Manufacturing industry 55 negligible 55 Subttal Ttal ,065 Ttal in % GDP Surce: van Beers and de Mr (2001). 4 Fr mre infrmatin n the issues cvered by the definitins given by ESA, WTO r OECD see IEEP et al. (2007). 16
19 EU Subsidies fr plluting and unsustainable practices As mentined abve, many f these subsidies have unwanted envirnmental effects and d nt achieve their intended aim. This situatin results in an inefficient allcatin f resurces that culd therwise be used in ther ambits. Fr instance, the amunt f 4% GDP (van Beers and de Mr 2001) dedicated t subsidies is much higher than the Official Develpment Aid (OECD, 2007). It is als higher than the required investment (1% GDP during the next 2 years) t seed a significant greening f the glbal ecnmy in the cntext f UNEP s Green New Deal (UNEP, 2009) r the needed investments t stabilise the atmspheric CO 2 cncentratin at ppm (annual 1% GDP until 2050) (Stern, 2007) Plitical cmmitments t remve EHS The prblem f EHS is nt new, neither is the aim f remving them. Fr example, in 1987 the Wrld Cmmissin fr Envirnment and Develpment mentined in Our Cmmn Future, als knwn as the Brundtland reprt, the distrtins in the envirnment caused by EHS. Since then, the cncept f sustainable develpment has increasingly gained imprtance within and ut f the EU and has thus becme a guiding principle f majr plicies at EU and cuntry level. The imprtance f the remval f EHS frm plicies has had majr recgnitin at all scales during the last decade. The UN highlighted in the frmal utput f the UN Wrld Summit fr Sustainable Develpment f Jhannesburg in 2002 the need t refrm f subsidies that have cnsiderable negative effects n the envirnment and are incmpatible with sustainable develpment (UN, 2002). In this line, the OECD called in its envirnmental strategy fr a fiscal refrm that wuld enable the remval f the EHS (OECD, 2001). Als the EU is has made the remval f EHS a plitical bjective. In this vein, the 6 th Cmmunity Envirnmental Actin Prgramme, which cvers the perid , tk the same bjective (Eurpean Cmmunities, 2002). The Integrated Guidelines fr Grwth and Jbs ( ) and the recently launched EU 2020 Strategy thrugh its Flagship Initiative n Resurce Efficient Eurpe als call fr a refrm t prgressively eliminate the EHS (Eurpean Cmmissin, 2007a; 2010a). The Strategy als emphasises the need t imprve the effectiveness and efficiency f the existing EU budget thrugh strnger priritisatin and better alignment f EU expenditure with the gals f the Eurpe 2020 as the budget must play a central rle in achieving the EU2020 bjectives (Eurpean Parliament, 2010). The Cmmissin has taken the first steps in phasing ut the EHS thrugh the refrm f fisheries plicy and as part f the CAP health check (Eurpean Cmmissin, 2009a). Other actins include the call fr develping a radmap fr a sectral refrm f the EHS aimed at phasing ut EHS (Eurpean Cuncil, 2006; Eurpean Cmmissin, 2007b) and the recmmendatin t develp an indicatr representing relevance f EHS, which wuld be part f the s-called Sustainable Develpment Indicatrs (Eurstat 2007; 2009). Effrts f the EU als include the funding f studies n the pssibilities and barriers fr remving the EHS (see fr example IEEP et al., 2007; Valsecchi et al., 2009). Mre recently the Cuncil cnclusins f 20 December 2010 (Eurpean Cuncil, 2010) have reiterated its "lngstanding invitatin t the Cmmissin t present a radmap fr the remval f subsidies that have cnsiderable negative effects n the envirnment s as t allw the mnitring and further regular reprting n prgress frm 2011 nwards, taking int accunt the Eurpe 2020 Strategy". 17
20 Plicy Department A: Ecnmic and Scientific Plicy 1.3. Changing unsustainable trends The call fr the phasing ut f EHS is unanimus within gvernment institutins at all levels (e.g. UN, OECD, WTO and EU) and civil sciety rganisatins (see fr example EEB 2004a; 2004b; FE, 2010; BirdLife Eurpe, 2010). But if there is an apparent cnsensus n the need t remve EHS, what is hindering the prcess? Van Beers and de Mr (2001) identify three types f bstacles (ecnmic, plitical and institutinal) that hamper the remval f EHS and thus, the extent f what they refer t as the addictin t subsidies. The effectiveness f the barriers depends n the nature f the subsidy and n the level f ecnmic develpment. The ecnmic barriers are the result f the s-called rent-seeking behaviur and f high adjustment csts. The subsidisatin f an activity ften induces the recipient t increase the prductin and the investment in rder t maximize its benefit, which makes him dependent n the subsidy. In these cases, the remval f the subsidy will have imprtant adjustment csts that might lead t bankrupt r t the need t further increase the prductin level in rder t adapt t the new situatin. Plitical barriers arise when rent-seeking behaviur leads t the cnslidatin f pwerful grups (lbbies) that will ppse t a refrm that decreases their prfit. A subsidy refrm makes visible the lsers (the recipients), but des nt clearly expse all the ptential beneficiaries, which creates imbalances n the incentives t defend each grup s interests. Furthermre, the remval f subsidies might als have negative effects n internatinal cmpetitiveness f natinal cmpanies and therefre n emplyment. Institutinal barriers are ften mtivated by the aim f gvernments t get plitical supprt frm the lbbying grups, which are an imprtant piece f plitical stability. Efficiently refrming r assigning a subsidy is nt an easy task. The unintended side effects and the barriers that arise after the earmarking f subsidies shw that it is essential t assess the interlinkages between the ecnmy, the sciety and the envirnment. The way f carrying ut the refrm is als a cmplex issue. EHS can be addressed separately r in a brader cntext that wuld als include the greening f the tax base thrugh an envirnmental fiscal refrm, shifting the tax burden frm welfare-negative taxes (n labur, capital, cnsumptin) t welfare-psitive taxes (n envirnmental externalities), and n refrming subsidies, sme f which are harmful t the envirnment and may have utlived their riginal purpse (EEA, 2006a). The current ecnmic situatin in the aftermath f the financial crisis requires the assessment f the past and the chice f the future (ecnmic) develpment path. Many cuntries within and utside the EU are currently limited by high public deficits, which might create the mmentum fr cutting envirnmentally harmful subsidies and thus, fr alleviating verburdened budgets Scpe f the assessment This reprt identifies the key terms f the EU sectral plicies that will supprt decisinmaking in the cntext f a hypthetical refrm f subsidies that d nt meet the criteria f sustainability. Explicitly, the scpe is set n n-budget subsidies. The n-budget apprach cmprises subsidies that are visible in the EU budget as public expenditure and includes measures such as direct and ptential transfer f funds (e.g. grants, lans in nn-market cnditins, cverage f liability, etc.) and prvisin f gds and services. 18
The - an analysis f plicy papers f the Greens/EFA New Deal Wrking Grup Mara Kuhl Study cmmissined by The Greens/EFA Grup in the Eurpean Parliament, initiated by Elisabeth Schredter in cperatin with Prf.
TOWARDS INTEGRATED REPORTING Cmmunicating Value in the 21st Century ABOUT THIS DISCUSSION PAPER Cntents Abut this Discussin Paper 1 Summary 2 What is Integrated Reprting? Why d We Need Integrated Reprting?
EEA EEA Staff Psitin Nte (April 2013) SPN13/01 ENVIRONMENTAL FISCAL REFORM ILLUSTRATIVE POTENTIAL IN PORTUGAL Prepared fr the cnference Green taxatin: a cntributin t sustainability Lisbn, April 30 th 2013
A Plan t Transfrm the Empire State s Medicaid Prgram Better Care, Better Health, Lwer Csts M U L T I - Y E A R A C T I O N P L A N TABLE OF CONTENTS Intrductin... page 3 Health System Redesign in New Yrk:
The Capacity Develpment Results Framewrk A strategic and results-riented apprach t learning fr capacity develpment The Capacity Develpment Results Framewrk A strategic and results-riented apprach t learning
New Zealand s Climate Change Target Our cntributin t the new internatinal climate change agreement - summary f cnsultatin respnses Disclaimer All reasnable measures have been taken t ensure the quality
Finding the Way: A Discussin f the Swedish Migrant Integratin System Finding the way: A discussin f the Swedish migrant integratin system OECD 2014 1 July 2014 Finding the way: A discussin f the Swedish
Number 13 March 1999 R ELIEF AND R EHABILITATION NETWORK 13 RRN newsletter Imprving aid plicy and practice in cmplex plitical emergencies In this issue... Articles... 1 Cdes f Cnduct: Wh Needs Them?...
Smallhlder Oil Palm Prductin Systems in Indnesia: Lessns frm the NESP Ophir Prject Idsert Jelsma, Ken Giller and Thmas Fairhurst Plant Prductin Systems, Plant Sciences Grup, Wageningen University, Wageningen
A Frrester Ttal Ecnmic Impact Study Prepared Fr KPN The Ttal Ecnmic Impact Of KPN s Managed Vide Services As Used By A Large Financial Service Organizatin Prject Directr: Sebastian Selhrst March 2012 TABLE
Prmting yur rganisatin Overview Welcme t this tlkit n prmting yur rganisatin. The aim f the tlkit is t help rganisatins t achieve their aims and bjectives using the active prmtin f their wrk as ne f their
Eurpean Medicines Agency Lndn, 20 Nvember 2008 Dc. Ref. EMEA/149995/2008 COMMITTEE FOR MEDICINAL PRODUCTS FOR HUMAN USE (CHMP) GUIDELINE ON SAFETY AND EFFICACY FOLLOW-UP - RISK MANAGEMENT OF ADVANCED THERAPY
A Beginner s Guide t Successfully Securing Grant Funding Intrductin There is a wide range f supprt mechanisms ut there in the funding wrld, including grants, lans, equity investments, award schemes and
2010 LIFE AFTER STUDY Internatinal students settlement experiences in New Zealand DOL11566 NOV 10 Authrs Angie Wilkinsn, Statistics New Zealand Paul Merwd, Department f Labur Anne-Marie Masgret, Department
Please cite this paper as: Mickleit, A. (2014), Scial Media Use by Gvernments: A Plicy Primer t Discuss Trends, Identify Plicy Opprtunities and Guide Decisin Makers, OECD Wrking Papers n Public Gvernance,
DIRECTOR S TOOLKIT 2012 Ref. GU102012-1-01EN All rights reserved. The distributin and reprductin f any part f this dcument by any means whatsever, in particular printing, phtcpying, micrfilm r any magnetic
Twards Supprting the Adptin f Sftware Reference Architectures: An Empirically-Grunded Framewrk Silveri Martínez-Fernández Universitat Plitècnica de Catalunya Jrdi Girna, 1-3 08034, Barcelna (Spain) +34
GENERAL EHS GUIDELINES: INTRODUCTION Envirnmental, Health, and Safety General Guidelines Intrductin The Envirnmental, Health, and Safety (EHS) Guidelines are technical reference dcuments with general and
Department f State Develpment, Infrastructure and Planning State Planning Plicy state interest guideline Water quality August 2014 Great state. Great pprtunity. Preface Using this state interest guideline
A Call fr Clarity: Open Questins n the Scpe f FDA Regulatin f mhealth A whitepaper prepared by the mhealth Regulatry Calitin December 22, 2010 Authrs Bradley Merrill Thmpsn Epstein, Becker & Green P.C.
N Unsafe Lift Wrkbk Cver and Sectin Break image prvided curtesy f Arj Canada Inc. Table Of Cntents Purpse f this wrkbk... 2 Hw t use this wrkbk...3 SECTION ONE A Brief Review f the Literature...5 SECTION
SECURITY GUIDANCE FOR CRITICAL AREAS OF FOCUS IN CLOUD COMPUTING V3.0 INTRODUCTION The guidance prvided herein is the third versin f the Clud Security Alliance dcument, Security Guidance fr Critical Areas
THIS PAGE LEFT INTENTIONALLY BLANK THE DEPARTMENT OF DEFENSE CYBER STRATEGY April 2015 THIS PAGE LEFT INTENTIONALLY BLANK THIS PAGE LEFT INTENTIONALLY BLANK TABLE OF CONTENTS I. INTRODUCTION...1 II. STRATEGIC