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Europe Carbon Tax

The European Carbon Taxes and Their Impact on Emissions

What is a Carbon Tax?

As any good economist will tell you, financial incentives are a strong motivator, and financial penalties are arguably stronger. Carbon taxes use this principle to encourage businesses or consumers to reduce CO2 emissions by putting a price on activities or products that are carbon-intensive. Because businesses want to minimize the negative impact on their wallets, they have to reduce their carbon emitting activities. However, finding an effective financial policy to discourage pollution is a complicated process based on political, social and economic factors. Currently, carbon tax policies are implemented widely in Europe, and utilized to a lesser extent (or aren’t utilized at all) in other parts of the world. 

Map showing where carbon taxes are implemented or scheduled

Carbon Tax Rates in Europe

Finland was the first country to introduce a carbon tax in 1990. Today, 19 countries in Europe have carbon taxes. Sweden has a carbon tax that is by far the highest in the EU – a whopping €116.33 per tonne of carbon emissions. Liechtenstein and Switzerland are tied for a distant second; both charge a carbon tax of €85.76 per tonne. On the other side of the spectrum, Poland has the lowest carbon tax rate at €0.07 per metric tonne of emissions. Taxfoundation.org has published a helpful chart of carbon taxes by country for a comparative view.

Map of 2021 Carbon Taxes in Europe

How does Europe stack up on emissions?

The European Union as a whole emits 6.4 tonnes of CO2 per capita. The global average is 4.47. Luxembourg is the highest emitting country in the EU at 15.3 t per capita. Estonia, Czech Republic, the Netherlands and Germany make up the rest of the top five European countries for carbon emissions. 

Many view Sverige to be a success story for its carbon taxes policy. Sweden has decreased its greenhouse gas emissions by 25% since implementing the carbon tax, without stifling their national economy. Today, Sweden’s emissions are among the lowest in Europe.  

Who Pays Carbon Taxes?

There are various scenarios for levying emissions taxes at different points of the journey between production and consumption. In some cases, refineries or other process industries are charged based on an estimated amount of CO2 produced. Sometimes middlemen or distributors pay the carbon tax. A tax is sometimes charged directly at the consumer level, such as on a utility bill or at a gas pump. 

To complicate the picture, some industries are exempt from carbon taxes based on economic, political and social factors. 

Eurostat has published a chart of emissions by source to help us visualize where CO2 emissions are coming from. Energy industries create the most emissions at 28%, followed by fuel combustion from industrial sources such as manufacturing and construction – 25.5%, then transport – 24.6% and agriculture which produces 10.1% of all emissions.

Chart of Greenhouse Gas Emissions by Industry

What is Carbon Trading?

Carbon trading is another financial system designed to limit the amount of greenhouse gases that can be produced. Participating nations agree to measure and cap the amount of greenhouse gas emissions to a quantified level, helping them meet their commitments under the Paris Agreement. Within each nation, the government sets the maximum amount of emissions for various types of industry. If an entity wants to exceed their allocated emissions level, they must purchase carbon credits from one who has not used their full allotted amount. 

In some cases, carbon trading provides an income stream option for organizations that achieve a negative carbon footprint by removing carbon from the atmosphere. Critics of carbon trading say that these structures permit ongoing damage to the environment by allowing pollution to continue, while advocates argue that carbon trading establishes limits and financial incentives for the transition to a green economy.

Carbon Taxes Revenue Spends

How much revenue is generated by carbon taxes around Europe? France brings in the largest amount of revenue from carbon taxes  worldwide: $9.6 billion in 2020. Sweden generated $2.3 billion, and the UK’s carbon tax revenue was just under $1 billion.

Chart of carbon tax revenue by country and how it is used

The European countries utilize carbon tax revenues differently based on their respective policies and agendas. In 2018, 38% of carbon tax revenues in Europe went toward countries’ general budgets, while 41% were spent directly on climate projects. France split the carbon tax revenue, so that 22% was allocated to climate projects, and the rest went into the general budget. Sweden applies all of the carbon tax revenue to their country’s general budget, and it accounted for 1-2% of Sweden’s national  budget in 2018. Some regions, such as Finland, opt to return all or part of the revenues to taxpayers in the form of tax cuts or dividends. 

The Impact of Carbon Taxes on Emissions at Oil Refineries and Oil Recyclers

Carbon taxes are calculated based on the amount of carbon dioxide gas produced by a given activity, industry or product. The petroleum oil refining industry produced 1.3 Gigatons of CO2 emissions in 2018. “Some oil and gas companies in Europe are already paying up to 10 percent of their operating costs in carbon taxes,” according to Zomo Fisher, VP of sustainability at a Nordic oil and gas company. 

Oil refineries are also a significant source of VOC emissions and hydrocarbon pollution in water. Regulatory bodies have yet to come to a consensus on standardized limits for VOC (volatile organic compounds) emissions. Instead VOCs are controlled by process regulations and penalties for infractions; but growing concern about environmental and health issues related to VOC emissions is likely to lead to stronger regulation in the near future. 

Even though other emissions of carbon — oil discharged to effluent for example — are not directly taxed in a carbon pricing scheme, there can still be a positive net effect on water quality from financial policies like carbon taxes. As carbon pricing models help bring clean energies and industries into a more competitive balance, carbon emissions to both air and water will naturally decrease.  

Use of SurfCleaner Hybrids Reduces Emissions

Carbon taxes are a good lever that can be used to decrease industries’ polluting activities which accelerate climate change. SurfCleaner helps refineries, petrochemical plants, oil recyclers, industries and oil ports reduce their emissions and their carbon taxes, while complying with national environmental regulations. 

One of the challenges SurfCleaner helps solve is removing thin oil sheen from water. SurfCleaner skimmer separator hybrids are the most efficient technology for separating hydrocarbon sheen from water. 

API separators and similar gravity tanks that are used for oil water separation can remove heavy particles, but they are not effective for removing thin sheen of hydrocarbons that float on top of industrial wastewater. Nor are traditional oil skimmers able to fully remove thin oil sheen. At oil separation facilities, floating diesel, thin oil sheens or other light hydrocarbons tend to evaporate into the air, resulting in product loss and alarming VOC emissions.

One SurfCleaner customer, Sonatrach Raffeneria Italiana, has this to say after installing two SCO 8000 units: “SurfCleaners automatically adapt the inflow depending on the thickness of the oil – from light fractions to thick oil – SurfCleaners can work with every type of slop. Before the SurfCleaners we had to manually control the speed of the disc skimmers, which consumed many man hours. We have been able to reduce our VOC emissions considerably, and we can re-refine the oil that is separated, a double goal achieved in terms of environmental sustainability.”

Suitable for installation at refineries and industries, the SurfCleaner SCO 8000 is a skimmer separator hybrid that can manage all types of oily wastewater – from thin sheens to heavy oil – at industrial scale and continuously recover up to 8,000 liters of oil per hour while being extremely cost efficient compared to traditional skimmers. 

Resources related to Carbon Taxes

Carbon Taxes in Europe -2021 

World Bank Carbon Pricing Dashboard

European Commission Emissions cap and allowances

Carbon Tax Revenues by Country

China’s Greenhouse Gas Emissions

Using Carbon Revenues

Challenges and Prospects for Carbon Pricing in Europe

CO2 Emissions by Country 2016 

World Resources Institute – Interactive Chart Shows Changes in the World’s Top Emitters

Greenhouse gas emissions trends and projections in Europe

Share of EU emissions by source

How are emissions by the EU evolving?

CDN Global Water Report

Britannica – Carbon Tax

Carbon Pricing Leadership Coalition

The Carbon Footprint of Water

These Countries Have Prices on Carbon. Are They Working?

How Carbon Tax Works

Pollution Tax

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