Norway Increases Carbon Tax on Domestic Production

Norway will nearly double the carbon dioxide tax rate for its offshore oil and gas production in 2013, the country's environment ministry announced last week.

By raising the tax rate from 210 Norwegian Krone to 410 Krone (or "28 to more than "55) per ton of CO2, the Norwegian government is setting one of the highest carbon tax rates in the world.

“The commitment to the environment must be followed up on in the budget and resolutions,” said Bård Vegar Solhjell, minister of the environment.

Much of the newly generated tax revenue will go into governmental fund devoted to investing in clean energy, the environment and public transportation.

By 2013, 33 countries and 18 so-called sub-national jurisdictions will have some sort of levy associated with the emission of CO2, according to the Australian Climate Commission. In many cases, the tax will not only be a narrow tax on CO2 emissions themselves, but a “carbon price,” a floor on the price of f uels that generate climate-changing emissions fixed by cap and trade schemes as well as taxes on coal, gasoline and transportation.

Many environmentalists are praising Norway's new tax, because it is high. But direct comparisons between carbon emission taxes or disincentives around the world are difficult. For example, Sweden's carbon tax is set at "101 per ton of carbon for consumers, but much less for its industrial producers.

The Australian Climate Commission produced a report to a global context for climate taxes and cost of CO12.  See the graphic above and here showing what countries are doing around the globe. (For a bigger version of the map, click here.)

Australia, the most recent country to impose a new carbon tax, started levying 23 Australian Dollars (about "18) per ton of CO2 emitted in July. Before the tax went into effect the country was one of the world's biggest carbon polluters per capita, emitting 27.3 tons of CO2 per person, per year, ac cording to its own figures.

Though the carbon tax levied in Australia is much lower than the one just announced by Norway, Australian consumers worried that they would feel the effects of their tax in their wallets.

Here is a video produced by Clean Energy Future that sells the relatively unpopular idea.

Norway's steep increase in carbon taxes for energy producers is seen by many as exemplary, especially as it adds to an already green fiscal policy in place in Norway for decades.

”The EU prefers a system that taxes more of what we burn and less of what we earn. If we want to consume less energy, we need a smarter way of taxing,” said Isaac Valero-Ladron, 
EU Spokesman for Climate Action in response to Norway's new tax.

Mr. Valero-Ladron points to the successes of environmentally progressive tax schemes put into place in Northern European countries during the nineties. According to his data, these tax policies have already led to significan tly lower levels of CO2 emissions without impacting economic growth.

“The higher the tax, the more aggressive a signal the government is going to send about the need to lower carbon emissions,” said Janet E. Milne, a professor at the Vermont Law School and the director of its Environmental Tax Policy Institute.

“You have to get fairly high carbon tax rates in order to get a significant long term change in behavior,” she said.