Abstract

The UN System of Environmental-Economic Accounting (SEEA) measures the interlinks between the economy and the environment consistently with National accounts methodology, providing guidance for measuring taxes, subsidies and expenditure on activities which are beneficial to the environment. Statistics on environmental harmful activities and expenditure (e.g. fossil fuel subsidies) are far less developed.
These environmental harmful subsidies are explicit or implicit payments by the Government to other economic actors. Implicit transfers (tax abatement, tax credits, preferential treatment, etc.) and externalities are not directly observable; they may consistently vary between countries and depend on the existing tax structure on fossil fuel products. Moreover, based on available information, it can be inferred that implicit fossil fuel subsidies are much bigger than explicit subsidies.
Eurostat set up in 2023 a voluntary data collection on Potential Environmentally Damaging Subsidies (PEDS). This data collection is the pendant to the environmental subsidies and similar transfers accounts. The latter are very developed in Europe and will be mandatory for production starting from 2025.
The PEDS data collection currently only covers explicit transfers: consequently, it is hard to answer policy questions on fossil fuel subsidies by (official) statistics means in a European perspective.
Still, European official statistics can do much – with zero to minimum additional effort from Member States – by efficiently exploiting data already collected under Regulation (EU) 691/2011.
A prominent case in this domain is the Eurostat project to produce Average Effective Carbon Rates (AECR) for European countries and the EU, broken down by industry/activity.
AECR measure the average price paid per tonne of CO2 emissions by economic agents and it is defined as a ratio between taxes (a subset of energy taxes as reported in the SEEA environmental taxes by economic activity - ETEA) and emissions (a subset of total CO2 emissions reported in SEEA Air Emission Accounts – AEA). This information is already available in Europe, broken down by economic activities of the producers according to the NACE European classification of economic activities, in line with ISIC.
AECR is straightforward indicator for the carbon pricing gap and – based on preliminary analysis – it varies widely between and within European countries.
Available data show that households pay on average 146 euros per tonne of CO2 emitted, while corporations pay 58 euros per tonne. Low price is imposed to emissions caused by the manufacturing industry (NACE C) and the electricity, stream, gas and air conditioning supply industry (NACE D), accounting (combined) account roughly half of EU CO2 emissions.
Collaboration with the European national statistical offices would be needed to benchmark ETEA and AEA info to PEDS data – when available – and/or to fine tune existing estimates to allow for a reliable calculation (e.g. clarifications on the National Tax List in ETEA and/or consistent application of the national accounts residence/national principle).
Ideally, after the initial bilateral interaction with EU Member States, which is necessary at this stage, the AECR broken down by industry/activities could then be produced centrally by Eurostat with a simple ex-post check by countries prior to dissemination.