No. 1, April 1997

Main articles in brief

Ships worth controlling
It is economically advantagous, and uncomplicated technically, to reduce the emissions of air pollutants from shipping. How the problem can be solved politically is another matter.

Sweden: Going still further
Sweden has managed to reduce its emissions of sulphur by 81 per cent since 1980. Measures now proposed would bring the figure to 86 per cent within the next decade or so. Three-fifths of the additional reduction would come from cutting emissions from ships.

EU Acidification strategy
In its final draft the EU commission is proposing a 50-per-cent gap closure - to bring down the total area in Europe where critical loads are being exceeded from 32.5 to 4.5 million hectares - as an interim target. To attain this, emission ceilings would be set for each country and the measures proposed in various EU directives carried out.

Air quality - new quidelines
The WHO is about to issue revised guidelines for Europe, in a list comprising some thirty pollutants. Outstanding differences compared with the former version will be a halving of the figure for short-time exposure to nitrogen dioxide and the omission of a guide value for particulates.

Eastern Germany
From being among the dirtiest anywhere, since reunification East German power plants have had their emissions of sulphur and nitrogen oxides greatly reduced - despite a continuing wide use of lignite. The worst plants have been closed down and others modernized. New plants are being built to make up for the shortfall in electricity output resulting from the closures.

Proposing a tax shift
Deeming current economic policy to be wrong in assuming labour to be in short supply, and the resources of the environment to be almost endlessly available, the Swedish Society for Nature Conservation is proposing a shift towards lowered taxes on labour and greater taxation of natural resources. It maintains that besides stimulating employment, such a tax system would lessen the effects of human activity on the environment.

Road pricing
According to a recent study in Stockholm, road charges are a powerful and economically attractive instrument to improve air quality and reduce congestion in urban areas. The income could be used to lower income taxes locally, thereby giving a general acceleration of economic growth.

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EDITORIAL

It needn't stop there

A response to the EU commission's proposal for a strategy on acidification can be expected from the union environment ministers when they meet towards the end of June. The proposal, which was approved by the Commission on March 12, would result in a great improvement in the situation as regards acidification. It would reduce the ecosystem area in the EU countries where acid deposition is exceeding the critical load from the 32.5 million hectares recorded in 1990 to 4.5 million by 2010. 

Remarkable though such a reduction might be, 4.5 million hectares is still a very large area (it would be half as much again as the whole of Belgium). It might moreover include the whole area of those ecosystems that are exceptionally sensitive to depositions of acid - in itself a potent reason for setting the sights higher than envisaged in the commission's proposal. It is explicitly stated in the EU's Fifth Environmental Action Programme that the target for environmental quality is to be a state where critical loads for acidification will not be exceeded anywhere in the union. This target was confirmed, too, in the Council Conclusions on Acidification of December 1995, when the Council invited the Commission to develop a strategy for combating acidification.

But there are also other reasons why the Council of Ministers should call for more far-reaching measures.

More can be achieved than the commission has calculated. In the first draft for a strategy it appeared impossible for the target of the Fifth Environmental Action Programme to be met by 2010. This estimate was based solely however on technical measures. Others, such as more efficient use of energy and fuel switching, had simply not been considered.

The cost of the reductions has been grossly overestimated. According to the commission's calculations, the emission reductions needed to attain the interim target of a 50-per-cent gap closure by 2010 would cost the EU countries 7 billion ecus a year. But again, only technical measures have been taken into account, because the non-technical options could not be accommodated in the computer model. Clearly however there are many ways of reducing emissions that would cost less than the most expensive technical methods, and many of these less costly measures will in any case be carried out first.

The cost will be greatly affected by the decision to reduce greenhouse gases. In March the Council of Ministers decided that the EU emissions of greenhouse gases, including carbon dioxide, should be reduced by 15 per cent between 1990 and 2010. The cost estimates of the acidification strategy are based however on an energy scenario that supposes a 10-per-cent increase in carbon dioxide during the period. Even a 10-per-cent reduction in CO₂ emissions would result in a considerable reduction of the amount needed to bring about an abatement of the emissions of the acidifying pollutants SO₂ and NOx - up to 60 per cent in the estimate of the commission's consultant, IIASA.

It would be worthwhile to go further. The ecosystem areas where the critical loads are being exceeded will obviously shrink when the emissions of acidifying pollutants are reduced. But there will also be a great many secondary benefits. It has been shown in an independent study made for the commission that even if only a few of these benefits are counted - the effects on health, structural materials, and agricultural crops - the gain would surpass the cost of the measures for reduction by a wide margin. See AN 5/96, page 5. To these must be added all the other gains, which so far have not been defined in terms of money, such as retained biological diversity, reduced forest damage, and less erosion of cultural objects and buildings.

The aim should therefore be set considerably higher than the 50-per-cent gap closure of the commission's proposal. Taken together with the measures against climate change, much more could be achieved through the acidification strategy for the same cost, or less, as that envisaged for a mere 50-per-cent gap closure.

PER ELVINGSON

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ACIDIFICATION

Advancing plans for a strategy

The last issue of Acid News contained a report on the work that was going on within the European Union to develop a strategy for dealing with acidification. The proposal for a strategy document that was put forward in October has since been further revised, and after adoption by the commission on March 12 presented in the form of a Communication to the Council and Parliament. The commission has also accepted its own environment directorate's proposal for a directive to limit the sulphur content of fuel oil, and one that the EU should ratify the 1994 sulphur protocol.

The commission has followed the environment directorate's line in recommending a 50-per-cent gap closure as an interim target for the new strategy. This means that the ecosystem area where the critical load for acid deposition was being exceeded within each 150x150-kilometre grid cell in 1990 should be at least 50 per cent less in 2010. For the European Union as a whole the result would be that the ecosystem area where the critical limit is being exceeded would be reduced from 32.5 to 4.5 million hectares.

The following are the measures proposed for attainment of the interim target:

• National emission ceilings should be set (see table).
• Specific measures set forth in various EU directives should be adopted (see below).
• All member countries should ratify the second sulphur protocol under the Convention on Long Range Transboundary Air Pollution, thus enabling it to take effect.
• Both the EU and individual member countries should strive to persuade countries outside the union to take further steps, within the Convention or otherwise, to reduce emissions of acidifying substances.
• The member countries should actively push for reduced emissions of sulphur from shipping (see again below).

As can be seen from the table, for some countries no measures will be required beyond those already adopted or planned in accordance with the reference scenario (REF). In general, all ceiling figures should be regarded as approximate. As a result of work just started on a strategy for ozone, adjustments will probably have to be made in the NOx figures in order to arrive at a cost-effective way of attaining the aims both of the acidification and ozone strategies. This in turn will call for adjustments of the ceilings for sulphur dioxide and ammonia. The final draft of a directive on emissions ceilings can be expected early next year.

A revision of the directive on large combustion plants (88/609/EEC) should be ready this autumn. According to the proposed acidification strategy, the revised directive should include national ceilings for emissions from existing as well as new LCPs, based on the country-by-country reductions needed for attainment of a 50-per-cent gap closure.

In March the commission decided, as a part of the strategy, to propose adoption of a directive concerning the sulphur content of certain liquid fuels. According to a draft for this, there would be a general limit of 1 per cent for sulphur in heavy fuel oils, taking effect in 2000. But in areas where there are no local problems of air pollution, and local sources do not contribute significantly to transboundary effects, member states could obtain a derogation allowing them to use heavy fuel oils with a maximum sulphur content of 2.5 per cent. Exemption from the 1-per-cent limit would be granted to combustion plants fulfilling certain requirements in regard to emissions. The limit proposed for sulphur in gas oil would be 0.2 per cent, as in the existing directive 93/12/EEC.

The new fuel-oil directive would be based on the article 130S of the EU treaty, instead of 100A, which was the legal basis for the directive 93/12/EEC. It would allow member countries so wishing to lower the sulphur limit still further, and those already having stricter requirements to retain them. As regards bunker fuels and emissions of sulphur from shipping, it is proposed that the member countries should, "in the context of the revised MARPOL Convention," try to get the Baltic Sea and/or all parts of the North Sea and the English Channel designated as SOx-sensitive zones. The idea is that it should only be permissible to use bunker fuels with a maximum sulphur content of 1.5 per cent in those areas.

No proposals have yet been put forward for ammonia.

The annual cost for a 50-per-cent gap closure, over and above that for the reference scenario, is put at 7 billion ecus. This estimate assumes however that only technical methods will be used to bring down emissions, that the energy use within the EU will increase by 20 per cent between 1990 and 2010, and that the emissions of carbon dioxide will increase by 10 per cent during the same period.

Prior to its previous meeting on January 16, the commission had ordered a study of an alternative "low CO₂ scenario" to see the effect of simultaneously reducing the emissions of carbon dioxide within the EU by 10 per cent. Assuming an increased efficiency in the use of energy, curbing of the expected demand for energy, and increased use of energy from renewable sources, this scenario would lead to smaller emissions of acidifying substances, which in turn would result in the costs of the measures required for attaining a 50-per-cent gap closure being lowered by about 60 per cent - from 7 to 2.9 billion ecus per annum.

This lower figure does not however include costs of bringing about the above-mentioned changes in the energy system. But other studies have revealed great possibilities for reducing the costs if other than technical measures are also applied. In its report to the commission, IIASA had stated that "earlier analysis has demonstrated that non-technical measures, modifications of the energy system (e.g. fuel substitution, energy conservation, etc.) and changes in the economic structures can reduce emission control costs substantially, in certain cases by more than 50 per cent."

The strategy proposal also includes estimates of how a 50-per-cent gap closure would affect concentrations of ground-level ozone. From preliminary analyses it appears there would be marked improvements in those areas where the formation of ozone is limited by the availability of nitrogen oxides - as is the case in most EU countries. But in some parts of northwestern Europe, where volatile organic compounds are the limiting factor for ozone forming, it is not likely that there would be any improvement, but rather some slight worsening of the situation.

MIKAEL JOHANNESSON

The intention is that the council of ministers will be deciding on the commission's proposals at its meeting late in June.

Provisonal national emission ceilings proposed for 2010, to attain the interim target of a 50-per-cent gap closure (GAP), compared with emissions in 1990 and those projected for 2010 under the reference scenario (REF).

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CLIMATE

EU commitments agreed

On March 3 the EU environment ministers agreed that the aim in climate negotiations should be to strive for reductions of greenhouse gases in the industrialized countries by 15 per cent between 1990 and 2010. In aggregate however the commitments now made by the member countries amount to reductions of no more than 10 per cent. How to arrive at the remaining five per cent remains an open question.

The gases covered by the agreement are carbon dioxide, methane, and nitrous oxide - weighted to reflect their global-warming potential over a hundred-year period.

The Netherlands, which is the country now holding the chairmanship, had proposed previously to the meeting that reductions should be so spread among the members that by 2010 the total should amount to 15 per cent. But, as mentioned, with present commitments it would only be 10 per cent - since almost every country wanted a smaller share of the burden than the Dutch had expected of it.

Here follow the figures for each country, showing the reduction or increase in per cent, with the Dutch proposals in parenthesis.

It is not certain whether the EU members will actually have to distribute the remaining five per cent among themselves, since the proposed 15 per cent reduction would only apply if all the industrialized countries were to adhere.

Both the overall EU target and burden sharing among member states will be reviewed after the Third Conference of the Parties to the Climate Convention in Japan next December.

Source: Environment Watch: Western Europe. March 7, 1997.

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OZONE

Strategy started for this too

PARALLEL to its strategy for handling acidification, the EU Commission's environment directorate of has now started work on another to combat the high concentrations of ground-level ozone that plague the EU countries every summer. Knowledge of the harmful effects of ozone on health has expanded of late, adding to the pressure on politicians to do something about this problem too.

Since ground-level ozone is formed from nitrogen oxides and volatile organic compounds, the ozone strategy will concentrate on measures aimed at cutting back the emissions of these two pollutants. There will thus be some overlapping with the strategy on acidification, which also deals with nitrogen oxides, as well as with a number of EU directives that are now being considered or revised, such as those on motor-vehicle standards, fuel quality, emissions from large combustion plants, and evaporation from solvents used in industry.

It appears from the modelling that has so far been done that very heavy reductions will be required both of NOx and VOCs - more than 75 per cent in each case - if ozone concentrations are to be brought down to levels that will be acceptable from the point of view of human health and not cause damage to vegetation. What the interim and/or final aim for the strategy will be has yet to be determined.

The development of an EU strategy for ozone will be coordinated with the work on ozone within the framework directive for air quality (see AN 5/96), and the commission is to have a proposal ready for presentation to the Council of Ministers early in 1998.

The problem of ground-level ozone is not only being attacked at EU level, but also within the Convention on Long Range Transboundary Air Pollution - where ozone figures prominently in a new "super-NOx protocol" that is now in course of development. This new protocol will embrace emissions of nitrogen oxides, volatile organic compounds, and ammonia. It should be ready for signing in 1998.

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RENEWABLES

A strategy for their greater use

THE EUROPEAN COMMISSION has outlined an EU strategy for renewable energy that seeks to double the contribution of that form to energy consumption to almost 12 per cent by 2010. A plan of action is expected later this year as a result of a green paper that was presented last November.

The energy commissioner, Christos Papoutsis, said the 12-per-cent target was realistic "given political will." If attained, it will mean a reduction of carbon-dioxide emissions by 400 million tons a year. A majority of the European energy ministers approved the proposal at its first reading in December. But Britain - which draws just 0.6 per cent of its energy needs from renewables - argued it was too ambitious, while France and Germany spoke out against expecting each country to reach the goal individually. Finland was the only country that wanted a bigger increase.

In its green paper the commission says the union should make renewables more cost-competitive by ensuring that the external costs of other forms of energy are factored into their prices. The member countries using proportionately the greatest amount of renewables are Austria and Sweden (both 24 per cent), Finland (19) and Portugal (17.5 per cent).

Source: Europe Environment No. 489. December 3, 1996.

* COM(96)576. Energy for the Future: Renewable Sources of Energy. Green Paper for a Community Strategy.

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SOLVENTS

Directive proposed

LAST NOVEMBER, after five years of consultation with the member countries and the affected industries, the EU commission issued a proposal for a directive* for curbing the emissions of volatile organic compounds due to the use of solvents in industry.

It estimated that some 400,000 businesses in twenty different trades would be affected by such a directive. Their use of solvents is responsible, according to the commission, for about half of the industrial emissions of VOCs in the union. It is hoped that when the directive is fully applied in 2007, the emissions from these sources will have been reduced by two-thirds from their 1990 levels. By weight, that would amount to a cut from 2.2 million tons per year to 0.7 million.

The directive is regarded by the commission as important for lessening the formation of ground-level ozone, of which VOCs are one of the precursors. It is of course also aimed at reducing people's exposure to the noxious effects of solvents.

The commission's proposal does allow for some freedom for member states and/or the users of solvents. Any country could, instead of imposing general requirements for the use of solvents, set up a national plan allowing reduction trade-offs between different sectors, depending on the national situation.

Of the 4 billion ecus per year that the directive is thought to cost business firms, a relatively large part, 700 million ecus each, will fall on the surface-cleaning and car-coating sectors. It is estimated that the cost per ton of emission that is prevented will be 2000 ecus, as against 3000 ecus per ton for emissions of ozone precursors under the auto-oil program.

* COM(96)538 Proposal for a Council directive on the limitation of the emissions of organic compounds due to the use of organic solvents in certain processes and industrial installations.

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SHIPS' EMISSIONS

Worth controlling

THERE ARE NOW two more reports showing it to be economically advantageous, and uncomplicated technically, to reduce the emissions of air pollutants from shipping. How the problem can be solved politically is another matter.

Until quite recently it has been given little attention, and there is still no detailed information as to the extent of the emissions. For several sea areas, such as the Mediterranean and the Black Sea, there are not even any responsible estimates. It turned out, too, from a recent study of the northeastern Atlantic, made by Lloyd's Register, that the emissions there were three times bigger than had previously been supposed, and that they were now 1.37 million tons of sulphur dioxide a year and 1.94 million tons of nitrogen oxides (se AN 4/95). The former figures, which are still used by the European Monitoring and Evaluation Program in its modelling of acid deposition over Europe, were 0.49 and 0.54 million tons a year.

To the extent that the emissions from land, especially of sulphur dioxide, diminish, the proportion of those from shipping will correspondingly increase, if nothing is done. Calculations made by Det Norske Veritas show an evident risk of shipping becoming the chief contributor to the depositions of sulphur in some areas.

According to several studies, however, measures to control emissions from shipping can be relatively cheap per kilogram of pollutant "saved." The effect of limiting the sulphur content of bunker oil to 1.5 per cent for ships plying in the North Sea and the Baltic has been shown in a report¹ from the International Institute for Applied Systems Analysis (IIASA) which provides the underlying information for the EU Commission in working out a strategy for dealing with acidification within the Union. While the cost for shipping would be 87 million ecus a year, as result of this measure the requirements for emissions from land could be lightened without any scaling down of the desired effect, namely, the 50-per-cent gap closure (see p. 6). Less stringent requirements on land would chop off 1150 million ecus from the sum that would otherwise have been needed for attaining that objective.

Reducing the emissions of nitrogen oxides as well as sulphur from shipping in the Baltic, the North Sea, and parts of the Atlantic would, according to IIASA, be a cost-effective way of reaching a 50-per-cent gap closure. Measures applied to shipping would provide the same environmental gain as any on land, but at a lower cost. The total cost of the 50-per-cent gap closure would be 25 per cent less if controls were also imposed on shipping, compared to that in a scenario where only land-based sources were controlled.

As has just been brought out in a report² from T&E, the European Federation for Transport and Environment, greatly reducing the emissions of acidifying pollutants from ships would not present any technical problems. Sulphur would be simplest to deal with, only requiring a switch to the low-sulphur oil which is already available on the market. Engines would only have to be rebuilt if oils with a very low sulphur content, down to 0.1 per cent, had to be used.

There are a number of technical solutions, of varying cost and efficiency, for controlling nitrogen oxides. Here it is a matter on the one hand of engine adjustment, to avoid the high temperatures at which a great deal of NOx is formed, and on the other of after-treatment of the exhaust gases. The most effective of the latter methods is selective catalytic reduction (SCR), with which the emissions can be reduced by something like 95 per cent. Ammonia or urea is sprayed into the gases before they pass a catalytic converter, where the nitrogen oxides are reduced to nitrogen gas, leaving water as a by-product.

Because shipping is largely an international business, a logical step is to try and bring about global agreements to limit the emissions from it. The body dealing with the matter is the International Maritime Organization (IMO), a UN organ. It was agreed within the IMO in 1991 that the targets for reductions of sulphur dioxide and nitrogen oxides should be 50 and 30 per cent by 2000. A start had also been made the year before on an air-pollution annex to the MARPOL 73/78 Convention.

The procedure has however been long drawn out, and it is widely feared that the annex, which probably will be adopted next September, will be a greatly watered-down document. The draft only contains weak requirements for NOx emissions from new vessels - and none for existing ones - and sets the maximum sulphur content for bunker oil at a level far above the present world average (proposing 4.5-5 per cent, as against 2.8-3.0 per cent).

One possibility would be to have the Baltic and the North Sea defined in the annex as special areas with their own requirements for the sulphur content of bunker oils. The level at present considered is 1.5 per cent. There is already a draft for the Baltic, and several North Sea countries, led by Norway, are pressing for the inclusion of that sea too.

It is still uncertain however what will come out of the negotiations within the IMO. It will in any case take time before an annex can take effect. Better results could probably be obtained, and more quickly, if several countries were to follow Sweden's lead by imposing harbour and shipping dues that are differentiated according to environmental effect.

A strong incitement to action may also come from public opinion. Last year the giant forest-products company, AssiDomän, started using bunker oils with a maximum sulphur content of 1 per cent for its seaborne transports - as a means of furthering its environmental image. Another company, Stora, requires ships carrying its products between the Swedish port of loading in Karlstad and Spain/Portugal to use fuel with a sulphur content of no more than 0.2 per cent.

Since regard for the environment has become a competitive argument for ferry companies, too, operating in inter-Scandinavian trade, they have now been using oil with a sulphur content of less than 0.5 per cent for several years on many of their ships. This was also the reason given by the managing director of the Stena Line for fitting its new ferry Stena Jutlandica for selective catalytic reduction.

PER ELVINGSON

¹ Cost-effective Control of Acidification and Ground-Level Ozone. Second Interim Report. Amann et al. IIASA, December 1996.

² Air Pollution from Sea Vessels. The need and potential for reductions. Oftedal et al. 1996. T&E Report 96/9. Available from T&E, www.t-e.nu.

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LRTAP CONVENTION

Protocols held up for lack of ratifications

ALMOST THREE YEARS after signing, the sulphur protocol adopted under the Convention on Long Range Transboundary Air Pollution has still not been ratified by a sufficient number of countries. Nor has that on volatile organic compounds, which was signed as far back as 1991. So neither has been able to take effect.

Ratifying an international agreement means that the text of the agreement has received the assent of the legislatures in the signatory countries. In both of the above cases the protocol will come into force only after ratification by sixteen of the contracting parties.

So far the VOC protocol has been ratified by fourteen countries. Among the signatories that have not done so are Belgium, Bulgaria, Canada, France, Greece, Portugal, Ukraine, the United States and the European Union.

As regards the sulphur protocol the situation is as follows:

HAVE RATIFIED: 
Norway, Sweden, the Netherlands, Luxembourg, United Kingdom.

ANNOUNCING THAT THEY HAD OR WERE ABOUT TO RATIFY*: 
Czech Republic, Austria, Belgium, Canada, Denmark, Greece, Slovenia, Switzerland.

NOT ANNOUNCING THAT THEY ARE ON THE WAY TO RATIFYING: 
Bulgaria, Croatia, Finland, France, Germany, Hungary, Ireland, Italy, Liechtenstein, Poland, Russian Federation, Slovakia, Spain, Ukraine, and the European Union.

There are a number of countries that have not yet signed the sulphur protocol, among them being Belarus, Latvia, Lithuania, Romania, Portugal, and Turkey.

Estonia is not even a member of the Convention.

MIKAEL JOHANNESSON

* Announcements made at a meeting with the Executive Body of the Convention last November.

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GERMAN EAST

Startling reduction of emissions

AT THE TIME of German reunification in 1990 there was a sharp contrast, in environmental respects as well as others, between the eastern and western parts of the country. The East German emissions of sulphur in particular were enormous. They were in fact probably the highest in the world, per capita. This was largely due to the large-scale burning of lignite.

As from July 1, 1990, however, the West German environmental laws began to be applied in the East. Plants deemed to have only a limited remaining lifespan were allowed to continue as they were until 1999, while the rest had to meet western requirements at the latest by June 30, 1996. In December 1990 the whole of the coal-fired power sector in eastern Germany was brought under a single company, the newly started Vereinigte Energiewerke AG, VEAG.

The plants burning lignite, with a total capacity in 1990 of 12,750 megawatt (MW), were in a bad state generally. The only means employed for cleaning the flue gases were electrostatic precipitators, and even they were badly maintained and basically inefficient. It was decided that the worst plants should be successively closed down, and by June 1996 some 5500MW had been decommissioned, to be followed by at least 3000MW by 1999. But eight 500MW units were to be modernized: six at Jänschwalde and two at Boxberg.

All eight of these 500MW units have been equipped for FGD, flue-gas desulphurization. While the actual processes differ slightly, in every case the flue gases are sprayed with a limestone-water suspension, which captures 95 per cent of the sulphur dioxide. A good-quality gypsum is obtained as a byproduct.

The emissions of nitrogen oxides were lowered by making various modifications in the combustion process. This has enabled them to be reduced by about 60 per cent at a relatively low cost.

The upgrading was finished by June 1996. Although desulphurization is said to lower the plants efficiency somewhat, renovations and modifications in other respects have resulted in a net increase in efficiency of 10 per cent, from 32 to more than 35 per cent. The cost, in terms of energy output, has amounted to 1.6 pfennig per kilowatt-hour, as against an estimated 2.2 pfennigs before the change.

To compensate for the loss of output from the plants that have been closed down or are about to be closed, VEAG is planning to build six new 800MW units using lignite. Most of the power produced in eastern Germany will then continue to come from plants fired with lignite, since there are a political will for going on using this domestic energy resource.

PER ELVINGSON

Source: Primary and secondary measures to reduce emissions from existing VEAG lignite-fired power plants. By M. Recker and M. Kehr. Document presented at the 6th ECE Seminar on Control Technology for Emissions from Stationary Plants. Budapest, October 14-17, 1996.

Comment. In the Secretariat's survey revealing the 100 worst emitters of sulphur in Europe at the beginning of the nineties (APC series No. 3), Jänschwalde and Boxberg came eighth and ninth on the list. The amount by which their emissions were subsequently reduced (altogether 269,000 tons of sulphur a year) is more than five times that of all Sweden's present emissions.

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TAX SHIFT

Two birds with one stone

THE IDEA of lowering the taxes on labour and raising those for use of the environment has long been advocated by environmentalists and some political opinion. The idea gained momentum when Jaques Delors, as chairman of the EU commission, put it forward as a viable means of attacking unemployment and simultaneously saving the environment. Increased credibility followed as a result of its incorporation in an EU white paper on environment and employment, and the possibilities have been subject to official study in the Netherlands, Norway and Sweden.

It is becoming ever more evident that the environment is not being well managed by market forces - largely because the environment does not usually appear in economic assessments. As early as in 1920, however, the economist A. C. Pigou wrote that in order to conserve resources, a price would have to be put on it - arguing, in the language of economists, the need to "internalize external effects."

A negative external effect is something that affects a third party, for which that party receives no compensation - as when someone exploits a common resource to his own advantage. Pigou maintained that anyone destroying the environment should pay compensation, in the same way as one pays for labour. Not having to pay for using up some environmental resource is equivalent, he said, to making environmental destruction profitable.

Environmental resources are, or should be, common to us all, and one way of putting a price on their use would be to levy a tax on them. The aim should be to favour socially acceptable activities, involving the production of environmentally sound goods at affordable prices, instead of their being, as today, more expensive than others that are more harmful to the environment.

Although there are many ways of determining the proper tax levels, it is often necessary to start from politically defined environmental objectives and then try to find the levels of environmental taxes that will be needed for the attainment of those objectives. In other words, an indirect pricing of the environment.

Even in Sweden - one of the OECD countries with most experience in this field - the history of environmental taxes only goes back as far as 1988, when the government appointed a commission on environmental charges. In 1990 the commission proposed the introduction of taxes on carbon dioxide and sulphur, and a charge on nitrogen oxides. A later tax reform, involving all told some 60 billion kronor, yielded 18 billion kronor in environment-related tax money which was used to lower the income tax. Half of the 18 billion kronor accrued from VAT being made payable on energy and environment taxes. By 1995 however environment taxes were contributing about 50 billion kronor to the exchequer, or, 6.1 per cent of total taxation and 3 per cent of the gross domestic product.

Today the taxes on energy and carbon dioxide account for 70 per cent of the environment-tax total. Industry has been granted certain exemptions: it does not have to pay any energy tax, and pays only 25 per cent of the general carbon-dioxide tax.

In 1996 the Swedish Society for Nature Conservation (hereafter SNF) produced its own proposal (see box) for ecological-tax reform. The new environmental taxes in its proposal are estimated to add some 44 billion kronor to net state revenue. The idea is that the change will have the result of:

• Creating opportunities for low-cost, cost-efficient environmental policy.
• Leading lifestyles into more environmentally acceptable ways.
• Repairing becoming cheaper, thus counteracting wasteful consumption.
• Making environmentally favourable actions and consumer habits worthwhile.
• Making the value of the environment economically visible by putting a price on it.
• Encouraging developments in new, green technology as well as investments in it.
• Making labour costs somewhat lower.
• Causing knowledge-intensive, environmentally matched production to become a growth sector in the economy.
• Making it rather more expensive for enterprises that pollute the environment and employ few people.

The new environment taxes are estimated to add 70 billion kronor to gross state income, from the present 50 to 120 billion kronor. They are expected to stimulate such new technical developments and changes in people's behaviour as will lessen the effects of human activity on the environment. But that will cause a relatively rapid decline in the revenue from environment taxes - more than 16 billion kronor - and with exemptions granted to energy-intensive industries the figure will come to some 25 billion kronor. So all in all the net extra revenue will, according to SNF estimates, amount to about 44 billion kronor.

There is an element of uncertainty in calculations of the effect of environment taxes on account of the rate at which emissions of pollutants can be forecast - in other words, how quickly the aims of the taxes will be attained and consequently how much the tax volume will be reduced within a given time. That volume will however settle relatively soon at some lower level - the level at which the marginal cost of reducing emissions still further exceeds the cost of continuing to pay the tax. In calculating the eventual total tax revenue, SNF has allowed for this so-called elasticity for various kinds of emission. The tax on carbon dioxide, for instance, is relatively unelastic compared with that on sulphur. This is because it is fairly simple to eliminate sulphur, whereas dealing with carbon dioxide calls for basic changes in the energy system.

The changes in people's behaviour, as well as technical progress, will be likely in time to cause emissions to drop still further. The figure for eventual tax income has therefore, for this and other reasons, to be a rough estimate.

Which taxes can be lowered, when environment taxes are raised, is an open question. In SNF's proposed tax shift the payroll levy could be reduced by 25 per cent, from the present 32.9 per cent to 24.9 per cent. The positive effect this would have on employment would not, however, be very great. It seems that for maximum effect, the reduction should be greatest for the lowest wage sectors - as has been confirmed in a recent study from the EU commission.

The chief beneficiaries of a tax shift would probably be labour-intensive activities that have little effect on the environment - such as engineering, welfare and other services, education, intellectual property businesses, banking and postal services - which today employ about 80 per cent of country's working population.

A tax shift such as SNF is proposing could entail excessively high costs for some energy-intensive industries. These are relatively few in number, comprising for the most part metalliferous and non-metalliferous mining, iron and steel making, metal manufacturing, paper and pulp, and chemicals. Although they employ relatively few persons - only 230,000 or 5 per cent of the country's workforce - they account for a considerable share (25 per cent) of Sweden's export earnings, and are of great regional importance.

To prevent the whole business community and the taxation system from being dominated by the needs of a single sector, SNF is suggesting a variety of transitional regulations for energy-intensive industries. One way would be to combine existing concessions with the new environment taxes. Under such an arrangement an industry would be able to obtain a special concession applying to its energy consumption and emissions of carbon dioxide. To avoid the general tax on these, it would have to enter into an agreement setting the rate at which its energy use and emissions would have to be reduced.

This would enable the environmental effects of the relatively few energy-intensive industries to be controlled without impairing those industries' competitive capacity. This method SNF considers most deserving of further study if transitional arrangements turn out to be needed.

SVANTE AXELSSON

The author is an economist and director of the SNF program A sustainable Sweden. The society's proposals are set forth more fully in Ecological Tax Reform. Tax Shift - a Tool to Reduce Unemployment and Improve the Environment, which is obtainable from the Swedish Society for Nature Conservation, Box 4625, S-116 91 Stockholm, Sweden. Fax. +46-8-702 08 55.

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SWEDISH SULPHUR EMISSIONS

Going still further

THE SECTOR where Sweden's emissions of sulphur could be most reduced and at the lowest cost is, according to the country's Environmental Protection Agency, shipping.

Since 1980, Sweden has reduced its emissions of sulphur by 81 per cent. This development is well in line with the country's commitment through the second sulphur protocol under the Convention on Long Range Transboundary Air Pollution and also with its national aims - in both cases calling for a reduction of 80 per cent in the interval between 1980 and the year 2000.

Nevertheless acidification is still going on - largely because of the imports of air pollutants from other countries. About 90 per cent of the sulphur falling on Sweden comes in from outside, and the proportion of oxidized nitrogen is about the same. Sweden must therefore set its hope on more stringent international requirements - such as can in fact be expected as a result of the EU strategy for dealing with acidification that is now in course of being thrashed out. This will however bring pressure on Sweden to reduce emissions still further, and so the EPA has been instructed to see how it can be done.

Swedish emissions now split as follows: transportation 25 per cent, the burning of oil, coal, and other solid fuels 36 per cent, industrial processes 39 per cent. Since 1980 there have been big reductions in all sectors, due mainly to a switch from oil to other kinds of fuel (and nuclear power), improved efficiency in the use of energy, more stringent requirements for emissions and structural changes in industry, harder restrictions on the sulphur content of oils, and a tax on emissions of sulphur.

None of these measures have however applied to shipping, which at present accounts for 22 per cent of Sweden's emissions. But of the reductions now proposed by the EPA, amounting altogether to 25,000 tons of sulphur dioxide a year, 15,000 tons would come from shipping - and it is estimated that such a reduction could be achieved if all vessels were to use oil with a maximum sulphur content of 0.5 per cent. The cost is put at 11 kronor for every kilogram of sulphur that would not be emitted. The economic (dis)incentives would be differentiated lighthouse and harbour dues.

Among the other proposals that the EPA is making is a lowering of the sulphur content of gas oil from the present 0.1 to 0.05 per cent. That would cut down the emissions of sulphur dioxide by 2000 tons a year, at a maximum cost of 50 kronor per kilogram of sulphur so eliminated. Extending the tax on sulphur to oils with an 0.05 content is suggested as a financial incentive (at present there is no tax on oils with a sulphur content of less than 0.1 per cent). It is further suggested that the tax should be indexed, since it has remained at the same nominal level - 30 kronor per kilogram of sulphur emitted - as it had when it was introduced in 1991. In today's money it would be about 35 kronor.

Measures already voted within industry will, according to EPA estimates, have cut emissions of sulphur dioxide by 9000 tons per annum by the year 2000. Further measures proposed by the agency would increase that figure by 5000 tons.

An uncertainty after 2000 will be the effects on the energy system of phasing out nuclear power. It is estimated however that this will not bring about an increase of more than 5000 tons of sulphur dioxide a year. The consequence would be that Sweden's total emissions would still have dropped by around 25,000 tons sometime between 2005 and 2010 - a reduction of 86 per cent since 1980.

It emerges from the environment agency's research that it would be possible to reduce the emissions still more, but at a greatly increased cost. Also pointed out in the report, however, is the fact that measures to reduce emissions of carbon dioxide would automatically bring down those of sulphur as well - at little or no cost.

PER ELVINGSON

Reduktion av svavelutsläppen efter år 2000. Report 4645. In Swedish only. Available from the Swedish EPA, 106 48 Stockholm, Sweden.

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AIR QUALITY

Revised guidelines from health organization

THE World Health Organization will soon be issuing revised air-quality guidelines for Europe. Outstanding changes from the old version will be a halving of the figure for short-term exposure to nitrogen dioxide and the omission of a guide value for particulate matter. The list includes some thirty pollutants.

The organization's guidelines for air-quality for Europe were first published in 1987, with the aim of providing "a basis for protecting public health from adverse effects of environmental pollutants and eliminating or minimizing exposure to those pollutants that are known or likely to be hazardous to human health or well-being."

The figures that the WHO will now be presenting, which in some cases represent a sharpening compared with the old, reflect the greater knowledge of the noxious effects of air pollutants that has been acquired in recent years. There are however studies that suggest a further tightening would be in order, for instance for ozone. A couple of years ago the British government's Expert Panel on Air Quality Standards proposed 100 ug/m³ as the maximum eight-hour average value for exposure to this pollutant (the WHO figure is 120 ug/m³), and last year the Swedish Institute for Environmental Medicine wanted to make it still lower: 80 ug/m³ as the maximum one-hour exposure.

The fact that WHO will no longer be giving a guide value for particulates does not mean it considers them unharmful, but rather that it sees no way of defining a harmless level. There is much to suggest from the intensive research that is going on that is the number of particles that is dangerous, rather than their chemical composition and total weight. For the time being, the WHO is giving information as to the dose-effect connection, leaving it to decision-makers to choose those effects they deem acceptable.

Although they are not legally binding, the WHO guidelines are nevertheless of great practical importance. This last revision has been made in close cooperation with the EU commission's environment directorate, and the new guidelines have been an important starting point for the commission's own revision of the EU limit values for nitrogen oxides, sulphur dioxide, and lead.

The commission's proposals for new limit values for these three pollutants, as well as particulates, were to have been presented around year-end 1996/97, but are now awaited for the summer. There appears every likelihood of their approximating the WHO values, which would mean a distinct tightening up on several counts.

PER ELVINGSON

Note. The full report on the revisions will be available later in the summer.

Table: WHO's revised air quality guidelines for Europe, 1996. Unless otherwise stated, refer to effects on health.

¹ For effects on vegetation (critical levels) as determined in the work under the Convention on Long Range Transboundary Air Pollution.

² Critical levels have also been formulated for the effects of ozone on vegetation, but have been expressed differently.See Acid News 4/96, p.10.

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ROAD PRICING

Profitable in many ways

IMPOSING CHARGES on inner-city traffic would be highly profitable for the community at large. In the absence of road pricing, Stockholm is now, according to SIKA, the Swedish Institute for Transport and Communications Analysis, losing between a half and a billion kronor a year in potential income.

The institute has studied the combined effect of three measures:

1. Charging for entry to each of five or ten zones into which the city would be divided (see AN 4/94). The income would be used to lower income taxes, either municipally or regionally.
2. Increasing the price of a season ticket for public transportation by 12 per cent (from 355 to 400 kronor per month).
3. Introducing more frequent services for public transportation to meet an increased demand following from road pricing.

• Less reason to subsidize public transportation. Taxes can be made lower.
• More people using public transportation, making it possible and defensible to increase the frequency of the services and make life pleasanter for the users.
• Less traffic congestion when the average speed of passage for buses increases because other traffic has eased after the introducing of road pricing (in Stockholm bus speeds should increase by 17 per cent). Quicker travel for passengers, and shorter waits.

After considering various ways of disposing of the resulting income, the study proposes a tax switch, that is, transferring the money to the municipality or the county council, to enable them to lower other taxes.

The road charges could probably with advantage be set higher than the figures used in the SIKA analysis. To quote the report: "Higher charges, within certain limits, would be still more favourable to the users of public transportation, result in still greater gains in efficiency following tax reductions, and have a still greater environmental effect."

The conclusion must be that there is no contradiction between better air quality and improvements in local finance.

MAGNUS NILSSON

Editor of Trafik & Miljö magazine, and member of the board of T&E, the European Federation for Transport and Environment.

The SIKA report entitled Samband mellan prissättning av bil- och kollektivtrafik is in Swedish only, but has an English summary. It can be obtained from SIKA, Box 3118, 103 62 Stockholm, Sweden. Fax. +46-8-21 58 72.

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In brief

Get on your bike!

A bicycle uses no fuel, emits no exhaust fumes, is quiet, and takes up little road space. Not only does cycling provide useful exercise, but it will often shorten travel time as well.

In Germany and Denmark, bicycles are used for 11 and 18 per cent of all trips. The corresponding figure for Britain, according to a report from the Cyclists' Touring Club, is only 2 per cent, despite the favourable circumstances. Almost half of the trips people make in the UK are for less than 3 kilometres, and two-thirds for less than 8 kilometres. The makers of the report have attempted to figure out why the difference between the countries should be so great, and what steps will be needed to get people to bicycle more. They note some successful efforts that have been made in Europe to achieve this aim, and examine their worth.

More Bikes - Policy into Best Practice. By Don Matthew. 60 pp. £10.00. Available from the Cyclists' Touring Club, 69 Meadrow, Godalming, Surrey, England GU7 3HS.

Great possibilities

According to the EU commission's business-as-usual scenario, emissions of carbon dioxide are likely to increase in the union by 7 per cent between 1990 and 2005, if no steps are taken to check them. It has however been shown in a study presented last December that they could be reduced by 14 per cent in the same period if the EU as a whole were to put in force a number of measures that have already proved effective in one or more countries.

The study had been made in the science and technology department of Utrecht University in the Netherlands for the World Wide Fund for Nature (WWF). Its conclusion was that 653 million tons could be lopped off yearly from the emissions total by 2005, if the proposed measures were applied early in 1998 at the latest. Such a reduction would be equal to the present combined emissions of Spain, Italy, and Belgium.

The greater part of the reduction - or just over two-thirds - would be a result of improved efficiency in the production and use of energy, especially in power generation. Fourteen per cent would come from increased reliance on energy from renewable sources, and 7 per cent from an expansion of gas-fired cogeneration, although both WWF and the power industry would expect that last figure to be higher.

Further information: Andrew Kerr, WWF European Policy Office. Fax. +32-2-743 8819.

Carburettor out

A petrol engine with direct injection developed by Mitsubishi uses 35 per cent less fuel than an ordinary one. The fuel is injected under high pressure directly into the cylinder, as in a diesel engine. This method, together with a specially shaped cylinder, makes it possible to use a very lean fuel mixture, with consequent low fuel consumption. At the same time the combustion temperature can be kept low, which restricts the formation of nitrogen oxides. Mitsubishi claims that in combination with a new catalyzer the emissions of NOx can be reduced by a good 95 per cent. As a result of efficient combustion, the emissions of volatile organic compounds will also be low.

Direct injection has hitherto only been used for diesel engines - at a cost of relatively high emissions of nitrogen oxides. A modern diesel normally emits three times the amount of NOx as an equivalent petrol engine. Vehicles with the new GDI engines, which have been onsale in Japan for the last six months, will be available in Europe this coming autumn. Mitsubishi plans eventually to use no other type.

Source: Trafik & Miljö No 3-4/96.

One company to stop using orimulsion

Firing with orimulsion - "the world's dirtiest fuel," see AN 5/95 - is to cease at one place in Britain. The PowerGen electricity generator has announced its intention of closing down the only plant in the country now licensed to burn this bitumen-water emulsion with exceedingly high contents of sulphur and heavy metals. Denying any environmentalist influence, the company maintains that it is acting purely from economic reasons. But at t