The aim of the analysis was to assess the socio-economic impact of the motions to amend the environmental tax system in the years 2015 to 2020. The alternative motions to amend the environmental charges rates made by the Ministry of the Environment were compared. The choice of the analysis methodology was based on the fact that it was not necessary to accurately predict the future situation but to compare the impact of the implementation of various policy options.
The impact was assessed in four categories that are most affected by the amendments of the environmental charges rates: the mining of constructional natural resources, water management, heating sector and the oil shale industry.
Praxis analysis show that levying the two-fold fee for the mining of constructional natural resources makes owning disused quarries costly and has significant pressure on companies to give up the disused permits or to modify the requested amount of resources in under-utilized permits, fulfilling the purpose of implementation of the two-fold fee.
Planned policy options in water management and heating sector have small impact on the water companies, heat producers and households. There are no significant changes planned in the permits for the special use of water and water contamination fees that would affect the water companies. The alternative with the highest fees for air pollution increases the charges paid by heat producers more than two times but the impact on businesses is still small because the air pollutions fees’ proportion of the production costs is modest.
The Ministry of the Environment targets on the objectives while making policy choices related to the fees applied on the oil shale industry in the years 2016 to 2020. The objectives where the planned environmental fees’ change should motivate oil shale industry to invest in the best available technology of oil shale processing and to implement cleaning appliances for reducing the waste and water and air pollution and to reduce the losses of oil shale mining. In addition, the amendments of the rates have to take into account the structural changes in the oil shale use in the forthcoming period – producing the electricity from oil shale will decrease and oil production will grow. The rates must consider the required returns from using the non-renewable resources and they should compensate the external costs associated to the oil shale mining.
In order to reach the mentioned goals the Ministry of the Environment has submitted two alternative policy options:
- In the case of low interference policy the rate of mining rights increases 10% in the years 2016, 2017 and 2018, and 25% during 2019 and 2020. Other types of charges – from the special use of water, air and water pollution and waste disposal will rise 5% to 10%.
- In the case of the other alternative policy the fee of mining rights increases 25% annually in the years 2016 to 2020 and other types of fees would rise 5% to 20%. This policy option is called the rapid growth scenario.
Praxis assessed the impact of those two policy options on the sustainability of the oil shale industry in comparison to the baseline scenario, i.e. a situation where all the rates are growing 3% annually. Corporate sustainability was treated as a survival capacity – companies that are able to earn profits and use the resources sustainably at the same time, are capable to survive.
“The analysis showed that the planned amendments of environmental charges in the case of low interference policy, supports the objective of encouraging the structural changes in oil shale industry.”
Through implementing the policy it is likely that the ineffective production of electricity by burning oil shale would be decreased and the production of the shale oil would be pushed ahead. The cost increase is in the limits that could motivate companies to develop, use more effective technologies and carry out environmental investments.