HASWhen environmental policies are experiencing a general decline, particularly in France, where the budgetary savings announced in April have severely affected the Ministry of Ecology to the tune of 2.1 billion euros, the European level could be the buoy rescue package we need to maintain our decarbonization trajectory. As such, the European elections of June 9 are an opportunity to integrate bold proposals into the public debate to face environmental challenges.
There is one that has the merit of offering a general response to these challenges: the creation of a tax on added pollution (TPA). The TPA aims to be an environmental mirror of the VAT. At each stage of production, the added pollution would be calculated and integrated into the final price. While consumption represents more than half of the GDP of the European Union, according to Eurostat, such a measure represents a powerful lever for ecological transition. For example, a vegetable grown in a greenhouse and transported by truck would have a higher TPA than a vegetable grown organically and sold through a short circuit.
In recent years, several European decisions have started a shift towards the greening of the single market. The VAT directive (directive 2006/112/EC), which unifies the rules on consumption tax, was recently reformed to offer more flexibility in terms of reduced rates for environmental purposes. The carbon border adjustment mechanism, a form of carbon tax on imports, also came into force in October 2023.
An incentive to transform behavior
The TPA is therefore part of this trajectory of increasing environmental taxation. It offers gigantic transformative potential for the European productive process. It makes it possible to integrate all European companies into a decarbonization mechanism close to that of carbon trading marketwhich today only concerns the 10,000 most carbon-intensive installations in the EU.
In the event that the tax were set based on the price of a tonne traded on this market, i.e. 76 euros at the end of May 2024, it would represent potential revenue that could theoretically reach up to 250 billion euros. Or the order of magnitude of the annual need for investments in the ecological transition, estimated in the green deal for Europe (260 billion until 2030).
In 2020, the European Union took an unprecedented step by raising a loan of 390 billion as part of its post-Covid-19 recovery plan NextGenerationEU. Part of this funding was also allocated to the green pact. The TPA would mark a new step forward in the construction of the Union by becoming the first major European tax. The purpose of the tax is not so much to offer an additional resource as to act as an incentive to transform behavior.
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