A comprehensive analysis of an environmental tax reform where people are taxed on pollution and the use of natural resources instead of on their income, it looks at the challenges involved in implementing this tax reform across Europe.

Many people have serious concerns about the environment and wonder whether solving environmental problems is compatible with continuing economic growth. This book provides an in-depth exploration of a proposed reform to the national tax system, whereby the burden of taxes is shifted from conventional taxes, such as those levied on labour and capital, to taxes on environmentally related activities, that involve resource use, particularly energy, or environmental pollution. There is some experience of such 'environmental tax reform' (ETR) in Europe, and the book briefly reviews this before considering how a more ambitious ETR in Europe could substantially reduce greenhouse gas emissions and material flows through the economy, while stimulating innovation and investment in the key 'clean and green' sectors of the economy which seem likely to play an increasing part in the creation of prosperity in Europe and elsewhere in the future. Case studies of renewable energy, construction, fuel-efficient vehicles, and waste management in Germany show how these fast-growing sectors are making an increasing contribution to employment, output, and exports in the German economy, while improving the environment. The book explores the implications of introducing it on a much wider scale throughout the European Union. A unique modelling exercise, using two macroeconomic models, delivers varied and complementary insights into the economic and environmental results of a large-scale ETR in Europe, and its effects on and implications for the rest of the world. The modelling suggests that such a policy has a key role in the achievement of Europe's targets to reduce its greenhouse gas emissions, and, if implemented with cooperative policy in other countries, could significantly reduce global emissions. The book is essential and hopeful reading for anyone who has wondered how, with today's intensifying environmental challenges, economic growth could become more environmentally sustainable.

Part Ⅰ. The Need and Rationale for Environmental Tax Reform 1. Introduction to the Issues and the Book 2. European Resource Use and Resource Productivitiy in a Global Context 3. Energy Consumption and CO2 Emissions in the German and British Industrial Sectors 4. Is Environmental Tax Reform an Appropriate Policy for Industrial Sectors with Different Energy Intensities? An Analysis of UK Industrial Sectors Part Ⅱ. Experiences in Environmental Tas Reform 5. Environmental Taxes and ETRs in Europe: The Current Situation and a Review of the Modeling Literature 6. Introducing Environmental Tax Reform: The Case of the Czech Republic 7. The Effect of the German and UK Environmental Tax Reforms on the Demand for Labour and Energy Part Ⅲ. A European ETR For Growth and Sustainability 8. Models for Projecting the Impacts of ETR 9. Modeling an ETR for Europe 10. Implications of ETR in Europe for Household Distribution 11. Global Economic and Environmental Impacts of and ETR in Europe 12. ETR and the Environmental Industry Part Ⅳ. Conclusions 13. ETR for Green Growth: Summary, Conclusions, and Recommendations Index