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Ian W.H. Parry and Mr. Philippe Wingender
Finland has pledged to cut net greenhouse gas emissions to zero by 2035 and has sectoral targets for deploying electric vehicles, phasing out coal generation, and oil-based space heating. Fiscal policies at the national and sectoral level could play a critical role in achieving these objectives. Carbon dioxide emissions are already priced significantly in Finland but prices vary substantially across fuels and sectors. The paper discusses a reform to both scale up, and progressively harmonize, pricing while using revenues to address equity issues. It also discusses the potential use of revenue-neutral feebate schemes to strengthen mitigation incentives for the transportation, industry, building, forestry, and agricultural sectors.
Ian W.H. Parry and Mr. Philippe Wingender

. Recommended Package of Fiscal Instruments to Reinforce Finland’s Climate Mitigation Strategy 2. Comparing Emission Reduction Targets from EU and National Pledges 3. Effective Carbon Prices by Major Fuel Type in Finland, €/tonne 2020 4. Selected Carbon Pricing Schemes, 2020 5. Key Design Issues for BCAs: A Summary 6. Impact of a €20 Per Tonne of CO2 Equivalent Feebate on Agriculture Figures 1. Global Fossil Fuel CO2 Emissions 2. Trends in Fossil Fuel CO2 Emissions 3. GHG Emissions and LULUCF Withdrawals in Finland 4. Breakdown of GHG Emissions, 2018 5

Joseph E. Aldy

-effective mitigation policies. Dellink et al. (2010) estimate emission reductions – both relative to baseline and a specified base year, carbon prices ($ per ton CO 2 ), fiscal revenues (assuming a carbon tax or a cap-and-trade program with an auction), production among energy-intensive industries, and costs (changes in GDP and changes in household income). Houser (2010) also compares emission reductions under Copenhagen Accord emission targets, goals, and policies among participating countries. The OECD (2013) has recently published estimates of effective energy tax rates

Mitigation Strategy ......................................................................................................................................6 2. Comparing Emission Reduction Targets from EU and National Pledges .............................8 3. Effective Carbon Prices by Major Fuel Type in Finland, €/tonne 2020 ..............................12 4. Selected Carbon Pricing Schemes, 2020 .............................................................................12 5. Key Design Issues for BCAs: A Summary