Following the successful Spring European Council 2007, which set very ambitious goals in the area of energy and climate change, the European Commission adopted a Green Paper on the use of market-based instruments for environment and energy related policy purposes. Since market-based instruments have proven to be cost-effective means of achieving policy goals, the paper aims to stimulate a broad public debate on how taxes, tradable emissions rights and other market-based instruments can be used more widely and effectively for environmental and energy policy purposes at Community and national levels. This green paper is a joint project by Commissioners Dimas and Kovács, in association with Commissioners Barrot and Piebalgs. In the field of biodiversity conservation, it builds on work carried out by Ecologic and others.

Environment Commissioner Stavros Dimas said: "Market-based instruments such as emissions trading, environmental taxes and targeted subsidies harness the power of market forces to protect the environment. This more flexible and cost-effective approach has proved its value but it is still underutilised. In launching this Green Paper our goal is to promote the use of market-based instruments whenever they are appropriate to the circumstances so that Europe's environment is protected most effectively."

László Kovács, the Commissioner responsible for Taxation and Customs Union said: "Fiscal policies will have an important role to play in the delivery of the ambitious objectives endorsed by the last European Council." He added: "Taxation should in the first place discourage what is undesirable rewarding at the same time all sorts of positive behaviour, being it energy savings or environment-friendly activities. Tax revenues can then be used to favour economy-friendly activities, such as innovation or jobs."

Read the full press release IP/07/430 published on 28 March 2007 on the website of the European Commission.

The Green Paper builds amongst others on the results of Ecologic’s project: The Use of Market Incentives to Preserve Biodiversity.