Air Date: Week of March 5, 1993

Stephen Beard in London and Mike Shatz in Tokyo report on the European and Japanese response to the proposed U.S. energy tax. President Clinton's plan has prompted some calls for even higher energy taxes to spur further conservation.

Transcript

CURWOOD: This is Living on Earth. I'm Steve Curwood.

President Clinton's call for a broad-based energy tax has caught the rest of the world a bit by surprise. As a big country where people routinely drive long distances, and as a producer as well as a consumer of energy, America has for years refused to go further than modest oil import fees and fairly small taxes on gasoline and diesel fuel. So the scope of Clinton's proposed energy tax has prompted renewed debate on the subject around the world, particularly among our closest competitors. We have two reports now - the first on the European community reaction, from Steven Beard in London.

BEARD: Most of the member states of the European community already have comparatively high energy taxes. But for reasons of conservation the European commission has, for the past two years, been trying to introduce an additional, community-wide levy. Most of the member states agree with it, provided the US and Japan adopt a similar measure. America's move could now force the community's hand, according to Simon Roberts of Friends of the Earth.

ROBERTS: I think the European community has been caught on the hawk by President Clinton. I don't think anyone this side of the Atlantic thought there was going to be a proposal coming forward this soon, or that it would be of a unilateral nature. So I think essentially there's going to be a lot of soul searching in European governments about how serious they were about this proposal to bring forward an energy tax if everyone else did it.

BEARD: Britain could play a decisive role in the new debate. John Major's administration has always objected strongly to an additional energy tax. Opposition environment spokesman Chris Smith hopes that the government will now fall into line with its most powerful European partners.

SMITH: Certainly the French and German governments are very keen on the idea of energy and environmental taxes. Some of the countries in the south of Europe - Spain and Portugal, for example - are somewhat less keen, but they are sheltering, at the moment, behind British government objections. Now if the British government decided just for once that they were going to take the environmental lead, then I think we might well get some real progress on this in Europe.

BEARD: But the British government shows no sign of dropping its opposition to further energy taxes. Nor should it, says Conservative member of Parliament Michael Clark.

CLARK: We in Europe do tax our energy products already, and there's no argument at all for having an additional tax over and above the very high taxes we already have on energy products.

BEARD: Mr. Clark applauds President Clinton's initiative, but does not believe European consumers should have to face yet higher energy prices.

CLARK: The United States of America is profligate in the use of energy. It's using up more than its fair share of energy reserves worldwide. We use far less energy, and I believe that Europe will say no to an energy tax, because it would put a burden on our exports that we're not prepared to accept, particularly at this time of recession.

BEARD: European environmentalists argue that savings through energy conservation should easily offset any higher taxes. Simon Roberts of Friends of the Earth thinks that the American proposal will bring mounting pressure to bear on European opponents.

ROBERTS: Over the next few months, as it becomes clearer the extent to which President Clinton's proposal will get through Congress, as it becomes clearer what the cost implications are about for US industry, for energy prices in the US, then the arguments that were being used in the EC to keep the tax out will be undermined. They're going to have to come up with new arguments against the tax, or they're going to have to say, well, we have to swim with this.

BEARD: If the EC does follow the American example, Japan will then have to decide whether it too will introduce an additional energy tax. For Living on Earth, I'm Steven Beard in London.

SCHATZ: I'm Mike Schatz in Tokyo. President Clinton's proposed broad-based energy tax is getting mixed reviews in Japan. Environmentalists here believe passage of the President's proposal would be a modest and long-overdue step toward greater energy efficiency in the United States. According to the Organization of Economic Cooperation and Development, the US is dead last among its group of seven counterparts when it comes to energy efficiency. Japan, on the other hand, ranks first. Officials of Japan's environment agency are hoping implementation of a green tax in the US and European community will help revive their campaign for a similar measure here. The agency believes the tax will help meet Japan's environmental goals, including improving energy efficiency. But Japan is in the middle of its worst economic downturn in 20 years, and a spokesman for Japan's trade and industry ministry says the taxes needed to improve energy efficiency would cripple the economy. In the absence of strong leadership, and with parliamentary elections just around the corner, the introduction of an environment tax in Japan appears to be a long way off. For Living on Earth, this is Mike Schatz in Tokyo.