New environmental tax will see coal prices rise by ten percent

In January 2008, to be in accordance with an EU directive on taxation on energies, the Czech government will implement the first of two phases of an environmental tax reform plan. The use of environmentally damaging forms of energy will be taxed in an effort to make individuals and companies more eco-friendly. Next year, coal prices will rise by an estimated ten percent. But with a significant number of Czechs - especially pensioners - using coal in their households, what are the economic and environmental implications of this move? Dita Asiedu spoke to Environment Minister and Green Party leader Martin Bursik:

Martin Bursik

"The income that is raised out of this taxation is being returned to the economy by lowering the social payments. That means that the environment is protected using the economical instruments and at the same time the labour costs are lowered as part of our active policy against unemployment. Our concept of the environmental tax reform is divided into two phases. The first introduces the minimum tax as stated in the EU directive and the second will see a CO2 tax from 2010. Besides this tax reform we will prepare special programmes to support the exchange of sources of heating such as coal with more environmentally friendly forms like solar heating panels, geothermal, or bio-mass pallets or wood chips and others."

Many Czechs, especially pensioners and households in the rural areas still use coal. Will these alternative sources of energy be accessible to them?

"There are about 450,000 households that use brown coal for heating. We are aware of the fact that the majority of them are not prepared to invest in the exchange of technology. With the use of European funds we want to prepare special programmes that will help households change the technologies of coal-based units into the more environmentally friendly ones. So this would entail a fifty percent subsidy and then a special loan that we will negotiate with commercial banks. We would like to have this achieved in a period of five years."

Photo: CTK

If coal prices increase by ten percent in 2008, people won't switch to other forms of energy that they also can't afford but will rather dump any kind of waste they can find into their furnaces.

"The thing is that by the time there will be no use of coal for local heating, as is the case in Ireland or in Germany, then it will be much easier to control the kind of smoke that comes out of a chimney. Then, it would be clear that any dark smoke means something illegal is being burned in the household."