Green Fiscal Policy : Ecuador

M. Dolores Almeida S. Groningen, 22 sep 2016

Ecuador • It is among the 17 mega-diverse countries in the world;

2 biodiversity hotspotsIncremento d

• Increase Greenhouse Gases Emission:46,7% in 10 years • 1990: 86,5 millon Tn CO2-eq • 2010: 162,2 millon Tn CO2-eq

• The main causes of deforestation are: the change of land use, expansion of the agricultural frontier and the energy sector.

• The Ecuadorian economy depends on the energy sector (07-14): • 56% was Oil exportation • Oil revenues were 33% of total incomes of Central

Government. • 3.5% of GDP in fossil fuel subsidies.

Green tax reforms

TAX ON VEHICLE POLLUTION

GOALS

(1) Reduce emissions of greenhouse gases GHG .

(2) Changing consumption habits throw low-powered engines.

(3) Promote the use of public transportation.

No.C Cylinder $ / cc.

1 menor a 1.500 cc 0 2 1.501 - 2.000 cc. 0.08 3 2.001- 2.500 cc. 0.09 4 2.501 - 3.000 cc. 0.11 5 3.001 - 3.500 cc 0.12 6 3.501 - 4.000 cc. 0.24 7 Más de 4.000 cc. 0.35

No.

Age of vehicle(años) Factor

1 Less than 5 años 0% 2 de 5 a 10 años 5% 3 de 11 a 15 años 10% 4 de 16 a 20 años 15% 5 mayor a 20 años 20% 6 Híbridos -20%*

CYLINDER

YEARS

* Disposición transitoria

Impuesto a la Contaminación Vehicular:

IACV = [(b - 1500) t] (1+FA)

1/5

Electric and hybrid vehicles ICE Rate VAT Rate

Electric and hybrid vehicles wich final price are less than USD 35.000 0% 0%

Electric and hybrid vehicles wich final price are betwen USD 35.000 to USD 40.000

8% 12%

Electric and hybrid vehicles wich final price are betwen USD 40.000 to USD 50.000

14% 12%

Electric and hybrid vehicles wich final price are betwen USD 50.000 to USD 60.000

20% 12%

Electric and hybrid vehicles wich final price are betwen USD 60.000 to USD 70.000

26% 12%

Electric and hybrid vehicles wich final price are more than USD 70.000 32% 12%

INCENTIVES FOR HYBRID VEHICLES AND SMALLER ENGINES

CHANGING CONSUMPTION HABITS

60%55%

39%44%

63%

40%45%

61%56%

37%

0%

20%

40%

60%

80%

100%

120%

e) anterior a 1997 d) 1997-2001 c) 2002-2006 b) 2007-2011 a) 2012-2015

Automóviles

Cilindraje menor a 1500 c.c. Cilindraje mayor a 1500 c.c.

19%

Source: SRI (2015)

REDEEMABLE TAX ON PLASTIC BOTTLES (PET)

BASE and rate tax

• 2 cents. for each plastic bottle.

• Tax Exemption:

• Bottles for milk drinks

• Bottles for medicines

• December 2014, revenue was USD 22.3 million and

refunded US $ 25.5 million (114.7%). 1,93 million bottles

were returned. Año Botellas puestas en el mercado

(Millones)

Botellas recuperadas

(Millones)

Porcentaje recuperado

2012 1142 905 79%

2013 1775 1988 112%

2014 1775 1935 109%

Source: SRI (2015)

Green expenditures uses

Public environmental expenditure in Central Government

80.609.905 73.776.118

124.040.001

154.655.269

187.527.959

150.370.116 164.876.232

0,13%

0,12%

0,18%

0,20%

0,21%

0,16%0,16%

0,00%

0,05%

0,10%

0,15%

0,20%

0,25%

-

20.000.000

40.000.000

60.000.000

80.000.000

100.000.000

120.000.000

140.000.000

160.000.000

180.000.000

200.000.000

2008 2009 2010 2011 2012 2013 2014

% D

EL P

IB

USD

Gasto Sector Ambiente

GASTO SECTOR AMBIENTE % DEL PIB

Source: Ministerio de Finanzas

Reduce the use of fossil fuels in electric power generation to hydroelectric power generation

Hidráulica 93,53%

Térmica 4,86%

Otras; 1,61%

2016 Hidráulica

48,33%

Térmica 45,46%

Otras 1,32%

2006

Change in electric power generation sources: renewable and clean energy at low cost

Source: MICSE

INDICE

8 hydroelectric power stations and 1 Wind Power Generation (Villonaco): 2016 will double the installed power in the history of the country (2006) with an public investment of USD 5.000 million

Source: MICSE

On the demand Size: Replacing incandescent bulbs and gas kitchen stoves.

Fuente: MAE, DEFINICIÓN DEL POTENCIAL DE REDUCCIÓN DE EMISIONES DE GASES EFECTO INVERNADERO EN ECUADOR EN EL SECTOR ENERGÍA, 2015

Main expected results: reduction of annual emissions

Source: MAE, DEFINICIÓN DEL POTENCIAL DE REDUCCIÓN DE EMISIONES DE GASES EFECTO INVERNADERO EN ECUADOR EN EL SECTOR ENERGÍA, 2015

Learned lessons

• The causes are differents and complex ...

• It is not just an issue for those responsible for the environmental sector

• The design and implementation of Climate Change Strategies should be "joint management" between different state institutions (multi-sectoral and multi-level governance).

• Political will at the highest level

• increasingly important role of ministries of finance / economics and finance (financial structuring and alignment of fiscal policy with the objectives

• Improve fiscal accountability and transparency.

• Generate a political dialogue with stakeholders and communication plan

Thanks you

M. Dolores Almeida mdalmeidas@yahoo.com

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