The 5 most successful environmental taxes in Europe

META looks at some of the most successful green taxes in Europe amid news that the UK will consider new taxes to reduce plastic waste and littering.

Britain’s Chancellor of the Exchequer Philip Hammond announced yesterday that the UK government will investigate how environmental taxes on single-use plastic items can reduce waste.

The decision comes as part of the government’s budget for the next year, albeit it did not include any detail regarding the implementation of specific charges.

Many institutions, including the Organisation for Economic Co-operation and Development (OECD) and the European Commission, have in recent years called on governments to shift the tax burden from labour on to polluters.

From plastic pollution to air quality and climate change, green taxes can discourage behaviour that is damaging for the environment and the people. At the same time, they can enable governments to reduce taxes on other areas, in particular labour, that weigh heavily on the shoulders of all citizens.

With many countries now contemplating the expansion of environmental taxation, META presents some of the most iconic success stories in Europe.


Plastic bag tax in Ireland                                         

In 2002, Ireland introduced a €0.15 plastic bag levy on plastic bags at the point of sale, which increased to €0.22 in 2007.

The aim was to reduce consumption and the adverse effects plastic bag litter had on the landscape.

As a result, discarded plastic bags fell from 5% of total litter pollution in 2001 to 0.13% in 2015.

The levy generated €200 million over a 12-year period. The revenue was used to finance environmental projects across the country.

The Irish plastic bag levy is regarded as one of the most successful and well-received environmental measures ever introduced.


Deposit refund scheme in Finland

Finland set up one of the most successful systems in Europe to reduce packaging pollution.

The government introduced for the first time a deposit refund system for beverage packaging in 1950. The scheme now collects disposable as well as refillable glass and plastic (PET) bottles.

With deposit amounts ranging from €0.10 to €0.40 per container, return rates for single-use packaging peaked 95% in 2015.

This was attributed to the close co-operation between the government, civil society, retailers and the beverage industry.

Following the introduction of a beverage packaging tax in 1994, the government also offered incentives to producers and importers to take part in the deposit refund system.


Landfill tax in the UK

A landfill tax was introduced in the UK in 1996 to reflect the environmental cost of landfilling (e.g., greenhouse gas emissions), and also to reduce waste generation and boost recycling.

Thanks to the tax, the amount of waste sent to landfill decreased from 50 million tonnes in 2001 to 12 million tonnes in 2015.

Inert, non-hazardous waste (e.g., concrete, sand) is currently levied at £2.65 (€2.96) per tonne, while the tax on biodegradable waste (e.g., food, paper) stands at £84.40 (€94.21) per tonne.


NOx tax in Sweden

In 1992, the Swedish government introduced a tax on nitrogen (NOx) – a powerful pollutant linked to acid rain and respiratory problems – which helped reduce NOx emissions by 30-40%.

The tax was applied to energy produced for space heating, electricity production and industrial processes in order to curb soil acidification, which undermines crop and pasture production.

The tax rate was initially set at SEK 40/kg NOx emitted for all types of fuel, and was increased to SEK 50/kg in 2008 (about €5 at the time).

The revenue was used to reimburse those taxed plants emitting low volumes of NOx in order to incentivise energy efficiency and reduce any potentially negative impact on competitiveness.

This led many companies to implement emission reduction measures ahead of the introduction of the tax.

Annual revenue reached £900 million (€1 billion) in 2016.


Fishing licence in Ireland

Declining salmon stocks in Ireland led the government to double the price of the existing recreational and commercial salmon fishing licenses in 2007.

The license scheme helped ease the fishing pressure on salmon stocks, while the revenue was used to fund projects relating to conservation and habitat restoration.

Funding for such projects delivered some improvements such as the stabilisation of salmon stocks. But most importantly it helped improve the status of river banks and restore riparian zones, bringing along broader environmental benefits.



Jean-Pierre Schweitzer, Policy Analyst at the Institute for European Environmental Policy (IEEP), contributed to this article.

You can see the full list of case studies here. The report was prepared by IEEP and partners as part of a major study for the European Commission on ‘Capacity building for environmental tax reform’.