Friday, March 25, 2011


Thursday, March 03, 2011

Kyoto and Estonia's Electric Cars

The most disappointing thing in recent years, in Estonian politics and life, is that we seem to have lost our edge; our willingness to go for awesome projects that might be very improbable and would not work anywhere else, but end up working really well here. The Tiger Leap program, the free wifi, the e-voting... How long has it been since there was a truly inspirational national project? The ultra-broadband buildout is the closest thing in the last few years, but that's not as obvious or immediate.

Now, it seems there is one. 

For years, Estonia has been supplementing its budget income by selling emission quotas under the EU and Kyoto Protocol regulations. Like fishing rights, this is a non-obvious but fairly serious revenue stream. The quotas are apparently assigned on a comparison basis, with 1990 as the baseline. In 1990, Estonia was still part of the Soviet Union, and all that Soviet industry was busy belching out pollution; most of it was not viable in a free-market economy and went bankrupt, so we are actually allowed to pollute a lot more than we do. The difference can be sold to countries which pollute more than they are allowed to, for cash... or other benefits.

Under the Kyoto Protocol, Estonia's initial assigned quota was around 196 million AAU per year; this is the emission level that was recorded for 1990. (One AAU is equal to one metric ton of carbon dioxide, although it's actually a mathematical calculation with conversion factors for other types of greenhouse gases - CO2 is not the only thing that industries emit.) In the period between 2007 and 2012, Estonia was subject to the general EU commitment to reduce that emission level by 8%, so it could claim no more than 180 million AAU per year. If companies in Estonia emit less CO2 than that, the leftover amounts can be traded with companies in other countries, and added to that country's allocation.

This commitment period is ending next year, and Estonia apparently has AAUs to spare, because instead of just selling them for cash, it will hand over 10 million AAU to Japan's Mitsubishi Corporation. In return, Mitsubishi will establish an electric car infrastructure in Estonia. The country's cities and major motorways will be covered by a network of 250 charging stations, and the state will receive 507 Mitsubishi i-MIEV electric cars, which will be used by social workers.

Besides that, the sale of additional AAUs will be used to finance a subsidy for an additional 500 or so vehicles for private buyers. Those cars will not be free, but they will be a lot cheaper than market price, and buyers won't have to stick to the Mitsubishis - any electric car certified for use in the EU will be eligible.

To receive the subsidy, the buyers will have to commit to purchasing sustainable energy certificates. This is a way of ensuring that the electric cars are powered by green electricity. The cars themselves can be charged from any station in the country-wide network, or indeed any power socket; the certificate is a way of ensuring that for each fossil-fueled kilowatt-hour that the electric car takes out of the grid, a green-fueled kilowatt-hour is put back into the grid.

Buyers of non-subsidized electric cars will, of course, be allowed to use the country-wide charging infrastructure, and will not be forced to purchase the green-energy certificates. Meanwhile, the subsidized electric cars will effectively consume no fossil fuels at all - apart, of course, from the energy used to build the cars in the first place. It's also worth remembering that all of this is financed by allowing a Japanese corporation to spew out greenhouse gases from its own factories.

But it's still an amazingly elegant and forward-thinking deal, one which will make Estonia one of the world's leading countries in electric-vehicle infrastructure. And the availability of charging stations is the real key to making electric cars viable.

Tuesday, March 01, 2011

Progressive Income Tax and You

I love hard data.

Here is a little website where you can input your current net salary (per month), and see how much less/more you would be paying under the progressive income tax proposals of SDE and the Center Party.

What I would also love to see is the impact of this on the budget, but unfortunately there is probably no way to get a breakdown of taxes paid by each resident (even if it's just a list of numbers, with no personally identifiable information). I'm sure the Tax Board has that info, and I would love it if they made the calculations and published the results, but I doubt they will. So I tried a very, very approximate method to get something vaguely resembling useful numbers.

The most relevant numbers I can find in the Statistics Database are the total amount of personal income tax paid into the state budget (191 728 390 Euro) and municipal budgets (584 706 720 Euro) in 2010. This table shows the average number of persons engaged in each industry, adjusted for fulltime work, and this one shows the average net and brute salary for the same industries (both tables show data for Q3 2010).

If there are any statisticians in the audience, please tell me if I've got the logic heavily wrong somehow. I took the number of employees in each industry, and the net wage for that industry; then used the net wage with the link above to calculate the impact.

Click the image to see the full-size version.

So for the wages listed above, alone, it seems that the Social Democrats' progressive income tax plan will result in an increase of budget revenues of around 3 million euro per year; whereas the Center Party's plan, which actually cuts the tax rate for the lower income bands, will result in a loss off around 638 thousand euro per year in budget revenue.

Of course, these numbers do not include income tax generated from corporate dividends and investment income, but those numbers are far harder to find. But they would not make a significant impact on the magnitude of the budget impact. Remember that the total revenue from personal income tax in 2010, for the state and local budgets, was 191 728 390 + 584 706 720 = 776 435 110 euro. Whereas the people in the table, together, would have paid 701 085 072 Euro in flat income tax, adjusting for the untaxable minimum.

Again, all these numbers are very approximate. As always, if you can point me to the right data, I'll appreciate it.


| More