The Impact of Environmental Tax Administration on the Cost of Thermal Energy on the Example of Organic and Biofuels Boilers in Ukraine

Abstract

The article provides an overview of approaches to greenhouse gas emissions taxation and tax rates in European countries. To compare heated boilers with different characteristics, which run on different fuels the average cost of thermal energy for the life cycle LCOH was used. Environmental tax on environmental pollution (as a component of LCOH) is calculated for the three most common types of boilers in Ukrainian boilers with a capacity of 4.65 to 58 MW, burning natural gas, coal, and fuel oil, as well as for low-power boilers (0.5 and 1 MW ), burning fossil fuels and biofuels. The eco-tax for biofuel boilers is calculated under current taxation and subject to the adoption of a European approach to taxation of carbon dioxide emissions. It is established that at the current rates there are almost no economic incentives for the introduction of technologies to reduce the concentration of pollutants in emissions, but increasing the rates of environmental tax may change this situation. However, provided that rates are evenly increased for all types of boilers, the eco-tax for natural gas boilers will remain the lowest, while for biofuel boilers it will increase significantly, which contradicts the stated goal of decarbonizing the economy. It is shown that not only the change of environmental tax rates can be an effective tool for achieving the goals of sustainable development, as the principles of its administration are also important.