EU enlargement and environmental policy

on the utilization of the revenues, (ii) enforcement and monitoring are often weak, (iii) fee
exemptions are common.

In the following we turn our attention to the fulfillment of the Kyoto targets for the
countries with economies in transition. All the new accession countries have agreed to reduce
their greenhouse gas emissions in 2010 according to the levels set in the Kyoto protocol.
Hungary and Poland took the opportunity of a “certain degree of flexibility” and selected their
own base year, in order to achieve the target at the best of their ability (Table 3). The CEEC
countries may reap several benefits from coupling the strong domestic action to reduce
greenhouse gases (GHG) with the use of the flexible mechanisms in the Kyoto Protocol. The
rationale of the Kyoto mechanisms is to achieve given targets by allowing the emission
reductions taking place, where they have the lowest possible costs. This could foster
technology and financial flows to the CEEC, where lower cost abatement possibilities are still
available. Thus combining domestic action and the participation in the flexible mechanisms
can bring additional benefits for CEEC such as (i) upgrading technological capacity and
improving energy efficiency, (ii) improving air quality and health, and (iii) attracting financial
flows by selling the carbon allowances.

Table 3 Kyoto targets (in %)*

* Source: Baumert, Petkova and Barbu (1999) and own calculations

In the new enlarged EU, several policy options with respect to climate change policy
will emerge (see Michaelowa and Betz 2000). The accession countries may enter the EU
Bubble and take part in the European burden sharing. This will, however only be possible in
the following commitment period, as according to the Kyoto protocol the EU has to stick to
its own bubble (Art. 4.4). The other possibility is a common European environmental and
energy taxation based on the Communication on environmental taxes and charges in the
Single Market (COM 97 / 9) and the Energy tax proposal (COM 97 / 30). An increasing

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