What would be the impact of much higher energy taxation?

A much higher energy tax would have virtually no impact on consumption in the short term. But it would lead to a massive decrease in energy demand and CO₂ emissions in the long term. However, such a tax could weaken the competitiveness of companies and worsen the living conditions of low-budget households.

In Switzerland, energy consumption appears to be largely insensitive to the price of energy, whether it be for fuels, combustibles or electricity. For example, the price of a barrel of crude oil has fluctuated continuously between $10 and $120 since 1990, with no perceptible influence on demand. This situation is reinforced by the fact that the share of energy in household and industrial budgets has been steadily declining over the past 50 years, and now averages only 3% for Swiss households.

Nevertheless, a distinction must be made between the short- and long-term impacts of a change in energy prices. In the short term, it is estimated that a 10% increase in the price of the various energy sources will lead to a drop in demand for fuels of only 0.8% and for electricity of only 2%. On the other hand, if the 10% increase were to be maintained over the long term, it would lead to a decrease in demand of 3% for fuels and 6% for electricity. A distinction must also be made between a change in the market price and an increase linked to the introduction of a tax. The impact of a tax on demand is more important because the consumer knows that it is a permanent measure and not a temporary price fluctuation, which may induce him or her to adapt his or her behaviour.

The introduction of a much higher tax on energy should therefore play an important incentive role in the long term. Such a tax would provide a strong incentive for investments in energy efficiency and self-supply by renewable energies, whose profitability increases with the price of energy. Energy efficiency measures in industry, as well as the trend towards the purchase of more fuel-efficient vehicles, will also be a direct consequence. However, the impact on the rate of renovation of buildings remains uncertain, as long as the investment costs are borne by the owner and the reductions in energy bills benefit the tenants [→ Q82].

A general energy tax is specifically envisaged as part of the ecological tax reform planned for 2021. The level of this tax has not yet been decided, but an amount of 26 centimes per litre of fossil fuel is mentioned. Furthermore, simulations carried out by the Federal Department of Finance indicate that an increase in the price of petrol to CHF 5 per litre and in the price of electricity by 50% up to 2050 would reduce CO₂ emissions by up to 63% and reduce electricity consumption by 25%, which represents more than half of the current production of our nuclear power plants.

Such a strategically important tax could probably only be introduced within the framework of international coordination and harmonisation, otherwise there is a risk of weakening the competitiveness of Swiss companies. Furthermore, the impact on household budgets remains to be assessed. An additional tax on a basic necessity such as energy could primarily affect low incomes. It is often difficult to reduce energy consumption when you already consume relatively little, and the share of energy in the budgets of low-income households can be much higher than for those with higher budgets. The situation of “energy poverty” (or precariousness of energy) is apparently already a reality in several European countries. In France, according to the national observatory of the same name, 5 million households would be in a situation of “fuel poverty”. In Germany, where the price of electricity has risen by 33% in 5 years and has stabilised at 31 centimes per kWh since 2014, nearly 350,000 households had their electricity cut off in 2012 because of unpaid bills. However, the degree of responsibility of the rise in energy prices for the increase in the number of unpaid bills has not yet been established. It is therefore necessary to place these figures in a global socio-economic context, in particular that of the economic crisis, and to avoid drawing too hasty conclusions. What some people call “fuel poverty” may be simply a question of economic poverty and nothing else.