Ireland and other EU countries are being urged by the European Environment Agency to follow the example of Estonia, which has just adopted a radical fiscal reform plan that will see the Baltic state switch to "eco-taxes".
Under the Estonian plan, which was adopted last month, personal income tax is to be reduced gradually to just 20 per cent while taxes on polluting industry, fossil fuels and the use of natural resources are to be increased over a 10-year period.
European Environment Agency executive director Jacqueline McGlade hailed the initiative, saying ecological taxation was "one of the major instruments to force change" so that the gap between environmental policy and its implementation could be closed. "This is really critical," she said.
"There are no economies without an environment, and we need to continue repeating that message," Prof McGlade told journalists at a briefing in Copenhagen. "We see no reasowhy countries can't use all the fiscal instruments that a treasury has available to underpin environmental policy.
"Politicians need to have courage and learn from best practice elsewhere," she said. "They should look at what Estonia is trying to do and realise that there must be some accounting for the use of green resources and structure the tax system accordingly."
Prof McGlade said Europe's ecological footprint in 2002 was 2.5 times larger than it was in 1961, and the trends in consumption were unstoppable.
"We are on a collision course with nature, and events such as the 2003 heat wave are now four times more likely," Prof McGlade said.
Project manager with the agency Paul McAleavey said implementation of EU environmental policies had been "appalling" over the past five years, mainly because of a political shift to the right and the adoption of the "Lisbon Agenda" in 2000, which put economic growth first.
The EU's agenda for sustainable development, adopted in 2001, had simply not been implemented.
Similarly, Mr McAleavey said, little progress had been made on the European Commission's sixth environmental action programme, which covered issues such as climate change.
André Jol, head of the agency's climate change unit, said Ireland was among the EU countries which would have the "biggest problems" dealing with the wide gap between its greenhouse gas limit under the Kyoto Protocol and the actual level of emissions.
"They will have to buy in credits, and this will either mean more public spending or the burden will fall on other sectors of the economy," he said, adding that under current policies the EU would only reduce its emissions by 0.6 per cent in the 2008-2012 period.
If the Kyoto target of a reduction of 8 per cent is to be achieved, Mr Jol said additional measures would be needed, such as using more renewable energy for electricity generation, improving the energy performance of buildings and promoting the use of bio-fuels in transport.
Dr Peder Jensen, a project manager with the agency, warned that carbon dioxide emissions from transport were increasing so fast that "all other sectors will have to reduce emissions to nothing by 2050 unless we start taking measures now to avoid this collision".
He said people preferred to buy SUVs (sports utility vehicles) rather than smaller, more fuel-efficient cars, and the motor industry also made more money from selling SUVs. "Policymakers will have to look at taxation of vehicles if they want to promote fuel efficiency."
Dr Jensen said Europe had only a limited opportunity to grow bio-fuels, and it would be more sensible to use them for heat and power production instead of cars.
"If Europe wants to put bio-fuels in vehicles, it will take up an awful lot of land in Brazil and Indonesia," he said.
