The measure, outlined in an agreement between the parties of the coalition government, follows a similar commitment by the previous government in thedraft budget for 2018. This noted that the country’s current carbon taxes are generally considered low in comparison to those of other Nordic countries.
The taxes apply to petrol, diesel, fuel oil and associated transport fuels. After the initial rise, these will be increased in the following years in line with the country’s climate change action plan.
The coalition government – formed by the Left-Greens’ Katrin Jakobsdottir with the centre-right Independence Party and the populist Progressive Party – intends to take measures to develop a bioeconomy, using incentives to reduce the environmental impact of food production. Organic production, which is currently low in Iceland, will be strengthened, according to the agreement.
The agreement states that all the government’s major programmes will be evaluated in light of climate change objectives, and a climate change board will be set up. The coalition parties also aim to ban the use of heavy fuel oil in shipping in Iceland’s economic area and to support international agreements on marine protection.
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