Effectiveness of environmental taxes and environmental stringent policies on CO2 emissions: the European experience

Wolde-Rufael, Yemane and Mulat-Weldemeskel, Eyob (2022) Effectiveness of environmental taxes and environmental stringent policies on CO2 emissions: the European experience. Environment, Development and Sustainability.

[img] Text
Efectiveness of environmental taxes and environmental policies.pdf - Accepted Version
Restricted to Repository staff only until 3 June 2023.

Download (1MB) | Request a copy
Official URL: https://doi.org/10.1007/s10668-022-02262-1

Abstract / Description

The aim of this paper is to investigate the effectiveness of environmental taxes and environmental stringent policies in reducing CO2 emissions in a panel of 20 European countries for the period 1995–2012. As mounting global environmental and climate challenges are becoming great cause for concern, environmental stringency policies and environmental taxes are becoming the cornerstones for a sustainable environment. Applying panel cointegration tests, we found a negative and a statistically significant relationship between environment taxes (disaggregated into total, energy and transport taxes) and CO2 emissions on the one hand and also a negative and a statistically significant relationship between environmental policy stringent and CO2 emissions on the other. The robustness of the evidence is also supported by a quantile regression model. The higher the environmental stringency policy, the lower the CO2 emission. Similarly, the higher the revenue from total environmental tax, energy and transport tax, the higher the reductions in CO2 emissions. Both these two policy instruments were effective in reducing CO2 emissions. The positive impact of environmental tax on improving environmental quality should encourage policy makers to increase environmental tax as the current level of environmental tax is believed to be low relative to levels required to achieve climate change objectives and is also low relative to the social cost of carbon and relative to the prices of taxed fuels.

Item Type: Article
Uncontrolled Keywords: Cointegration; CO2 emissions; environmental policy stringency; environmental taxes; fossil energy; renewable energy
Subjects: 300 Social sciences
300 Social sciences > 330 Economics
Department: Guildhall School of Business and Law
Depositing User: Eyob Mulat-Weldemeskel
Date Deposited: 23 Jun 2022 15:30
Last Modified: 23 Jun 2022 15:30
URI: http://repository.londonmet.ac.uk/id/eprint/7720

Actions (login required)

View Item View Item