How environmental taxes and carbon emissions are related in the G7 economies?


Dogan B., Lan Khanh Chu L. K. C. , Ghosh S., Huong Hoang Diep Truong H. H. D. T. , Balsalobre-Lorente D.

RENEWABLE ENERGY, vol.187, pp.645-656, 2022 (Journal Indexed in SCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 187
  • Publication Date: 2022
  • Doi Number: 10.1016/j.renene.2022.01.077
  • Title of Journal : RENEWABLE ENERGY
  • Page Numbers: pp.645-656
  • Keywords: CO2 emissions, Economic complexity, Environmental taxes, Energy usage, Renewable energy, Natural resources rent, ENERGY-CONSUMPTION, RENEWABLE ENERGY, CO2 EMISSIONS, PANEL COINTEGRATION, NONRENEWABLE ENERGY, EMPIRICAL-EVIDENCE, OECD COUNTRIES, GROWTH, URBANIZATION, TESTS

Abstract

This paper explores the impact of an environmental tax on carbon emissions for the G7 nations from 1994 to 2014 and the importance of the major drivers of emissions such as energy use, economic complexity, natural resources rent and economic growth. The study also verifies the Environmental Kuznets Curve Hypothesis for the G7 countries and explores the marginal effects of an environmental tax on traditional energy consumption, natural resources rent and renewable energy consumption. This paper's unique contribution is that it investigates for the first time the moderating role of an environmental tax on renewable and non-renewable energy consumption, natural resources rent and CO2 emissions. The results suggest that environmental taxes effectively reduce emissions for the G7 countries and confirm that the marginal effects of the environmental tax on traditional energy consumption, natural resources rent and renewable energy consumption rise with the level of taxation in a statistically significant way. The findings indicate that strict environmental tax laws will allow businesses to shift production towards cleaner methods. Finally, the paper proposes that redistributing tax revenues to the research and development of sustainable technology programmes would empower the nations to achieve the United Nations' SDG-7 and SDG-13 goals. (C) 2022 Elsevier Ltd. All rights reserved.