Abstract
One of the European Union’s (EU) objectives regarding climate change is a 40% reduction in greenhouse gas emissions by 2030, ensuring that member states focus on sustainable development. The aim of this study was the comparison of a three-dimensional relationship between green taxation, environmental performance and economic growth for the time period between 1995 and 2017 in Romania and Sweden. The novelty consists of simultaneously using the double dividend theory and environmental Kuznets curve theory for Romania. The autoregressive distributed lag (ARDL) method was used for testing the cointegration relationship. The Granger causality estimation based on the ARDL-error correction model was applied to identify the causality relationship between the variables and the pairwise Granger causality test to detect the direction of causality. The implementation of the tests led to the conclusion that environmental taxes will have a significant influence on the reduction of greenhouse gas emissions in the long run in both Romania and Sweden, while in the short run, no such influence will be noticed. Also, in Romania, in the long term, there was a bidirectional causality relationship between economic growth and greenhouse gas emissions, while in Sweden, the causality relationship was from economic growth to greenhouse gas emissions.
Highlights
Climate change has become a reality nowadays, and all governments, individuals and private companies should take serious measures to diminish the extent of these changes and combat them, this being one of the goals included in the UN 2030 Agenda for Sustainable Development
A better and more responsible coordination of the relationship between economic growth, air pollution and environmental taxes has become an item of interest on the agenda of all institutions at local, national and global levels
The objective of the present study was to examine the causal relationships between greenhouse gas emissions, economic growth and environmental tax revenues for Romania and Sweden between 1995 and 2017
Summary
Climate change has become a reality nowadays, and all governments, individuals and private companies should take serious measures to diminish the extent of these changes and combat them, this being one of the goals included in the UN 2030 Agenda for Sustainable Development. It is important to adjust to the negative consequences brought by climate change in order to reduce the extent of the effects and raise the resilience and level of preparedness in the face of future effects. In these conditions, government should implement policies meant to reduce greenhouse gas emissions, the most important tool being carbon taxes [2]. In order to reduce the reluctancy of the population from developing countries regarding green taxation, the government may offer some facilities such as reducing other taxes or investing revenues from these taxes in green technologies, green public transportation, developing the infrastructure and implementing educational programs that will increase awareness towards climate changes
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