Abstract
Energy taxes are one of the main market-based tools directed toward mitigating climate change in the European Union (EU). Therefore, the aim of this article was to analyze whether energy taxes really contribute to the reduction of greenhouse gas (GHG) emissions and the successful implementation of climate change policy. Applying the Granger causality test on time series and using panel data analysis, the direct and indirect (via the reduction of fossil energy consumption (FEC) and energy intensity (EI), as well as the increase of renewable energy consumption (REN)) impacts of energy taxes on GHG emissions in EU countries were analyzed in the present study. The results showed that energy taxes did not Granger-cause fossil energy consumption, energy intensity, renewable energy consumption, and GHG emissions in almost all EU countries. Regarding the panel data analysis, the results showed that energy taxes did not, directly and indirectly, influence GHG emissions. Therefore, this paper shows that generally, energy tax policy in EU countries is ineffective. Thus, tax policy should be reformed and matched with an emissions trading system in seeking climate change mitigation.
Highlights
In recent decades, climate change policy has attracted particular attention
Considering that energy taxes contribute to the reduction of greenhouse gas (GHG) emissions in two ways—by using less fuel per unit of output, or a reduction in energy intensity, and by using fuel with a lower carbon content—Granger causalities among energy taxes, fossil energy consumption, energy intensity, and renewable energy consumption were analyzed in separate European Union (EU)
With some time series pairs in the cases of a few countries, we found a cointegrated relationship that might suggest a long-run relationship, but these findings were not supported by estimations using the ECM model and were treated in our research as not reliable evidence of a relationship
Summary
Despite the increased number of studies on adaptation to climate change, the reduction of this problem remains the main task of environmental policy. There are several policy tools for emissions control, many of which use economic mechanisms to influence environmental impacts. Environmental taxes affect resource consumption or emissions quantities by increasing the price of chargeable products [1,2,3] and are the tools most used in environmental policy. The main aim of these taxes is to change market prices to internalize environmental harms [4,5,6,7]. Increasing the prices of goods and services pushes consumers to change their purchasing behaviors, reducing demand for the products and services of polluters [8]
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