The Importance of Green Tax in Reducing Carbon Emissions: The Case of G-7 Countries

Abstract

Global warming and climate change are recognized as one of the most important environmental and economic problems of the last century. For this reason, new studies are added every day in this field. Carbon emissions, which are shown as the most important cause of global warming, result from the intense use of fossil fuels to meet the energy demand. In this context, many countries are trying to limit their carbon emissions with new laws and regulations. One of these regulations is green taxes. In the study, the role of green taxes in reducing carbon emissions that cause global warming and climate change was examined by using linear panel regression methods for the years 1994-2014 in G-7 countries. In the study, firstly specification tests, then deviations from the assumption were tested and parameter estimations were made using AR(1) Residual Random Effects model. When the coefficients obtained in the study are examined, it is seen that there is a positive relationship between economic growth and carbon emissions. On the other hand, it is seen that environmental patent applications, environmental taxation and renewable energy consumption variables, which are indicators for monitoring environmental quality, have a negative relationship with carbon emissions.