Environmental Taxation and Climate Change

Environmental Taxation and Climate Change

Achieving Environmental Sustainability through Fiscal Policy

Critical Issues in Environmental Taxation series

Edited by Larry Kreiser, Julsuchada Sirisom, Hope Ashiabor and Janet E. Milne

Containing an authoritative set of original essays, Environmental Taxation and Climate Change provides fresh insights and analysis on how environmental sustainability can be achieved through fiscal policy. Written by distinguished environmental taxation scholars from around the world, this timely volume covers a range of hotly debated subjects including carbon related taxation in OECD countries, implications of environmental tax reforms, innovative environmental taxation and behavioural strategies, as well as many other relevant topics.

Foreword

Nils Axel Braathen

Subjects: economics and finance, environmental economics, environment, climate change, environmental economics, environmental law, law - academic, environmental law

Extract

Many hundreds of environmentally related taxes are applied in OECD countries and elsewhere around the world (cf. www.oecd.org/env/policies/ database), addressing a broad spectrum of environmental problems, such as waste generation, use of hazardous chemicals, traffic congestion, etc. – and, of particular relevance for this book, greenhouse gas emissions. There are many good reasons for their use, both from a theoretical and practical point of view. One well-known argument for their use is that they (in principle) can equalise the marginal cost of reducing emissions across polluters, which, in the context of climate change mitigation, would result in a given level of carbon emissions being obtained at the lowest possible cost to society as a whole. Those who can reduce their emissions at a cost per unit lower than the tax rate set will do so – and those who face higher abatement costs will pay the tax instead of abating. Importantly, the taxes give the polluters a large flexibility to find low-cost ways of reducing their emissions. It would in practice be an impossible task for a government to achieve a similar outcome by telling each polluter how much – and how – they should abate. In practice, however, governments rarely design environmental taxes in a way that provides an equal marginal abatement incentive to all sources contributing to a given problem – and this is also the case as regards carbon-related taxes. Certain polluters are often completely exempted, or face reduced tax rates; tax rates of ‘carbon taxes’ often vary between energy products...