Environmental Taxation and Climate Change
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Environmental Taxation and Climate Change

Achieving Environmental Sustainability through Fiscal Policy

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.
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Chapter 4: Innovative Taxation Strategies Supporting Climate Change Resilience

Rolf H. Weber


Rolf H. Weber I. INTRODUCTION Currently no globally accepted carbon price scheme exists; hence regulations concerning emissions reductions are mainly governed by national laws (Weber and Kaufmann, 2011). Since governmental measures designed to improve climate conditions, such as incentive-driven carbon taxes or cap-and-trade-regimes (other measures are, for example, standardization rules or prohibition legislation: Avi-Yonah and Uhlmann, 2009, p. 22 et seq.), may differ between countries, the problem could arise that these differences lead to anti-competitive or protectionist effects, because producers of goods may have to face higher costs, if they are subject to stringent environmental provisions. In light of this fact, the risk is immanent that carbon intensive industries relocate to countries having less strict provisions on carbon emissions. This phenomenon is generally referred to as ‘carbon leakage’. Furthermore, ‘carbon heavens’ could pose a threat to the effectiveness of globally agreed carbon reduction measures (WTO, 2009, pp. 98–100, WTO, 2009a). To combat the negative effects of climate change trough reduction of carbon emissions, national governments rely mostly on ‘traditional’ tax instruments such as carbon taxes and cap-and-trade regimes. Both instruments are designed to modify the behavior of the market participants by sending price signals to the market. These instruments may have an effect on a national scale; however, they do not encompass entities producing abroad and, therefore, the introduction of new environmental taxation strategies must be considered. The concept of creating a powerful incentive for the producers of negative externalities to reduce their output was developed in the early...

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