How environmental taxes and carbon emissions are related in the G7 economies?. (March 2022)

• Record Type: Journal Article
• Authors: Doğan, Buhari; Chu, Lan Khanh; Ghosh, Sudeshna; Diep Truong, Huong Hoang; Balsalobre-Lorente, Daniel
• Is Part Of: Renewable energy. Volume 187(2022)
• Page Start: 645
• Page End: 656
• Publication Date: 2022-03
• Subjects: CO2 emissions -- Economic complexity -- Environmental taxes -- Energy usage -- Renewable energy -- Natural resources rent; Renewable energy sources -- Periodicals; Power resources -- Periodicals; Énergies renouvelables -- Périodiques; Ressources énergétiques -- Périodiques; 333.794
• DOI: 10.1016/j.renene.2022.01.077
• Languages: English
• ISSNs: 0960-1481

Abstract

Abstract: This paper explores the impact of an environmental tax on carbon emissions for the G7 nations from 1994 to 2014 and the importance of the major drivers of emissions such as energy use, economic complexity, natural resources rent and economic growth. The study also verifies the Environmental Kuznets Curve Hypothesis for the G7 countries and explores the marginal effects of an environmental tax on traditional energy consumption, natural resources rent and renewable energy consumption. This paper's unique contribution is that it investigates for the first time the moderating role of an environmental tax on renewable and non-renewable energy consumption, natural resources rent and CO2 emissions. The results suggest that environmental taxes effectively reduce emissions for the G7 countries and confirm that the marginal effects of the environmental tax on traditional energy consumption, natural resources rent and renewable energy consumption rise with the level of taxation in a statistically significant way. The findings indicate that strict environmental tax laws will allow businesses to shift production towards cleaner methods. Finally, the paper proposes that redistributing tax revenues to the research and development of sustainable technology programmes would empower the nations to achieve the United Nations' SDG-7 and SDG-13 goals. Graphical abstract: Flow Diagram on the nexus between emissions, tax, economic complexity, energy and economic growth. Image 1 Highlights: The paper analyses the effects of economic complexity on carbon emissions. Environmental tax affects directly carbon emissions. Environmental tax lessens the effect of energy consumption and natural resources. Environmental tax amplifies the effect of renewable energy consumption. The EKC hypothesis is validated for economic complexity in G7.