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Environmental taxes, energy consumption, and environmental quality: Theoretical survey with policy implications

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Abstract

Improving energy efficiency and mitigating environmental problems through environmental regulations and taxes are considered as fundamental driving forces of climate change policies. However, the current literature on the theoretical and empirical evidence focusing on the inter-linkages between environmental taxes, energy consumption, and environmental quality is rather meager. This article attempts to provide a detailed survey on the earlier literature for developed, developing, and emerging countries analysis by covering the literature up to 2020. The prime objective of this survey is the coverage of different level of economies, modeling, methodologies, time periods as well as empirical outcomes. The study mainly covers three types of causality direction: (i) environmental taxes, energy consumption, and energy efficiency; (ii) environmental taxes and environmental quality; (iii) energy consumption (renewables, non-renewable, and fossil fuels) and environment deterioration. Most of the empirical studies reported that the energy usage for economic activities significantly affects the pollutant emissions. However, the role of environmental taxes is still ambiguous and demands a more in-depth investigation. Comprehending the literature survey has provided the basis to address the policymaking, designing as well as the implementation of environmental regulations.

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Notes

  1. Environmental taxes were pioneered by several developed countries of Europe and OECD. Later, environmental taxation policy has been adopted across developed, developing, and emerging countries. https://www.oecd.org/tax/tax-policy/working-papers-environmental-taxes.htm

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Correspondence to Umer Shahzad.

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Responsible Editor: Nicholas Apergis

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Highlights

• Environmental regulations and taxes act as a policy tool to fight climate change externalities.

• The use of fossil fuels and non-renewable sources is the major contributor for greenhouse gases in developing, developed, and emerging economies.

• Renewable energy sources and green technologies tend to have significant effects in improving the environmental quality.

• The government of developing or developed countries can redesign the environmental regulations by imposing the carbon tax on industries to install carbon treatment plants.

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Shahzad, U. Environmental taxes, energy consumption, and environmental quality: Theoretical survey with policy implications. Environ Sci Pollut Res 27, 24848–24862 (2020). https://doi.org/10.1007/s11356-020-08349-4

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  • DOI: https://doi.org/10.1007/s11356-020-08349-4

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