It is believed that carbon dioxide emissions into the atmosphere are mainly regulated by ‘direct’ economic instruments - the carbon tax and the Emissions Trading System (ETS).
It is believed that carbon dioxide emissions into the atmosphere are mainly regulated by ‘direct’ economic instruments - the carbon tax and the Emissions Trading System (ETS). However, a comparative analysis has shown that ‘indirect’ instruments, such as excise taxes on motor fuel and other energy taxes, did not yield any lesser impact than their ‘direct’ counterparts, and, over time, were even more effective. This is the conclusion drawn by HSE researcher Ilya Stepanov in his article, ‘Taxes in the Energy Sector and Their Role in Reducing Greenhouse Gas Emissions’.
Context
In 2015, 197 countries signed (and the majority have already ratified) the Paris Agreement, thereby enacting the world community’s pledge to move towards low-carbon development. This transition marks a major change for the energy sector, which is responsible for two thirds of the world’s greenhouse gas emissions. The efficiency of energy production is gradually increasing, and conditions of inter-fuel competition are changing in favor of low-carbon energy sources.
A widely held belief in the scientific literature is that the price of carbon plays a major role in climate policy. It is determined either by an appropriate tax, or through the Emissions Trading System (ETS). Both methods are considered ‘direct’ economic instruments of climate policy, but they appeared relatively recently.
Read more at National Research University Higher School of Economics
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