A way forward in reducing carbon emissions in environmentally friendly countries: the role of green growth and environmental taxes

Eyup Dogan, Sabina Hodžić and Tanja Fatur Šikić

Economic Research-Ekonomska Istraživanja, 2022, vol. 35, issue 1, 5879-5894

Abstract: Given recent environmental reforms and the focus on the problem of climate change, it is necessary to evaluate whether green growth and environmental taxes can reduce CO2 emissions for countries. Even though a number of studies have analysed the ways to reduce environmental pollution, the literature lacks enough evidence for the role of green growth and environmental taxes in determining the level of carbon emissions. Therefore, the objective of the empirical analysis is to estimate the impacts on CO2 emissions of green growth and environmental taxes by including sustainable indicators for a group of 25 environmentally friendly countries from 1994 to 2018 by applying advanced panel data analysis models. By applying the novel quantile regressions on the largest amount of available data from 1994 to 2018, this article shows that the coefficients of green growth, environmental taxes, renewable energy and energy efficiency are negative at lower, medium and higher quantiles. According to the results of the quantile regression, environmental taxes, renewable energy and energy efficiency are key factors in decreasing CO2 emissions. Overall, renewable energy should be given greater priority through research supports, subsidies and government incentives while environmental taxes should be more implemented to discourage activities that promote pollution.

Date: 2022
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DOI: 10.1080/1331677X.2022.2039261

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