How do environmental taxes affect the environmental investment of high-emission enterprises: Evidence from China.

Countries worldwide have adopted environmental taxes to reduce pollution, making it essential for policymakers and researchers to understand their impact on corporate environmental investment. This study investigates the impact of China's environmental tax law on the environmental investment behavior of high-emission enterprises, using a Difference-in-Differences (DID) approach based on a quasi-natural experiment. The findings reveal that environmental taxes significantly incentivize these enterprises to increase their environmental investments, with the proportion of investment relative to total assets rising by approximately 82% compared to low-emission firms. This effect remains robust after controlling for various tests, including parallel trends, placebo tests, and Propensity Score Matching (PSM) tests, as well as excluding firms that never disclosed pollutant discharge tax payments or expected effects. Motivation analysis shows that high-emission enterprises are driven primarily by the goal of reducing pollution costs to engage in environmental governance. Mechanism analysis indicates that the implementation of environmental taxes strengthens corporate governance, further encouraging environmental governance activities. Cross-sectional analysis reveals that these effects are most pronounced in firms with high financing constraints, elevated operating costs, or low profitability. Additionally, environmental investment is found to enhance corporate productivity, net sales margins, and social evaluations. This study enhances the understanding of how environmental regulation influences corporate behavior, offering empirical evidence that environmental taxes foster sustainable practices and enhance corporate performance.

The dark side of climate policy uncertainty: Hindering energy transition by shaping environmental taxes effectiveness.

Climate policy uncertainty (CPU) may have an adverse impact on the environment by interfering with the effectiveness of environmental policies, but there is currently little evidence to support this indirect effect. By incorporating CPU into the transition function, this paper utilizes the panel smooth transition regression (PSTR) to dynamically analyze how CPU affects the relationship between environmental taxes (ETR) and energy transition. When CPU exceeds the threshold, the promoting effect of ETR on energy transition weakens or reverses. The robustness of the main conclusions is demonstrated by establishing a PSTR estimator with the instrumental variable. This paper also constructs a counterfactual scenario, showing that CPU reduces the positive impact of ETR on renewable energy consumption and generation by 7.6% and 3.5%, respectively. Further analysis indicates that this negative effect arises because CPU likely increases investment risk, particularly for long-term green projects, thereby inhibiting the clean energy market and energy-related green technological innovation. Heterogeneity analysis find that the weakening effect of CPU on the effectiveness of ETR is stronger in countries with low energy resource endowment, high energy intensity, and lower economic development levels, underscoring the need for tailored policy approaches. This research emphasizes that for countries with ambitious energy transition goals, climate policy stability is crucial for ensuring the healthy development of environmental taxes policy and renewable energy markets.

How to get green with agricultural footprint: A global analysis of carbon emissions, environmental taxes, and agrochemical use.

The agriculture sector, being highly vulnerable to climate change, plays a pivotal role in achieving green and sustainable economies. As the 2030 Agenda emphasizes the integrated development of environmental, social, and economic dimensions, it is crucial to understand how agricultural practices affect sustainability. This study investigates the environmental impact of the agricultural sector on the green economy by examining key environmental factors, such as agricultural energy emissions, environmental taxes, irrigated water use efficiency, fertilizer use, and pesticide application. The analysis is conducted using the Panel Quantile Autoregressive Distributed Lag (QARDL) model, with robustness checks performed through the comparison with the Panel ARDL model, using data from 2000 to 2020. To assess the green economy, an index is constructed based on 20 indicators related to environmental, social, and economic sustainability. The results show that agricultural energy emissions, despite their environmental cost, are positively associated with green economy development, highlighting the trade-off between high productivity and environmental degradation in a resource-efficient economy. Improved water use efficiency is found to enhance agricultural sustainability and production. Additionally, environmental taxes and regulations exert a significant positive effect on both environmental preservation and social welfare. Contrary to the belief that reducing agricultural production will lower carbon emissions, the study suggests that adopting environmentally friendly practices and imposing targeted taxes are more effective strategies. The findings also reveal a negative relationship between excessive fertilizer use and the green economy, indicating the need for minimal fertilizer application to promote sustainability. The study concludes with specific policy recommendations. Governments, particularly in countries that have not yet adopted sustainable agricultural practices, should implement environmental taxes and regulations to promote carbon neutrality and support the Sustainable Development Goals. These measures are essential to balancing economic growth, environmental sustainability, and social equity in the agricultural sector.

Environmental taxes, energy transition and sustainable environmental technologies: A comparative OECD region climate change analysis.

The integrated economic reforms in recent years have transformed human life, however, the subsequent rise in environmental challenges necessitates sustainable development goals to ensure net-zero transformation. Within the context of modern energy, economic, and environmental transformation, we deliberate how environmental taxes, energy transition, and sustainable environmental innovation impact climate change in 38 OECD economies. Our robust empirical investigation allows us to report that environmental taxation, sustainable environmental technology, and energy transition lower but GDP and trade openness exacerbate ecological challenges. We also divide the dataset in G7 and the rest of the OECD groups to document the varying impact of environmental policies within OECD economies. Our econometric analysis helps us report novel policy frameworks to solve climate challenges under the UN SDG agenda.

Evolving waste management: The impact of environmental technology, taxes, and carbon emissions on incineration in EU countries.

Amid the urgent global imperatives concerning climate change and resource preservation, our research delves into the critical domains of waste management and environmental sustainability within the European Union (EU), collecting data from 1990 to 2022. The Method of Moments Quantile Regression (MMQR) results reveal a resounding commitment among EU member states to diminish their reliance on incineration, which is evident through adopting green technologies and environmentally conscious taxation policies, aligning with the European Union's sustainability objectives. However, this transition presents the intricate task of harmonizing industrial emissions management with efficient waste disposal. Tailoring waste management strategies to accommodate diverse consumption patterns and unique circumstances within individual member states becomes imperative. Cointegrating regressions highlighted the long-run relationship among the selected variables, while Feasible Generalized Least Squares (FGLS) and Panel-Corrected Standard Errors (PCSE) estimates roughly confirmed MMQR results. ML analyses, conducted through two ensemble methods (Gradient Boosting, GB, and Extreme Gradient Boosting, XGBoost) shed light on the relative importance of the predictors: in particular, environmental taxation, consumption-based emissions, and production-based emissions greatly contribute to determining the variation of combustible renewables and waste. This study recommends that EU countries establish monitoring mechanisms to advance waste management and environmental sustainability through green technology adoption, enhance environmental taxation policies, and accelerate the renewable energy transition.

The effects of environmental taxes, renewable energy consumption and environmental technology on the ecological footprint: Evidence from advanced panel data analysis.

The world faces various challenges in terms of environmental sustainability. An increasing world population, the rigidity of traditional production and consumption patterns, the complexity of economic activities, globalization, and harmful emissions intensify environmental pressures. In this context, the evaluation of various environmental policy instruments is important to alleviate environmental pressures and, thus, combat climate change. This study aims to investigate the impact of environmental taxes, renewable energy consumption, and environmental technology on the ecological footprint in OECD countries by using data from 1994 to 2018 and modern panel data techniques. The results of the AMG estimator indicate that environmental taxation and renewable energy consumption play a role in reducing the ecological footprint; however, results imply that environmental technology does not have a statistically significant effect on the ecological footprint. In addition, we applied DCCE and CS-ARDL estimators to obtain robustness results and observed that the findings remained valid. Therefore, the results of the study suggest that regulations to increase the effectiveness of environmental taxes, renewable energy consumption, and environmental technology should be promoted to ensure environmental sustainability.

The individual and combined impact of environmental taxes in Chile - A flexible computable general equilibrium analysis.

Many studies simulate carbon taxes with computable general equilibrium (CGE) models, but there is scarce evidence about how other environmental taxes implemented simultaneously reinforce or lessen the impacts. This study aims to determine the individual and combined effect of taxes on CO2 and other local air pollutants (SO2, NOX, and PM) currently applied in Chile. A flexible CGE model is used to sensitize the results, allowing two nested production structures to be compared. Both nested production structures include a high disaggregation of the energy sector that considers different fossil fuels and renewable energies. The results show that environmental taxes reduce between 5.4% and 6.9% of net CO2 equivalent emissions in the most realistic scenarios. In addition, the carbon tax explains 84%-85% of the drop in net CO2 equivalent emissions, 81%-82% of the reduction in fossil energy consumption, 76%-78% of the decline in GDP, and generates co-benefits by reducing local air pollutants. The tax on PM emissions is the second more relevant to reduce net CO2 equivalent emissions, while taxes on SO2 and NOX emissions have marginal effects. By comparing the impacts of both structures to previous studies based on microdata, it is concluded that the KL-EM provides the best results.

A step towards sustainable environment in China: The role of eco-innovation renewable energy and environmental taxes.

In the contemporary environment, developing countries are more focused on how economic factors can reasonably utilize technological advancement and carbon neutrality target as effective mechanisms in achieving sustainable production and consumption patterns. The effort to attain carbon neutrality target on natural environment in terms of lower carbon emission (CO2), haze pollution, and greenhouse gas (GHG) requires measures like the usage of non-renewable energy, ecological innovation, and environmental taxes. In doing so, this study considers the sustainability of China's natural environment in terms of CO2 emission, haze pollution through PM2.5, and greenhouse gas emission as well as factors like ecological innovation (ECO), environmental taxes (ERT), renewable energy, and globalization as the key determinants. The Quantile ARDL approach was used to examine both long- and short-run relationships between the explanatory and outcome variables. The results confirmed that there is a significant and negative impact of ECO, renewable energy, and ERT on CO2 emission in the region of China under different quantiles. Whereas, the globalization factor was observed as positively and significantly linked with CO2 emission but only for the higher quantiles. The long-run estimation further showed that ECO, renewable energy, and ERT can significantly help to decrease haze pollution in terms of PM2.5 in China. Furthermore, QARDL also confirms the negative and long-run estimation between the ECO, REN, and ERT, whereas globalization is causing more GHG in China, subsequently creating more environmental sustainability issues. Thus, it is concluded that effective innovation, renewable energy consumption, and environmental taxes reduce carbon emission while globalization increases the carbon emission in the country.

The dynamic effect of eco-innovation and environmental taxes on carbon neutrality target in emerging seven (E7) economies.

After the Paris Climate Conference (Conference of the Paris COP21), emerging countries also start succeeding in carbon neutrality targets. In doing so, environmental sustainability has become a vital concern over the past few decades. To control the pollution from combustion gases and to mitigate the destructive effects of carbon emission on environmental quality, governments and policymakers need to consider the important factors that decrease the net carbon emission level, such as eco-innovation and environmental taxes. The literature on the environmental taxes and eco-innovation to control carbon emission is scant. Therefore, this study fills the knowledge gap by evaluating the dynamic effect of eco-innovation and environmental taxes on the carbon neutrality target in emerging seven (E7) economies from 1995 to 2018 and other control variables. The study uses advanced panel data econometric tools to handle various issues such as cross-section dependence structural break and slope heterogeneity for empirical analysis. The study uses the second-generation panel unit root test, Westerlund's cointegration tests, CS-ARDL long-run and CS-ARDL short-run analysis, AMG, and CCEMG for robustness check. The study's outcomes confirm that eco-innovation and environmental taxes play a major role in carbon abatement and Environmental Kuznet Curve (EKC) presence found in E7 countries.

A step toward reducing air pollution in top Asian economies: The role of green energy, eco-innovation, and environmental taxes.

Environmental degradation is significantly studied both in the past and the current literature; however, steps towards reducing the environmental pollution in carbon emission and haze pollution like PM2.5 are not under rational attention. This study tries to cover this gap while considering the carbon emission and PM2.5 through observing the role of renewable energy, non-renewable energy, environmental taxes, and ecological innovation for the top Asian economies from 1990 to 2017. For analysis purposes, this research considers cross-sectional dependence analysis, unit root test with and without structural break (Pesaran, 2007), slope heterogeneity analysis, Westerlund and Edgerton (2008) panel cointegration analysis, Banerjee and Carrion-i-Silvestre (2017) cointegration analysis, long-short run CS-ARDL results, as well as AMG and CCEMG for robustness check. The empirical evidence in both the short- and long-run has confirmed the negative and significant effect of renewable energy sources, ecological innovation, and environmental taxes on carbon emissions and PM2.5. Whereas, non-renewable energy sources are causing environmental degradation in the targeted economies. Finally, various policy implications related to carbon emission and haze pollution like PM2.5 are also provided to control their harmful effect on the natural environment.

Does environmental taxes achieve the carbon neutrality target of G7 economies? Evaluating the importance of environmental R&D.

The present study highlights the importance of environmental taxes and R&D in achieving the goal of carbon neutrality. Post Paris conference (COP21), countries set domestic targets to achieve zero carbon or carbon neutrality. Several studies have been conducted to explore the factors affecting environmental quality. However, the literature on the importance of environmental taxes and environmental R&D in affecting environmental quality is scant, and thus, this study investigates the impact of environmental taxes and R&D on consumption-based carbon emissions for G-7 countries over a period of 1990-2019. The cointegration test results show a stable long-run association between environmental taxes, environmental R&D, imports, exports, GDP, and consumption-based CO2 emissions. The results show that in the short- and long-run, environmental taxes, environmental R&D, and exports significantly reduce carbon emissions, whereas GDP and imports significantly enhance carbon emissions. The Dumitrescu and Hurlin Granger causality test results show that any policy that targets environmental taxes, environmental R&D, exports, imports, and GDP significantly changes CO2 emissions. This study recommends that policymakers in G-7 countries should focus on environmental R&D and taxes to achieve the goal of carbon neutrality.

Obstacles and appeal of environmental taxation: Insights from sub-Saharan Africa.

Increasing the slow pace of adoption of environmental taxes across low-income countries has become a significant priority among international financial institutions, multilateral development banks, and international donors. Yet little is known about the practical institutional, administrative, and political obstacles that have led to their slow implementation and how they can be made more appealing, especially across sub-Saharan Africa. Based on a review of the literature and 16 in-depth interviews with ministries of finance, revenue authorities, and other government representatives across six African countries, this paper provides exploratory evidence of these stakeholders' view about environmental taxes deployment in their countries' context. By increasing the visibility of these policymakers' opinions and priorities, this study aims to individuate areas in which further research can provide support for the introduction of environmental fiscal measures. While there are differences across the countries covered, a lack of data and analytical capacity to develop effective environmental taxes is a common theme, as well as the historical prioritisation of their revenue mobilisation capacity over their environmental impact. A great variety of government actors with a mandate over natural resources, often with competing policy priorities, coupled with a lack of coordination fora, has also impeded the harmonisation of the environmental charges they levy. These measures are also often perceived to be regressive and to pose an obstacle to industrial development, lowering their appeal, given that poverty reduction and employment creation are an overarching priority. Nonetheless, support for introducing specific environmental tax measures exists across the population and policymakers, especially if their revenue can be earmarked for environmental purposes.

The impact of Chinese foreign direct investment and environmental tax revenues on air degradation in Europe: a spatial regression approach, 2000-2020.

This study analyzes air pollution through the effects of China's FDI in 27 European countries over a 20-year period, with a focus on the impact of environmental tax revenues (ETRs) and the environmental context in China. The relationship is estimated through spatial regressions that account for the presence of air pollutants in neighboring countries. The findings suggest that China's FDI in Europe does not contribute to air pollution but rather has a positive impact. The presence of environmental charges filters out non-polluting investments, which has a non-linear relationship with PM2.5 pollution rates. The study also concludes that air pollution is closely linked to the global environmental context, highlighting the positive effects of international agreements in the fight against climate change. Specifically, the study finds a link between China's efforts to address its polluting activities and their impact on European air quality.

Environmental taxes, technological innovation and firm performance: Evidence from China's manufacturing firms.

Based on panel data from 2011 to 2019 for heavily polluting listed firms in the manufacturing industry, this paper examines the impact of environmental taxes on technological innovation and firm performance using the propensity score matching (PSM) and differences-in-differences (DID) methods. The empirical results show the following: (i) Firm performance and innovation quantity are positively affected by environmental taxes. The average effects of environmental taxes on firm performance and innovation quantity are 1.28 and 0.219, respectively. However, environmental taxes have no significant impact on innovation quality. (ii) A mechanism analysis reveals that innovation quantity plays a significant partial mediating role in the positive effect of environmental taxes on firm performance. (iii) Heterogeneity analysis shows that different environmental tax rates lead to a variation in innovation quantity and firm performance across regions. The positive effect of environmental taxes on innovation quantity is only confirmed in high-tax and low-tax areas. Meanwhile, high environmental taxes are related to better firm performance. Based on the research, policy recommendations are put forward to optimise environmental taxes, such as improving the environmental tax system and coordinating environmental tax and innovation policies.

Digital financial inclusion and environmental entrepreneurship: evolution of state legal environmental responsibility in China.

This investigation attempts to look at how digital finance and environmental taxes affect environmental entrepreneurship. We have used the QARDL model to evaluate the short- and long-run estimations. The main findings of the QARDL model confirm that digital finance is vital in promoting the environmental entrepreneurship model in the long run. In contrast, in the short run, digital finance does not significantly impact environmental entrepreneurship. Moreover, environment-related taxes, environmental innovations, and economic development promote environmental entrepreneurship in the long run across most quantiles. However, in the short run, environment-related taxes and economic development do not exert any significant impact on environmental entrepreneurship in almost all quantiles, while environmental innovation promotes environmental entrepreneurship in most quantiles. Further, asymmetric effects of digital finance (ATM and debit card), environment-related taxes, environmental innovations, and economic development are confirmed in the long run; in the short run, asymmetric effects are observed in the case of environmental innovation in both the models. Following the results, we suggest that the public and private sectors should do more financing to promote ecopreneurship in society. Moreover, more taxes should be imposed on entrepreneurs who do not adopt green practices.

Do environmental taxes, environmental innovation, and energy resources matter for environmental sustainability: Evidence of five sustainable economies.

This study explores the relationship between environmental taxation, environmental technologies, energy resources, and consumption-based carbon emissions in five leading green economies from 2000 to 2019. The study applied the Cross-Sectional Auto-Regressive Distributed Lag (CS-ARDL) model to derive benchmark results, with Augmented Mean Group (AMG) and Common Correlated Effect Mean Group (CCEMG) techniques being utilized for conducting robustness analyses. The empirical findings suggest that environmental taxation, environmental innovations, and the consumption of renewable energy are associated with a reduction in consumption-based carbon emissions, thereby contributing to enhanced environmental sustainability. Conversely, the utilization of non-renewable energy is linked to an increase in consumption-based carbon emissions. These results align with the objectives outlined in the Sustainable Development Goals' 2030 agenda, particularly SDG 7 (Affordable and Clean Energy), SDG 9 (Industry, Innovation, and Infrastructure), and SDG 13 (Climate Action), offering valuable policy implications.

Environmental taxes, eco-innovation, and environmental sustainability in EU member countries.

Environmental taxes and renewable energy consumption are becoming central policy instruments in countries especially in European Union (EU) countries to enhance environmental sustainability; however, no attention has been given to eco-innovations in the nexus between environmental taxes and carbon dioxide emission. This study investigates the effect of environmental taxes, innovations, and renewable energy consumption on CO2 emissions in 26 EU countries from 2000 to 2020. Panel quantile regression was employed for analysis where the results show that environmental taxes have both positive and negative influence on CO2 emissions across quantiles in different models, whereas renewable energy consumption considerably reduces carbon emissions. Economic growth causes an increase in CO2 emissions; however, the financial progress greatly reduces CO2 emissions. Eco-innovations and its square term have a negative influence on carbon emissions which shows that eco-innovations significantly reduce carbon dioxide emission. The findings have significant implications for public policy in the sample countries, notably in terms of promoting renewable energy sources and transitioning to green growth through eco-innovations in order to achieve environmental sustainability.

Dynamic relationship between green finance, environmental taxes, and CO2 emissions in transition toward circular economy: what causes what?

The study was aimed at investigating the dynamic relationship between environmental taxes, green financing, and carbon dioxide (CO2) emissions in Brazil, China, India, and South Africa from 1994 to 2019. To thoroughly examine the proposed relationship, a family of robust econometric methods is used to get reliable and accurate results. Our evidence indicates that green finance and CO2 emissions are negatively connected with each other. Similarly, positive relationship is found between environmental taxes and CO2 emissions. Additionally, environmental taxes and green finance are positively related as well. Further, the results of the Method of Moments Quantile Regression estimator indicate that green finance and CO2 emissions decrease in countries with higher pollution compared to those with lower pollution. Interestingly, environmental taxes only contribute to pollution in countries with higher emissions, whereas CO2 emissions increase environmental taxes in all sample countries. Lastly, green finance has a mitigating effect only in countries with greater pollution, and CO2 emissions have a negative rebound effect on green finance in countries with greater CO2 emissions. According to the evidence, green financing can be an effective tool for promoting environmental quality. By allocating the funds collected from environmental taxes to green financing, environmental sustainability can be promoted in sample countries.

Effect of environmental taxes on environmental innovation and carbon intensity in China: an empirical investigation.

Environmental taxes are deemed to be an important carbon mitigating factor and also encourage the producers to adopt environmentally friendly technologies. Therefore, the main objective of the analysis is to evaluate the environmental taxes on environmental innovations and carbon intensity in China. The novel quantile autoregressive distributed lag (QARDL) is applied to investigate the model empirically. From the results, we confer that the short and long run estimated coefficients of environmental taxes are positive and significant at most quantiles in the environmental innovation model, implying that the higher the rate of environmental taxes, the higher the rate of environment-related innovations. However, the estimates of environmental taxes are significant and negative in both short and long run at more than half quantiles in the carbon emissions model, suggesting the positive role of environmental taxes in reducing carbon emissions. In general, our findings imply that an increase in environment-related taxes helps reduce carbon intensity and promote environmental innovation in China. The study suggests that policymakers in China should promote environmental innovation and expand the environmental tax base to achieve the objective of carbon neutrality.

Environmental taxes and environmental quality in Canada.

This paper aims to capture the effect of environmentally related taxes on environmental quality in Canada while controlling economic growth, financial development, and energy consumption over the period of 1990Q1 to 2020Q4. The present study employs novel econometric approaches, namely, the nonlinear autoregressive distributed lag (N-ARDL) test and the gradual shift causality (GS-C) test. The outcomes of the study reveal that (i) there is long-run cointegration equation between environmental taxes (E-TAX), carbon dioxide emissions (CO2E), economic growth (ECG), financial development (FD), and primary energy consumption (PREC); (ii) E-TAX causes to decrease in environmental degradation in Canada; (iii) PREC and ECG increase (and cause) environmental degradation in Canada; and (iv) financial development also positively affect the environmental sustainability. This effort may also be of great importance for policymakers and decision-makers to better understand the factors of environmental degradation for developing effective tax policies that will alleviate human impacts and contribute to reducing environmental degradation.