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International evidence on fiscal levers to reduce greenhouse gas emissions
This study reviews the use of fiscal levers to reduce greenhouse gas (GHG) emissions across the world. These levers include taxes, levies, duties or charges applied by governments on major sources of emissions.
The study focuses mainly on direct carbon taxes which are applied to specific goods – typically fuels – based on the amount or intensity of greenhouse gases they produce. We also consider indirect taxes, which place a price on other forms of pollution, such as air or water, but often target GHGs as well. Grants and subsidies are not in scope.
The study examines whether these levers have been effective in decreasing GHG emissions, the revenue that has been raised and how governments have used that revenue. It looks at six international case studies in more detail. It also examines relevant fiscal levers currently applied in the UK and Scotland, and the possible implications for Scotland of adopting any new lever, based on the case studies. This study does not make policy recommendations, nor does it consider the costs and benefits if they were adopted.
Summary findings
The study focused mainly on the use of direct carbon taxes both nationally and sub-nationally (in specific regions or provinces within a country) around the world. Key findings are:
- The use of carbon taxes is increasingly common. Sub-national carbon taxes have also been applied by Canada and Mexico.
- The balance of evidence suggests carbon taxes have reduced GHG emissions.
- Carbon taxes have generated government revenue.
- Implementation has been politically challenging.
For further details on the findings and case studies, please download the report.
If you require the report in an alternative format, such as a Word document, please contact info@climatexchange.org.uk or 0131 651 4783.