Carbon Tax: Moving Towards a Net-Zero Emissions Future

Carbon Tax: Moving Towards a Net-Zero Emissions Future

Contenido principal del artículo

Tanushree Ajmera
Dr. Vivek Nemane


In the wake of the 21st century, climate change has emerged as the biggest lifethreatening challenge with a potential of evolving into the largest, if not the most complex, economic opportunity since the industrial revolution. While narrowing down its focus to carbon tax as a regulatory fiscal aspect of international economic law, this article explores the potential role of the tax in moulding this economic opportunity in line with the commitments assumed by countries under the 2015 Paris Agreement. The issue is whether imposition of carbon tax or restructuring tax rates can have a significant impact in regulating carbon emissions by rationally pushing consumers, investors, and producers, towards an environmentally sound direction. To answer this, the article investigates three carbon-tax implementation case studies; British Columbia, South Africa, and the revision of European Union Energy Taxation Directive in the context of aviation, with the aim to explore the scope of contributing factors – from adequate tax rate determination to optimum tax revenue use – in successfully curbing carbon-based emissions. Drawing upon the policy-efforts of the countries in the case studies, the challenges and the solutions, the article proposes a suggestive policy model of carbon-tax in the wake of COVID-19 pandemic, as the way forward in ensuring global carbon-neutrality.

Palabras clave:


Los datos de descargas todavía no están disponibles.

Detalles del artículo

Referencias (VER)

Aviation Intelligence Unit. (2020). Does taxing aviation really reduce emissions? EUROCONTROL,

Think Paper Number 7.

Bowen, A. (2015). Carbon Pricing: How Best to Use the Revenue? Policy Brief, Grantham Research Institute and Global Green Growth Institute.

Burns, W. (2016). Loss and Damage and the 21st Conference of the Parties to the United Nations Framework Convention on climate Change. ILSA Journal of International & Comparative Law, 22(2), 415-433. DOI:

Dussax, D. (2015). Is taxing the right way to regulate environmental damage. Review of Environmental Economics and Policy, 11(2), 87-98.

Elgie, S., & McClay, J. (2013). BC’s Carbon Tax Sift is Working Well after Four Years (“Attention Ottawa”). Canadian Public Policy / Analyse de Politiques, 39, S1-S10. DOI:

European Environment Agency (1996). Environmental taxes: Implementation and environmental effectiveness. Copenhagen 1996: Environmental Issues Series, Number 1.

Federal Reserve bank of San Francisco (2002, November 1). What is the difference between private and social costs, and how do they relate to pollution and production?

Friedrich, J., Ge, M., & Pickens, A. (2020). Changes in the World’s Top 10 Emitters. World Resources Institute.

Gore, T. (2021). The revision of the energy taxation directive could underpin a fair and green tax reform in Europe. Heinrich Boll Stiftung Brussels.

Gossling, S., Humpe, A., Fichert, F. & Creutzig, F. (2021). COVID-19 and pathways to lowcarbon air transport until 2050. Environmental Research Letters, 16, Number 034063. DOI:

Hafstead, M., Brooks, S., Keohane, N. & Look, W. (2020). Carbon Tax Adjustments Mechanisms (TAMs): How they work and lessons from modelling. Environmental Defence Fund and Resources for the Future, Issue Brief 20-08. _20-08_TAM.pdf

Hafstead, M. A. C. & Williams III, R. C. (2020). Designing and Evaluating a U.S. Carbon Tax Adjustment Mechanism to Reduce Emissions Uncertainty. Review of Environmental Economics and Policy, 14(1), 95-113. DOI:

Harrison K. (2013). The Political Economy of British Columbia’s Carbon Tax. OECD Environment Working Papers, Number 63. DOI:

IEA. (2020). Implementing Effective Emissions Trading Systems: Lessons from International Experiences. OECD Publishing, Paris. DOI:

Kaufman, N., Barron, A. R., Krawczyk, W., Marsters, P. & McJeon, H. (2020). A near-term to net zero alternative to the social cost of carbon for setting carbon prices. Nature Climate Change, 10, 1010-1014. DOI:

Keen, M. & Strand, J. (2006). Indirect Taxes on International Aviation. International Monetary Fund, WP/06/124. DOI:

Kossoy, A., Oppermann, K., Reddy, R. C., Bosi, M., Boukerche, S., Hohne, N., Klein, N., Gilbert, A., Jung, M., Borkent, B., Lam, L., Roser, F., Braun, N., Hansel, G. & Warnecke, C. (2013). Mapping Carbon Pricing Initiatives: Developments and Prospects. World Bank, Washington, DC.

Lacroix, K. & Richards, G. (2015). An alternative policy evaluation of the British Columbia carbon tax: Broadening the application of Elinor Ostrom’s design principles for managing common-pool resources. Ecology and Society, 20(2), 38. DOI:

Marron, D. B. & Toder, E. J. (2014). Tax policy issues in designing a carbon tax. American Economic Review, 104(5), 563-68. DOI:

Metcalf, G. E. (2009). Cost Containment in Climate Change Policy: Alternative approaches to mitigating price volatility. University of Virginia Tax Review. 29(2), 381-405. DOI:

Metcalf, G. E. (2015). A Conceptual Framework for Measuring the Effectiveness of Green Fiscal Reforms. GGKP Research Committee on Fiscal Instruments, GGKP Working Paper 07/2015.

Metcalf, G. E. (2019). On the Economics of a Carbon tax for the United States. Brookings Papers on Economic Activity, 405-458. DOI:

OECD (2013). Climate and Carbon: Aligning Prices and Policies. OECD Environment Policy Papers, Number 1. DOI:

OECD/IEA/NEA/ITF (2015). Aligning Policies for a Low-carbon Economy, OECD Publishing, Paris. DOI:

OECD (2019). Taxes on polluting fuels are too low to encourage a shift to low-carbon alternatives. OECD Publishing, Paris.

OECD (2021). Effective Carbon Rates 2021: Pricing Carbon Emissions through Taxes and Emissions Trading, OECD Publishing, Paris. DOI:

OECD (2021), Tax and fiscal policies after the COVID-19 crisis, OECD Policy Responses to Coronavirus (COVID-19), OECD Publishing, Paris, DOI:

PWC (2020). Net Zero for South Africa. PWC Net Zero Economy Index: The Pivotal Decade.

Pearce, D. (1991). The role of carbon taxes in adjusting to global warming. The Economic Journal, 101(407), 938-948. DOI:

Pindyck, R. S. (2013). Climate change policy: what do the models tell us. Journal of Economic Literature, 51(3), 860-872. DOI:

Poliwoda, D. A. (2021, April 7). References Re Greenhouse Gas Pollution Act – Supreme Court of Canada Rules Carbon Pricing Constitutional. Client Alert.—greenhouse-gas-pollution-pricing-act.pdf

Schratezenstaller, A. K. M. (2021). Effects of Environment and Carbon Taxation: A literature review. WIFO Working Papers, 619/2021.

Stern, N., Stiglitz, J.E., Duan, M., Edenhofer, O., Giraud, G., Heal, G., Rovere, E. L., Morris, A., Moyer, E., Pangestu, M., Shukla, P. R., Sokona, Y. & Winkler, H. (2017). Report of the High-Level Commission on Carbon Prices. World Bank Group.

Stern, N. & Stiglitz, J. E. (2021). The Social Cost Of Carbon, Risk, Distribution, Market Failures: An Alternative Approach. National Bureau Of Economic Research, Working Paper 28472. DOI:

Touri, L., Sari-Minodier, I., Molinari, N. & Chanez, P. (2013). The airport atmospheric environment: respiratory health at work. European Respiratory Review, 22(128), 124-130. DOI:

Victor, D. G., Geels, F. G. & Sharpe, S. (2019). Accelerating the Low Carbon Transition: The case for stronger, more targeted, and coordinated international action. The Brookings Institution.

Vollebergh, H. R. J. (2012). Environmental taxes and Green Growth: Exploring possibilities within energy and climate policy. The Hague: PBL Environmental Assessment Agency. _2013-Environmental-taxes-and-Green-Growth_1009.pdf

Wang, P., Xiangzheng, D., Huimin, Z. & Yu, S. (2019) Estimates of the social cost of carbon: A review based on meta-analysis. Journal of Cleaner Production Volume, 209, 1494-1507. DOI:

World Bank Group & Agence Française De Development. (2019). Using Carbon Revenues, Annex to report: Case studies. Pratnership for Market Readiness, Technical Note 16.,transfers%20over%20the%20same%20period

World Bank Group. (2020). State and Trends of Carbon Pricing. e=4&isAllowed=y

References Re Greenhouse Gas Pollution Act, 2021 SCC 11.

(2019, August 24). Climate Change: Should you fly, drive or take the train. BBC.

(2021, October 4). Net-Zero Carbon Emissions by 2050. IATA, Press Release Number 66,

Investigative Europe. (2020, September 4). The EU’s Broken Energy Taxation Directive: ripe for revision.

Joselow, M. (2021, March 29). National Carbon Tax Upheld by Canada’s Supreme Court. E&E News: Environment.

Planting, S. (2021, April 7). South African companies scramble to comply with the new carbon tax. Daily Maverick.

Reed, E. (2021, February 5). Carbon tax failing to tackle South African Missions. Energy Voice.

Tasker, J. P. (November 2, 2021). Trudeau calls for global carbon tax at COP26 Summit. CBC.

Thomas, V. & Araral, E. (2020, September 28). The Benefits of Carbon Tax. The Hindu.

Timperley, J. (2020, February 19). Should we give up flying for the sake of climate? BBC.

(2021, January 27). British Columbia’s Carbon Tax. Futurepolicy.Org.

(2019, August 29). What the new carbon tax means for SA industry. Deloitte South Africa. Html

Boone, L. (2020, September 16). Coronavirus: Living with Uncertainty. ECOSCOPE: An Economic Lens on Policies for Growth and Wellbeing.

Dichter, A., Henderson, K. & Riedel, R. (2020, May 13). How airlines can chart a path to zerocarbon flying. McKinsey & Company.

Elgie, S. (2014, July 9). Just the Facts: What’s behind B.C.’s whopping fuel use drop? Sustainable Prosperity.

Klauber, A., Harvey, N. & Wight, K. (2020, October 22). The low-carbon jet fuel market is cleared for take-off. RMI.

Lester, S. (2021, July 17). Krugman on Carbon Tariffs. International Economic Law and Policy Blog.

Timperley, J. (2019, February 4). Corsia: The UN’s plan to ‘offset’ growth in aviation emissions. Carbon Brief.

Williams, A., Knight, K. (2021, July). The EU’s green deal proposals for aviation and the UK Decarbonizing transport plan: initial thoughts. Norton Rose Fulbright. https://www.nortonrosefulbright.


Carbon Tax Act 2008 (SBC) Chapter 40 (Can.).

Carbon Tax Act Number 15 of 2019 (CT) Vol. 647 No. 42483 (SA). 5act15of2019carbontaxact.pdf

Climate Change Accountability Act 2007 (SBC) Chapter 42 (Can.).

Directive 2003/96/EC. Restructuring the Community Framework for the Taxation of Energy Products and Electricity. European Parliament, Council of the European Union.

European Commission. (2019). Communication from the Commission to the European Parliament, the European Council, the European Economic Committee and Social Committee and the Committee of the Regions, The European Green Deal. EUR-Lex, COM/2019/640 final.

European Commission. (2020). Communication from the Commission to the European Parliament and the Council, an action plan for fair and simple taxation supporting the recovery strategy. EUR-Lex, COM/2020/312.

Greenhouse Gas Pollution Pricing Act 2018 (Can.).

Greenhouse Gas Reduction Targets Act 2007 (SBC) Chapter 42 (Can.).

The Paris Agreement to the United Nations Framework Convention on Climate Change, Dec. 12, 2015, T.I.A.S. No. 16-1104.

Eurostat (2013). Environmental Taxes: A statistical guide. Eurostat Manuals and Guidelines, ISSN 2315-0815.

Ministry of Environment and Climate Change Strategy (2020). 2020 Climate Change Accountability Report. Government of British Columbia.

Ministry of Environment and Climate Change Strategy (2021). 2021 Climate Change Accountability Report. Government of British Columbia.

Ministry of Environment and Climate Change Strategy (2021). Roadmap to 2030. Government of British Columbia, Clean BC. Our Nature. Our Power. Our Future.

Ministry of Finance (2019). Budget and Fiscal Plan 2019/20–2021/22. Government of British Columbia.

Ministry of Finance Tax Bulletin (2021). Tax Rates on Fuels, Motor fuels Tax Act and Carbon Tax Act. Government of British Columbia, MFT-CT 005.

South African Revenue Service (2021). Frequently Asked Questions – Carbon Tax. South African Revenue Services Government of South Africa.

(2021). Green House Gas Emissions by Country 2021.

European Commission (2021). EU Green Deal – Revision of the Energy Taxation Directive. Law.

European Commission (2021). Reducing emissions from aviation. Climate Action.

European Commission (2021). Green Taxation – in support of a more sustainable future. Taxation and Customs Union.

IEA (2020). South African Carbon Tax. IEA/IRENA Renewables Policies Database.

IEA (2021). Sweden Carbon Tax. IEA/IRENA Renewables Policies Database.

Ministry of Environment and Climate Change Strategy (2021, January 27). Climate action legislation – Province of British Columbia. Government of British Columbia.

Ministry of Environment and Climate Change Strategy (2021, May 27). British Columbia’s Carbon Tax – Province of British Columbia. Government of British Columbia.

Ministry of Environment and Climate Change Strategy (2021, November 9). Climate Change – Province of British Columbia. Government of British Columbia.

Ministry of Finance (2016). British Columbia Carbon Tax: Presentation for State of Connecticut. Government of British Columbia.

South African Revenue Service (2021, July 20). Carbon Tax. South African Revenue Services Government of South Africa.


The World Bank (2021). Carbon Pricing Dashboard.

Citado por