Mental accounting shapes public support for green spending of carbon tax revenues

Despite its potential for curbing greenhouse gas emissions, carbon taxation encounters strong public resistance in many countries. However, social acceptability of carbon taxation heavily depends on how the generated revenues are used. Citizens prefer carbon taxation schemes where tax revenues are earmarked for environmental protection rather than for non-environmental purposes (e.g., lowering the value-added tax or labour taxes). Here, we test the hypothesis that acceptability varies across earmarking domains according to a mental accounting heuristic, by which people create mental budgets where the origin of revenues is matched thematically with their domain of use. Across two experiments conducted in the United Kingdom and in France (Ntotal = 3500), we show that citizens display a specific preference for tax designs where the earmarking domain is matched with the revenue source (i.e. a carbon tax earmarked for environmental protection), relative to an unmatched tax scheme. Moreover, we find that acceptability of carbon taxation increases with the proportion of tax revenues earmarked for environmental protection.

Mapping Climate Justice

A three-dimensional climate justice approach introduces to share the benefits and burden of climate change in an economically efficient, legally equitable, and practically feasible way around the globe. Climate justice within a country pays tribute to low- and high-income households carrying the same burden proportional to their dispensable income through consumption tax, progressive carbon taxation, and a corporate inheritance tax. Climate change burden sharing between countries ensures those countries benefiting more from a warmer environment bear higher responsibility regarding climate change mitigation and adaptation. Climate justice over time is proposed by an innovative bonds climate change burden sharing strategy.

Carbon tax acceptability with information provision and mixed revenue uses

Public acceptability of carbon taxation depends on its revenue use. Which single or mixed revenue use is most appropriate, and which perceptions of policy effectiveness and fairness explain this, remains unclear. It is, moreover, uncertain how people’s prior knowledge about carbon taxation affects policy acceptability. Here we conduct a survey experiment to test how distinct revenue uses, prior knowledge, and information provision about the functioning of carbon taxation affect policy perceptions and acceptability. We show that spending revenues on climate projects maximises acceptability as well as perceived fairness and effectiveness. A mix of different revenue uses is also popular, notably compensating low-income households and funding climate projects. In addition, we find that providing information about carbon taxation increases acceptability for unspecified revenue use and for people with more prior tax knowledge. Furthermore, policy acceptability is more strongly related to perceived fairness than to perceived effectiveness.

Implementation of the Paris Agreement on Global Climate: European Carbon Blackmail of Russia and Possibilities of Countering It

The subject of the analysis is the EU initiative to introduce the so-called Carbon Border Adjustment Mechanism developed within the framework of the «European Green Deal» adopted in 2019 and its possible impact on the Russian exporting industries. The author examines in detail the genesis of European initiatives in the field of border carbon tax, draws a parallel between the Border Carbon Correction Mechanism and the early EU initiatives on carbon taxation of flights of foreign airlines operating in airports of EU countries. Recommendations are given on possible measures to hedge risks associated with this EU initiative, including the possibility of blocking the EU initiative in the international arena, including the positions of the leading world powers on this issue, is analyzed. The tactics of interaction on this issue with such large global exporters as China, India, Brazil and others are proposed.

Carbon Taxes

Economists argue that carbon taxation (and more generally carbon pricing) is the single most powerful way to combat climate change. Since this is so controversial, we need to explain it better, and to be precise, the efficiency gains are largest when the costs of abatement are strongly heterogeneous. This is often—but not always—the case. When it is not, standards can fill much the same role. To internalize the climate externality, economic efficiency calls for a global carbon tax (or price) that is equal to the global damage or the so-called social cost of carbon. However, equity considerations as well as existing geographical and sectoral differences in the effectiveness of carbon taxation at reducing emissions, suggest earlier implementation of relatively high taxation levels in some sectors or countries—for instance, among richer economies followed by a more gradual phase-in among low-income countries. The number of national and subnational carbon pricing policies that have been implemented around the world during the first years following the Paris Agreement of 2015 is significant. By 2020, these programs covered 22% of global emissions with an average carbon price (weighted by the share of emissions covered) of USD15/tCO2 and a maximum price of USD120/tCO2. The share of emissions covered by carbon pricing as well as carbon prices themselves are expected to consistently rise throughout the decade 2021–2030 and beyond. Many experts agree that the social cost of carbon is in the range USD40–100/tCO2. Anti-climate lobbying, public opposition, and lack of understanding of the instrument are among the key challenges faced by carbon taxation. Opportunities for further expansion of carbon taxation lie in increased climate awareness, the communicative resources governments have to help citizens understand the logic behind carbon taxation, and earmarking of carbon tax revenues to address issues that are important to the public such as fairness.

The Case for Carbon Pricing

When it comes to responding to the problem of anthropogenic climate change, the overwhelming preference among policy experts is for a system of carbon pricing. This is normally justified on the grounds that it maximizes the welfare of future generations. The objective of this chapter is to provide a philosophical defense of carbon pricing based instead on contractualist foundations. The central claim is that the negative externality of greenhouse gas emissions violates a reciprocity condition that is a central normative constraint in the system of cooperation in our society. A system of carbon taxation is recommended on the grounds that it addresses this externality problem more directly than any other policy alternative. The merits of such a regime are illustrated using the example of agricultural production and the carbon emissions associated with food supply.