Governments around the world are increasingly turning to sustainability fiscal measures to reduce emissions, meet their carbon neutrality commitments, and address climate change. These measures also help to raise revenues and finance important policy objectives. Studies have shown that environmental taxes can play an important role in boosting innovation. By raising taxes on pollution and other environmentally harmful activities, governments can use the additional funds to provide incentives for innovation, such as the development of renewable energy. For advanced economies, such as the EU, these plans also create new technologies that can be exported globally.
Consumption taxes could adopt the tariff approach proposed by Amory Lovins, which involves additional taxes on less sustainable products, such as sport utility vehicles, bundled together to finance subsidies for more sustainable alternatives, such as hybrid electric vehicles. Sustainability taxes are an effective way for governments to reduce emissions and address climate change. By raising taxes on pollution and other environmentally harmful activities, governments can use the additional funds to provide incentives for innovation and create new technologies that can be exported globally. Additionally, consumption taxes could adopt the tariff approach proposed by Amory Lovins to finance subsidies for more sustainable alternatives.
