Determinants of Reducing Greenhouse Gas Emissions in European Union Countries

Abstract

In the literature on the subject, it is argued that tax policy is one of the tools stimulating the transition toward sustainable economies. Public authorities can use two functions for this purpose: fiscal and non-fiscal functions. High emission rates and the rising rapid atmospheric changes that come with them are serious threats to the climate and sustainable development. Reducing greenhouse gas emissions is one of the goals towards which the world strives (including the EU), so as to keep a balance between people’s expectations, economic aspects, and the needs of the environment. Therefore, it is necessary to explain whether, along with other factors, environmental policy and its component “green taxes” can act as a factor in limiting greenhouse gas emissions. The purpose of this article is to seek an answer to the question of whether “green taxes” as an instrument of tax policy are a significant factor influencing climate change by contributing to reducing greenhouse gas emissions. This article attempts to identify the determinants of greenhouse gas emissions (the dependent variable) using the method of linear regression analysis. Multiple linear regression models are used to predict the value of the dependent variable based on the values of the independent variables (identified from the literature). Trading of CO2 emissions was not included in the analysis due to lack of data. The regression analysis was carried out using specialized statistical software (SPSS). The authors negatively verified the hypothesis that environmental taxes are a significant determinant of greenhouse gas emission reductions compared to the analyzed determinants. “Population”, “current and capital transfers for environmental protection”, and “supply, transformation and consumption of solid fossil fuels” are the most important factors influencing greenhouse gas emissions. Changing consumer behavior (as an effect of the non-fiscal function of taxes) appears to be an extremely important factor in reducing greenhouse gas emissions. Hence, the public authorities should promote behaviors conducive to their reduction by means of incentives, and not mainly taxation of negative behavior or fiscal incentives.