Policies and tools for climate change policy implementation: a panel data analysis at industrial and commercial level

Abstract

Climate change is a very debated topic among academia, national and international institutions. Therefore, policies and tools for diminishing pollutant emissions are in place in a number of countries. Among them, taxation and renewable energy use seem to be among the most important. This paper aims at testing the impact of certain tools for climate change policy implementation, such as environmental taxes, renewable energy use, real productivity, employment rate taking into consideration the level of economic development and the GINI coefficient, on the greenhouse gas emissions in two important sectors of the economy: industry and commerce. Panel data analysis is used for a cluster of nine developing countries of the European Union that have the per capita GDP at purchasing power parity lower than 80% of the EU average, during 2008–2021. Similar to other studies, the results show a negative relationship between environmental taxation and greenhouse gas emissions in the industrial sector, and a positive one in the commercial sector. The latter is explained by the fact that transport, which is a main pollutant sector, is also one of the most difficult sectors to achieve green transition, given high associated costs. The analysis also shows that renewable energy use discourages the emissions of greenhouse gases, both in the industrial and commercial sectors, so that fostering investment in renewables is an important factor for addressing climate change and promoting a sustainable growth.