Pollution Patrol: An Analysis of Carbon Taxes
Open Access
- Author:
- Srivastava, Sneha
- Area of Honors:
- Geography
- Degree:
- Bachelor of Arts
- Document Type:
- Thesis
- Thesis Supervisors:
- Roger Michael Downs, Thesis Honors Advisor
Jennifer E Baka, Thesis Supervisor - Keywords:
- Carbon Tax
Environment
Carbon Price
Emission - Abstract:
- In recent decades, climate change has become a central issue of discussion as policymakers scramble to reduce emissions and mitigate one of the most pressing problems in the world. While command-and-control policies have existed for several years, countries are slowly transitioning to market-based policies that rely on incentive structures to reduce carbon emissions. One of the most popular types of market-based policies are carbon taxes, which price carbon emissions at a certain rate in order to encourage firms to reduce their emissions. However, carbon tax policies are not perfect; difficulties in implementation and the inequitable distribution of costs reveal mixed results in the effectiveness of carbon taxes. The purpose of this thesis is to analyze carbon taxes based on their implementation and effectiveness in emission reduction through case studies of Finland and Japan. While Finland experienced more emission reduction than Japan, the country also experienced increased welfare inequality as a result of carbon taxes. Lower-income households in Finland paid a higher percentage of their income towards the carbon tax than higher-income households. Japan’s low carbon tax rate hindered emission reduction, but its effect on welfare and inequality is yet to be seen.