Green tax Policies as Questionable Solutions for Sustainable Energy

Abstract

Transitioning to sustainable energy requires measures that involves policymakers, regulators, economic actors and consumer. A key governmental solution that connects these entities, is the implementation of green tax policies. These polices stand on the polluter pays principle and efficiency considerations, allowing jurisdictions to pragmatically conduct behavior and turn it into monetary and social benefits. Thus, Green taxes are tools used, on one hand, to switch to cleaner and more sustainable energy, industry and habits, and on the other hand, to enhance accessibility (Section I). According to the European union, these taxes include taxes on energy, transport, pollution and resources. This range of taxes operates in two ways: through coercive measure that increase tax rates to sanction and limit harmful behaviors, and by reducing taxes to encourage behaviors that align with sustainable energy objectives. Despite the straightforward concept behind these taxes, practical implementation has revealed significant complexities that create multiple challenges (Section II). Indeed, reality has shown that a lack of consideration for market-driven approaches can lead to the failure of green tax policy goals and negatively impact the economy, as illustrated by China's tax incentive policies for the photovoltaic energy industry. Furthermore, green taxes must strike a delicate balance between consumption and investment, as seen in the European Union's decision to elevate import taxes on electric cars from China in October 2024, and its impact on the consumption. Additionally, the success of green tax policies depends on a wide and extended application of these policies. In other words, it requires the establishment of an inclusive framework that coordinates jurisdictions, policymakers and regulators among coherent green tax policy. Organisation for Economic Co-operation and Development and European Union working method as an example.