Do Environmental Taxes and Green Electricity Matter for Environmental Quality? Fresh Evidence in France Based on Fourier Methods

The environment has generally served as the foundation and support of human existence and survival over the years through agricultural development, health supply, industrialization, and transportation. This process has resulted in massive environmental degradation. In this postindustrial period, global consensus calls for taking steps to rebalance the degraded environment by planning economic development and social progress while preserving the quality of the environment. In recent years, experts have recognized key factors affecting the quality of the environment where policy is required. The study seeks to explore the impacts of ecological taxes and green electricity on the quality of the environment in France. The work employed Fourier ADL cointegration, novel Fourier autoregressive distributive lag econometric (N-ARDL), and Fourier Toda Yamamoto causality methods. The outcomes of the N-ARDL long-run cointegration estimates imply that both environmental tax and green electricity improve environmental quality in France. Furthermore, the Fourier Toda Yamamoto causality test denotes that both green electricity and environmental tax affect environmental quality in France without a rebound effect. The results recommend that since the “bonus–malus” system of France has suffered a significant rebound effect, the economy could reverse this with environmental taxes focused on reducing pollution. Additionally, the government of France could commit to its current alternative energy plan of 560 TWh of decarbonized electricity yearly from 463 TWh, given the fact that the energy sector is responsible for approximately 11% of total greenhouse gas (GHG) emissions.