The impact of environmental taxes, economic growth and industrialization on carbon emissions: an empirical analysis on selected countries

This study aims to examine the impact of environmental taxes, economic growth, and industrialisation on carbon emissions across 15 selected countries during the period 2009-2024. With the increasing threat of global climate change, the reduction of carbon emissions has become a prerequisite for sustainable development. The methodological approach employs econometric analysis using panel data techniques. Specifically, the panel ARDL model and the Hausman test were applied. The results of the Hausman test confirmed the homogeneity of long-run coefficients across countries, leading to the selection of the PMG estimator. The findings indicate that environmental taxes increase carbon emissions by 0.15% in the long run. This outcome may be explained by the ineffective allocation of tax revenues towards environmental improvements and structural deficiencies in policy implementation. Conversely, environmental taxes were observed to have a limited emission-reducing effect in the short run. The effects of economic growth, industrial production, and urbanisation on carbon emissions were found to be positive and statistically significant, resulting in increases of 1.5%, 0.42%, and 0.10%, respectively. These results underscore the importance of policy integration to mitigate the environmental costs associated with economic and social development processes. Accordingly, enhancing the effectiveness of environmental taxes requires directing tax revenues explicitly towards investments in green technologies and infrastructure, promoting the widespread adoption of eco-friendly technologies in the industrial sector, and developing sustainable urban planning and transportation policies. Furthermore, improving policy coherence and governance quality is essential to ensure that the short-term positive effects of environmental taxes translate into sustained long-term outcomes. This study highlights the necessity of comprehensive and integrated policy approaches for environmental taxes to serve as an effective instrument in reducing carbon emissions.