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Environmental tax on products and services based on their carbon footprint: A case study of the pulp and paper sector

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  • Gemechu, E.D.
  • Butnar, I.
  • Llop, M.
  • Castells, F.

Abstract

The main aim of this work is to define an environmental tax on products based on their carbon footprint. We examine the relevance of life cycle analysis (LCA) and environmentally extended input–output analysis (EIO) as methodological tools for identifying the emission intensities on which the tax is based. The price effects of the tax and the policy implications of considering non-CO2 greenhouse gases (GHG) are also analyzed. The results from the case study on pulp production show that the environmental tax rate based on LCA (1.8%) is higher than both EIO approaches (0.8 and 1.4% for product and industry, respectively), but they are of the same order of magnitude. Although LCA is more product specific and provides a more detailed analysis, we recommend EIO as a more relevant approach to applying an economy-wide environmental tax. If an environmental tax were applied to non-CO2 GHG instead to CO2 alone, the tax would greatly affects sectors such as agriculture, mining of coal, extraction of peat, and food. Therefore, it is worthwhile for policy-makers to pay attention to the implications of considering either a CO2 tax or a global GHG emissions tax in order to make their policy measures effective and meaningful.

Suggested Citation

  • Gemechu, E.D. & Butnar, I. & Llop, M. & Castells, F., 2012. "Environmental tax on products and services based on their carbon footprint: A case study of the pulp and paper sector," Energy Policy, Elsevier, vol. 50(C), pages 336-344.
    • Handle: RePEc:eee:enepol:v:50:y:2012:i:c:p:336-344
    DOI: 10.1016/j.enpol.2012.07.028
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    2. Rocco, Matteo V. & Forcada Ferrer, Rafael J. & Colombo, Emanuela, 2018. "Understanding the energy metabolism of World economies through the joint use of Production- and Consumption-based energy accountings," Applied Energy, Elsevier, vol. 211(C), pages 590-603.
    3. Choi, Tsan-Ming, 2013. "Local sourcing and fashion quick response system: The impacts of carbon footprint tax," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 55(C), pages 43-54.
    4. Carmen Ramos Carvajal & Ana Salomé García-Muñiz & Blanca Moreno Cuartas, 2019. "Assessing Socioeconomic Impacts of Integrating Distributed Energy Resources in Electricity Markets through Input-Output Models," Energies, MDPI, vol. 12(23), pages 1-21, November.
    5. Yu, Min & Cruz, Jose M. & Li, Dong Michelle, 2019. "The sustainable supply chain network competition with environmental tax policies," International Journal of Production Economics, Elsevier, vol. 217(C), pages 218-231.
    6. Chia-Wei Hsu & Tsai-Chi Kuo & Guey-Shin Shyu & Pi-Shen Chen, 2014. "Low Carbon Supplier Selection in the Hotel Industry," Sustainability, MDPI, vol. 6(5), pages 1-27, May.
    7. Choi, Tsan-Ming, 2015. "Sustainable management of mining operations with accidents: A mean-variance optimization model," Resources Policy, Elsevier, vol. 46(P1), pages 116-122.
    8. Yu, Min & Cruz, Jose M. & Li, Dong & Masoumi, Amir H., 2022. "A multiperiod competitive supply chain framework with environmental policies and investments in sustainable operations," European Journal of Operational Research, Elsevier, vol. 300(1), pages 112-123.
    9. Yu, Yugang & Zhou, Sijie & Shi, Ye, 2020. "Information sharing or not across the supply chain: The role of carbon emission reduction," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 137(C).
    10. Josef Gotvald, 2024. "The role of environmental taxes and other political instruments on the road to climate neutrality [Role environmentálních daní a dalších politických nástrojů na cestě za klimatickou neutralitou]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2024(1), pages 47-76.
    11. He, Pinglin & Zhang, Shuhao & Wang, Lei & Ning, Jing, 2023. "Will environmental taxes help to mitigate climate change? A comparative study based on OECD countries," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 1440-1464.
    12. Zhou, Xiaoyong & Zhou, Dequn & Wang, Qunwei & Su, Bin, 2019. "How information and communication technology drives carbon emissions: A sector-level analysis for China," Energy Economics, Elsevier, vol. 81(C), pages 380-392.

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