Are taxes the best means to cut greenhouse emissions?
Apr 23rd 2007 | From the Economist Intelligence Unit ViewsWire The ambitious goals set by EU leaders in March at the Brussels summit–a 20% cut in greenhouse gas emissions by 2020 and related targets for energy savings, biofuels and other renewable energies–is unlikely to be achieved, at least without the use of environmental taxes to induce changes in businesses’ and consumers’ behaviour. With its consultative green paper issued end-March, the European Commission has now kicked off a wider debate on the subject. Conservation groups, however, accuse the Commission of being too timid. In contrast to regulatory or administrative approaches, market-based instruments such as taxes and tradable permit schemes offer several advantages as a means of achieving environmental objectives. Whether by influencing prices (through taxation or fiscal incentives) or setting absolute quantities (via tradable permits), they improve price signals, allow industry greater flexibility in meeting objectives, a
