Ural Federal University: Scientists Have Studied the Carbon Taxes Problems

Ivan Savin, professor of the Ural Federal University, together with his colleagues from the Universitat Autònoma de Barcelona, found how citizens’ awareness of the taxation of CO2 emissions and the use of the revenues obtained affect the perception of fairness and effectiveness of this measure to deal with global warming. The study’s findings are presented in an article published in Nature Communications. The work was supported by the Russian Science Foundation (grant no. 19-18-00262) and the European Research Council.

“Carbon taxes are seen as a key tool of modern climate policy, limiting and reducing the burning of fossil fuels – coal, oil, natural gas. Despite the fact that carbon taxes are already applied by dozens of countries, in relation to almost 22% of all global emissions of greenhouse gases into the atmosphere, this measure still faces weak support and resistance from the public, companies and politicians,” explains the co-author of the article, Professor of the Economics Department of the UrFU, researcher of the Universitat Autònoma de Barcelona Ivan Savin.

According to the researchers, the reason lies in taxes that increase the cost of goods and services whose production is followed by the greatest amount of emissions. Thus, government regulation faces resistance from citizens. In France, for example, an attempt to raise taxes on fossil fuels led to a massive and violent protest by the “yellow vests”. A similar reaction was observed in Chile. In Australia and Washington State, the government had to abandon such a tax entirely.

Researchers conducted a survey experiment involving more than 2,000 people to assess how different uses of revenue, citizen awareness, and the provision of information about the functioning of carbon taxation affect the perception and acceptability of such policies. It was found that spending revenue on climate projects maximizes acceptability as well as perceived fairness and efficiency. The option to support both climate projects and low-income households is also popular. It has also been found that providing information about carbon taxation increases the acceptability of uncertain revenue use and more tax-conscious people. Moreover, acceptability of such policies is more strongly associated with perceptions of fairness than with perceptions of efficiency.

“This is important in terms of monitoring which social groups bear the major costs of these instruments and therefore need to be compensated. For example, high-carbon services such as transportation and heating have a greater weight in the budget of low-income households. Another reason is that over time, the severity of climate instruments – and therefore the costs of them – will likely only increase, and therefore gaining the support of the public will become even more difficult, and we need to be concerned about this now,” summarizes Ivan Savin.