An Introductory Note on Carbon Taxation in Europe: A Vermont Briefing

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Carbon taxes are in place in 14 countries in Europe, complementing emissions trading schemes for power plants and large industrial installations. Nordic countries pioneered carbon taxes 25 years ago, while France and Portugal most recently did so. Carbon taxes have been leveraged by linking their introduction to other issues and often through a ‘roundtable’ method of policy-making enabling agreement on exemptions and compensations. Distributional questions are key to the introduction of carbon taxes, although they are less regressive than many other taxes. Carbon taxes have proven effective in curbing emissions and with excise taxes on fuels provide a long-term signal capable of transforming energy and transport systems. Carbon tax schemes have been designed to reinforce employment and economic activity and to avoid damaging economic growth. With the large reserves of carbon allowances in Europe’s emissions trading market, allowances continue to be traded at a modest carbon price, whereas carbon taxation is providing a more firm price signal to investors.
Original languageEnglish
Publication year1 Dec 2016
Number of pages6
Publication statusPublished - 1 Dec 2016

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