The System of Emission Taxation Analyzed: An Institutional Approach

Environmental regulation, designed to reduce environmental pollution and improve the climate, is currently actively applied in all economically developed countries of the world. Various tools have been developed to influence economic and social entities in order to reduce emissions of pollutants into the environment. Emission taxation and trade in emission permits are basic tools of environmental regulation. These tools have different effects both on success in implementing international and national environmental policies, and on the degree to which businesses and households are involved in the implementation of the whole range of measures to reduce harmful emissions into the atmosphere and protect the environment. This article analyzes the features and practical applicability of the tax instrument for harmful emissions, and examines its strengths and weaknesses taking into account the influence of political, social, and economic factors. Institutional and comparative analysis are the main research methods used. The result of the study is the conclusion about the varying degrees of effectiveness of applying tax mechanisms for harmful emissions at the national and international levels as well as in relation to various sources of emissions. It is shown that, due to differences in national legislation and basic economic development conditions, the mechanism of taxation of harmful emissions in individual countries cannot succeed in achieving the results of pollution reduction and normal development of environmental mechanisms planned in international documents. Nevertheless, in the current context, the system of emission taxation remains more effective than trade in emissions within individual countries, and is applied more widely throughout the world than the mechanism of trade in permits. In addition, the potential of the taxation mechanism has not yet been fully utilized.