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Efficiency of Energy Taxes and the Validity of the Residential Electricity Environmental Kuznets Curve in the European Union

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  • Djula Borozan

    (Faculty of Economics in Osijek, Josip Juraj Strossmayer University of Osijek, Gajev trg 7, HR 31000 Osijek, Croatia)

Abstract

To achieve the energy targets, energy policy of the European Union (EU) is trying to discourage residential electricity consumption employing different measures but without worsening the quality of life and jeopardizing its economic growth and development at the same time. This paper aims to directly and indirectly explore the effects of energy taxes on household electricity consumption and test the validity of the household electricity environmental Kuznets curve (EEKC) in a multivariate setting and a system generalized method of moments framework for EU member countries in the period 2005–2016. The results reveal that energy taxes influence electricity consumption more efficiently through energy prices than directly and in the long-run. Efficiency of energy taxes can be reinforced by combining changes in energy prices and policy measures that change the electricity consumption behavior patterns. As for the EEKC, the paper corroborates its inverted U-shaped form, assuming thereby at least the same level of policy efforts directed to accomplish the energy targets and household willingness to use goods in an environmentally friendly way.

Suggested Citation

  • Djula Borozan, 2018. "Efficiency of Energy Taxes and the Validity of the Residential Electricity Environmental Kuznets Curve in the European Union," Sustainability, MDPI, vol. 10(7), pages 1-16, July.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:7:p:2464-:d:157930
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    8. Shahbaz, Muhammad & Sinha, Avik & Kontoleon, Andreas, 2020. "Decomposing Scale and Technique Effects of Economic Growth on Energy Consumption: Fresh Evidence in Developing Economies," MPRA Paper 102111, University Library of Munich, Germany, revised 27 Jul 2020.
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    21. Assaad Ghazouani & Wanjun Xia & Mehdi Ben Jebli & Umer Shahzad, 2020. "Exploring the Role of Carbon Taxation Policies on CO 2 Emissions: Contextual Evidence from Tax Implementation and Non-Implementation European Countries," Sustainability, MDPI, vol. 12(20), pages 1-16, October.

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