Environmental taxes, energy consumption, and environmental quality: Theoretical survey with policy implications

Improving energy efficiency and mitigating environmental problems through environmental regulations and taxes are considered as fundamental driving forces of climate change policies. However, the current literature on the theoretical and empirical evidence focusing on the inter-linkages between environmental taxes, energy consumption, and environmental quality is rather meager. This article attempts to provide a detailed survey on the earlier literature for developed, developing, and emerging countries analysis by covering the literature up to 2020. The prime objective of this survey is the coverage of different level of economies, modeling, methodologies, time periods as well as empirical outcomes. The study mainly covers three types of causality direction: (i) environmental taxes, energy consumption, and energy efficiency; (ii) environmental taxes and environmental quality; (iii) energy consumption (renewables, non-renewable, and fossil fuels) and environment deterioration. Most of the empirical studies reported that the energy usage for economic activities significantly affects the pollutant emissions. However, the role of environmental taxes is still ambiguous and demands a more in-depth investigation. Comprehending the literature survey has provided the basis to address the policymaking, designing as well as the implementation of environmental regulations.