The impact of environmental policy stringency and environmental taxes on GHG emissions in Western and Central European countries

Environmental pollution endangers nature, human health, and, subsequently, the economy. The governments of European countries are trying to mitigate the effects of environmental degradation and climate change by employing various policy instruments, including taxes, subsidies, trading schemes, and others. However, the question is whether such actions are efficient. Several researchers previously studied the effects of stringent environmental policy on CO₂ emissions for different regions of the world. Nevertheless, there is a lack of understanding of how regional specifics and economic factors can impact the effect of the stringency. We examined the impact of environmental policy stringency and environmental taxes on greenhouse gas emissions in a sample of eight European countries, covering Western Europe and Central Europe. Our results show that the stringency of environmental policies has a significant effect only in Western Europe. Interestingly, the most influential factor for both groups turned out to be the R&D expenditure.