Towards a ‘Third Dividend’ for innovative environmental taxation policies and allocations: a smart instrument mix for the reduction of CO2 emissions

Van Outryve d'Ydewalle, Sixtine;Wolff, Sébastien;et.al.
(2017) The Green Market Transition Carbon Taxes, Energy Subsidies and Smart Instrument Mixes — ISBN: [978-1788111164], p. 231-245, published

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The double dividend analysis is a common way to encompass the beneficial effects of environmental taxes. Indeed, by earning some revenues and reducing harmful behaviours for the environment, governments can use environmental taxes for both environmental and budgetary reasons. However, the allocations of these environmental tax incomes are not always used for environmental-friendly purposes. Therefore, not only do these taxes sometimes fail in drastically reducing CO2 emissions, but their potential allocation to environmentally harmful sectors can even make them counterproductive. This contribution aims to explore the possibilities of innovative taxation and income allocation to reverse this existing trend. It starts by discussing the possibility of implementing a tax creating a ‘third dividend’ from the taxation of fossil resources extraction in the current tax law framework. It then proposes to magnify the effect of such a ‘third dividend’ from ‘extraction taxes’ to reduce CO2 emissions by allocating these tax revenues to low-carbon social innovations. Indeed, the reasoning underlying this governance tool that is taxation will be put into question in the light of the necessity to switch from a paradigm of ‘heteroregulation’ of individuals to one of human autonomy in order to increase environmental-friendly behaviours. To this end, the contribution exposes existing ecological innovations already undertaken by citizens through two existing bottom-up initiatives: a community-led renewable energy project and a town gathering a myriad of local low-carbon resilient initiatives.
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Van Outryve d’Ydewalle, S., Wolff, S., & et al. (2017). Towards a ‘Third Dividend’ for innovative environmental taxation policies and allocations: a smart instrument mix for the reduction of CO2 emissions. In Stefan E. Weishaar, Larry Kreiser, Janet E. Milne,Hope Ashiabor, Michael Mehling (ed.), The Green Market Transition Carbon Taxes, Energy Subsidies and Smart Instrument Mixes (Edward Elgar Publishing, p. p. 231-245). Edward Elgar Publishing. https://hdl.handle.net/2078.5/220294