Energy Taxes, the Climate Change Convention, and Economic Competitiveness

Interest in energy taxes as an environmental policy tool has grown over recent years. This interest has been spurred partly by a growing recognition that even with stringent environmental regulations, energy production and use impoe health and amenity costs on society that are not considered in private economic decisions. Increasingly, however, analysts and policymakers are turning to energy taxes as a tool for addressing the problem of global climate change, rather than simply as a means of internalising social costs. This trend is likely to gain momentum as the governments of developed countries face their commitments under the United Nations Framework Convention on Climate Change (UNFCCC), and agree to further more stringent commitments.