In Pursuit of Progressive and Effective Climate Policies

35 Pages Posted: 6 Dec 2021

See all articles by Roger Fouquet

Roger Fouquet

London School of Economics and Political Science (LSE)

Tanya O'Garra

Economics Department, Middlesex University

Abstract

This paper investigates the trade-offs between progressivity and effectiveness for a carbon tax versus an ‘excessive consumption’ levy. To do this we compare the distribution of consumer welfare impacts and environmental effectiveness of an air travel carbon tax and a ‘frequent flyer levy’. Results indicate that both policies have the potential to achieve substantial carbon mitigation with minimal impacts on consumer welfare. Nevertheless, compared with a carbon tax, a frequent flyer levy is more progressive and effective at reducing emissions – thus, there is no trade-off associated with using an ‘excessive consumption’ levy to mitigate air travel emissions. Furthermore, considering the pronounced growth in demand projected for air travel over the next 30 years, results show the frequent flyer levy will remain more progressive and effective over time. Such an ‘excessive consumption’ levy has the potential to be an equitable, effective and politically acceptable environmental policy for curbing carbon dioxide emissions. This is relevant not only for air travel but for other forms of consumption in which the affluent are responsible for a large share of demand and associated carbon emissions.

Keywords: carbon tax, frequent flyer levy, emission reductions, consumer welfare, progressivity

Suggested Citation

Fouquet, Roger and O'Garra, Tanya, In Pursuit of Progressive and Effective Climate Policies. Available at SSRN: https://ssrn.com/abstract=3978368 or http://dx.doi.org/10.2139/ssrn.3978368

Roger Fouquet (Contact Author)

London School of Economics and Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
Great Britain

HOME PAGE: http://www.lse.ac.uk/GranthamInstitute/profile/roger-fouquet/

Tanya O'Garra

Economics Department, Middlesex University ( email )

The Burroughs
London, NW4 4BT
United Kingdom

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