Environmental taxes as a tool for the green economy and sustainable infrastructure development

Abstract

In the article the role of environmental taxes in advancing the green economy and financing sustainable infrastructure development was invistagated. A comprehensive analysis of academic literature and research was undertaken to examine the theoretical foundations of environmental taxation and its economic implications. Practical insights were derived from case studies of European countries, focusing on the design and implementation of environmental tax systems and the strategic allocation of tax revenues toward green initiatives and infrastructure development. Additionally, statistical correlation and regression analyses were conducted to evaluate the relationship between environmental tax revenue and explanatory variables.

The aim of the article is to evaluate the role and efficacy of environmental taxes as a strategic policy instrument for advancing green economic transitions and fostering sustainable infrastructure development in the energy sector.

Methods of the research include literature review of existing academic literature on environmental taxation, green economy practices and infrastructure financing; examination of case studies from European countries (Denmarks, Sweden, Finland, Austria and Netherlands); statistical correlation and regression analysis of environmental tax revenue data and range of explanatory variables.

Results of the research confirm that environmental taxes provide a significant revenue stream, particularly in countries with established carbon pricing mechanisms and energy taxes. These revenues have been effectively allocated to support renewable energy development, energy efficiency improvements, and green infrastructure projects. Countries with higher environmental tax rates exhibit reductions in carbon emissions and increased adoption of cleaner energy technologies. The analysis highlights a positive correlation between environmental tax revenue and investments in low-carbon infrastructure. Stronger fiscal signals, such as high implicit energy tax rates and investments in research and development (R&D), contribute to greater energy efficiency and technological advancements. These factors bolster the effectiveness of environmental taxation systems in driving sustainable economic transitions. The effectiveness of environmental taxes varies based on policy design and implementation. Countries with transparent revenue allocation mechanisms and integrated policies linking taxation to sustainability objectives achieve more substantial outcomes. Some factors, such as the share of renewables and energy import dependency, do not exhibit a direct or isolated impact on environmental tax revenues. Political resistance, equity concerns, and potential economic burdens on vulnerable populations remain challenges for widespread adoption.

Conclusions. Environmental taxes are a vital tool for advancing the green economy and financing sustainable infrastructure development. They not only provide economic incentives to reduce pollution and improve resource efficiency but also create a reliable revenue stream for funding essential green infrastructure projects. The study underscores the importance of aligning environmental tax policies with broader innovation and efficiency agendas to maximize their impact. While challenges such as political resistance and equity issues persist, transparent revenue allocation and integrated policy frameworks can enhance the effectiveness of environmental taxes.