Q53 - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; RecyclingReturn

Climate change and climate neutrality targets for 2050 in the case of the EU bring the need for effective environmental policy instruments. Environmental taxes, green innovations, carbon pricing, emission allowances and other instruments are attracting increasing attention in academic as well as economic and environmental policy debates. This paper provides a detailed review of the theoretical and empirical literature on the role of policy instruments in the path towards climate neutrality, in particular on the effectiveness of environmental taxes, innovations, and established policies across the globe. A separate section also examines the two most widely used approaches for putting a price on carbon – carbon taxes and emission allowances. Environmental policy instruments are combined, however, none of them alone contributes to significant environmental improvements, as confirmed by several major studies. But stricter regulation and improved instruments go a long way towards achieving climate neutrality.