Higher Carbon Tax Rates More Effective in Reducing Emissions in G20 Countries?

Abstract

This study investigates the impact of carbon tax policies on carbon emission reductions in G20 countries to support the achievement of the Net Zero Emissions target by 2060. As the G20 collectively accounts for a significant share of global greenhouse gas emissions, effective policy interventions in these nations are pivotal to addressing the climate crisis. The research employs the Pearson correlation test to quantify the statistical relationship between carbon tax rates and emission levels, alongside a content analysis of sustainability reports from G20 countries to evaluate policy implementation and outcomes. The results reveal a moderate yet statistically significant negative correlation (r = −0.30, p < 0.05), indicating that higher carbon taxes are associated with lower emission levels. Content analysis further demonstrates that countries with high and consistently enforced carbon taxes, such as Japan and South Korea, achieve more substantial emissions reductions compared to nations with lower tax rates or inconsistent policy implementation. The findings emphasize that while carbon taxes serve as an effective instrument to internalize the social costs of carbon pollution, their impact is maximized when integrated with broader strategies, including investments in renewable energy, advancements in energy efficiency, and technological innovation. This research contributes to the understanding of carbon tax effectiveness and offers policy recommendations to strengthen fiscal measures as part of comprehensive climate action strategies toward achieving global sustainability targets.