Date of Graduation

5-2023

Document Type

Thesis

Degree Name

Bachelor of Science in Industrial Engineering

Degree Level

Undergraduate

Department

Industrial Engineering

Advisor/Mentor

Chimka, Justin

Committee Member/Reader

Rainwater, Chase

Abstract

A carbon tax is an economic policy that aims to reduce various emissions to serve the protection of the environment. Versions of this policy have been implemented in multiple countries across the world to introduce a cost for contributing to environmental damage. Since climate change is prevalent in today’s world, finding an effective method to reduce emissions is essential. However, many countries hesitate to utilize a carbon tax for two reasons. First, they are unsure if the carbon tax is effective at reducing emissions. Second, there is a concern that the implementation of such a tax will be detrimental to the economy.

The aim of this study is to run a linear regression model to analyze the relationship between these different carbon tax plans with the production of various emissions as well as the GDP of each country. Then, each of the analyzed carbon tax plans will be defined as effective or not effective. Effective is defined as meeting the following two criteria. First, the tax must have a significant effect resulting in the reduction of at least one of the given emissions with no positive effect amongst the remaining emissions. Second, the carbon tax must hold no significant impact on GDP. A significant increase in GDP is also accepted as a success if the other requirement is met but this was not expected. Therefore, a positive relationship or no relationship between the tax and GDP is a success.

Twelve countries were analyzed in terms of emissions, while eleven of these twelve were also analyzed in terms of GDP. These countries, including Finland, Mexico, Japan, and Sweden, have varying carbon tax plans, so they were assessed individually. The results show that the implementation of a carbon tax plan in six of the eleven fully analyzed countries were considered effective.

Keywords

Linear regression, emissions, carbon tax, GDP

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