Environmental Taxation

1. Introduction

1.1. Framing the Inquiry: Environmental Taxation at a Legal Crossroads

As the climate crisis intensifies, national tax systems are being retooled as instruments for ecological transformation. Across jurisdictions, governments are increasingly deploying environmental tax incentives such as production credits, investment credits, energy efficiency rebates, and subsidies for clean vehicles in S. 592order to stimulate private sector decarbonization. These fiscal measures are not only more politically feasible than carbon pricing or environmental levies but are also designed to catalyse investment, encourage technological innovation, and localize supply chains in sectors critical to the transition. This strategic shift from punitive taxation to incentives that reward climate positive behaviour represents a significant transformation in the structure of environmental fiscal policy.

However, this transformation has brought environmental and trade regimes into closer and more frequent legal conflict. While international trade law recognizes the right of states to adopt measures aimed at legitimate public policy objectives such as environmental protection, it also imposes legal disci...