Green Levy
Categories: Tax
A green levy is a tax that’s “green," i.e. related to clean energy.
Green levies are meant to encourage more efficient and greener energy use, which should result in more demand for green energy R&D, as well as a faster transition to these more environmentally-friendly energies.
From an economic perspective, green levies can be used to correct market failures for firms not taking on the full cost of their pollution. Economic accounting adds in social costs and benefits to regular ol’ accounting.
Which means that when, for instance, a firm pollutes a river used by a neighborhood nearby, or emits carbon and chemicals into the air causing a large uptick in lung cancer in the surrounding neighborhoods, the firm is causing a cost, which is being paid by the public. Green levies can correct this market failure by artificially applying the cost to firms via taxes.