The Unintended Effects of Carbon Emission Policy: International Evidence from the Paris Agreement

The Challenge

This research addresses the critical intersection of carbon emissions, tax aggressiveness, and innovation investment in the minerals sector. It examines the economic and environmental impact of carbon emissions policies on firms’ tax behaviour and investments, focusing on:

• Economic Impact: Does a firm’s carbon emissions correlate with its tax aggressiveness?
• Innovation Investment: How do firms allocate tax savings?
• Does it drive investments in carbon-related innovations?
• Institutional Influence: To what extent do institutional factors moderate the link between carbon emissions and tax aggressiveness?
• Industry-Specific Response: Are highly pollutant-intensive mining firms more inclined to employ tax avoidance practices in response to carbon emissions regulations?

This research provides essential insights into sustainability, compliance, and innovation dynamics within the minerals sector.

Proposed Solution

This research project investigates carbon emissions’ impact on tax behaviour within WA’s minerals sector, leveraging the Paris Agreement as a global catalyst. We also explore the role of carbon disclosures. Our international sample reveals insights into how country-level institutions shape regulatory outcomes, directly benefiting local regulators and mining firms.

Proposed Benefits to WA

My research investigates tax avoidance responses to increasing carbon reduction costs in Western Australia’s minerals sector, particularly in high-carbon-emitting industries like mining. Understanding firms’ strategic financial decisions is crucial for fostering innovation and sustainable practices in the mining sector. Additionally, my work will address the societal impact of tax avoidance behaviours, which can affect safety, social responsibility, and environmental sustainability. If firms employ tax aggressiveness to counter carbon reduction expenses, it could lead to reduced government revenues. These funds are vital for supporting social well-being and environmental initiatives in the state.

This research empowers policymakers to make informed choices, ensuring the efficient allocation of financial resources for the benefit of Western Australia’s society and environment. In harmony with the region’s sustainability goals, economic development priorities, and responsible resource management, this research contributes to a prosperous and sustainable future for Western Australia