Author(s)

Lirong Yao

Corresponding Author

Lirong Yao

Abstract

Climate change driven by greenhouse gas emissions is urgent for effective policy interventions to transition to a sustainable, low-carbon future. Carbon taxes and renewable energy subsidies are two prominent policy tools aimed at combating climate change. In this paper, we compare the effectiveness of carbon taxes and renewable energy subsidies in reducing emissions, noting that while carbon taxes provide a broad incentive across sectors, their impact depends on the tax rate and the availability of alternatives. Renewable energy subsidies, in contrast, directly promote clean energy but require robust grid infrastructure and storage technology to be fully effective. The essay concludes that neither policy is a panacea, and a combination of both, along with other mechanisms such as cap-and-trade systems, carbon dividends, and direct investment in green technologies, may be the most effective approach. Policymakers must carefully balance the strengths and weaknesses of each policy to ensure a fair and sustainable transition to a low-carbon future.

Keywords

Climate Change, Carbon Taxes, Renewable Energy Subsidies