Have green taxes worked since Paris: Evidence from Latin American countries

This paper tests whether higher green-tax pressure reduced CO2 emissions in 13 Latin American countries over 2000-2021, with emphasis on the post-Paris years. Using annual panel models with country- and year-fixed effects and interaction terms, we assess three channels: direct tax effects, post-Paris reinforcement, and complementarities with renewables. Baseline pooled OLS suggests a positive elasticity, consistent with upward bias from omitted variables. Once country and year heterogeneity and full controls are included, the tax coefficient shrinks toward zero and loses statistical significance. The Tax × Paris interaction is also not significant, indicating that the Paris Agreement did not strengthen fiscal mitigation on average in the region. By contrast, a higher renewable-energy share is robustly associated with lower emissions, while its synergy with taxation weakens after controls. We conclude that taxes alone delivered limited mitigation in Latin America during 2000-2021. Policy effectiveness likely requires credible price signals paired with renewable deployment and stronger governance and enforcement.