The Role of Carbon Taxation in Global Climate Finance: A Hybrid Policy Model for Türkiye

Abstract

As the economic and social impacts of climate change deepen, the need for sustainable financial instruments to support the low-carbon transition is increasing. This study assesses the role of a carbon tax in global climate finance and proposes feasible policy options for Türkiye. It comparatively examines the theoretical foundations of carbon taxation, its revenue-generating capacity, revenue use, its relationship with green budgeting, selected country experiences, and carbon pricing policies. The findings indicate that the effectiveness of a carbon tax depends on the tax rate, the scope of the tax base, revenue allocation, institutional capacity, public acceptance, and the integration of complementary policies. Successful country experiences show that directing carbon tax revenues toward renewable energy, energy efficiency, climate adaptation, and social compensation programs can strengthen both emission reductions and the financing of the green transition. For Türkiye, a phased hybrid carbon pricing model integrating a carbon tax with an emissions trading system and allocating revenues to green transition and social support programs appears to be the most feasible policy option.