Green taxes could help to combat the climate crisis – but they aren’t free of drawbacks

Prince Charles spoke in their favour at Davos, but to ensure they are effective policymakers need to be alive to the dangers, writes James Moore

Fuel duty, frozen since 2011, is one example of a green tax (Getty)

I found myself in rare agreement with a member of the British royal family – Prince Charles – when he advocated for green taxes during a speech at a Davos dominated by the climate crisis and the debate over how to tackle the greatest challenge of the age.

At a time when we have to clean up or face the consequences, they could prove to be an important part of policymakers’ armoury when it comes to the shaping of an economy that delivers an environment our children can live in.

However, they’re not a magic bullet, as Douglas McWilliams, vice chair of the Centre for Economics and Business Research, makes clear in the think tank’s “Forecasting Eye”. Green taxes can have drawbacks and lead to unintended consequences depending on how, and on whom, they are levied.