Why do governments implement very low carbon prices? Sequencing and symbolism in climate policy

Carbon pricing, in the shape of carbon taxes or emissions trading systems, is widely seen as an important climate policy instrument, based on the expectations that this would effectively trigger behavior change towards less emissions-intensive practices. However, current carbon prices are in most countries too low to fulfill this expectation, and higher carbon prices often lack political feasibility due to strong industrial and public opposition. But for what purposes do governments implement low carbon prices? To answer this question, we analyze low carbon tax policies on the national level between 1990 and 2020 based on legislative and governmental primary sources, secondary scientific sources, and quantitative data. We show that in only nearly half of all analyzed cases, governments initially implemented low carbon taxes with the plan to later increase their price level through policy sequencing, but only 25% of the investigated countries actually increased the carbon price. In half of the cases, governments adopted a low carbon tax mainly for symbolic, not climate mitigation-related purposes, such as general revenue generation or enhancing the international reputation, and without the expressed intention to increase the tax over time. Using low carbon taxes to generate funds for green spending only played a minor role so far. We conclude that the initial implementation of low carbon taxes in many cases needs to be seen as mainly symbolic policymaking rather than ambitious climate policymaking, especially outside Europe, whereas sequencing to ratchet up ambition – starting with a political feasible but too low carbon price and then increase it once the instrument is in place – is the exception rather than the rule in the global perspective.