The use of regulatory taxation as a policy instrument for sustainability transitions: old wine in new bottles or unexplored potential?

The burgeoning literature on sustainable transitions links persistent environmental problems to the functioning of socio-technical systems. Conventional policy instruments, such as environmental taxation, are often rejected by transition scholars but in-depth studies on their potential are scarce. This paper explores the potential of the instrument of environmental taxation for influencing sustainability transitions. The multi-level perspective and the multi-phase perspective from transition thinking and the social practices approach are combined with the environmental economics theories of Pigou and Coase. Our analysis shows that the highest impact of regulatory taxation will be realised at the end of the take-off phase and in the acceleration phase of a transition. Although important barriers exist and many conditions apply, regulatory environmental taxation, especially as part of a smart policy mix, has more potential for contributing to sustainability transitions than hitherto assumed.