Taxation of fuel and vehicles when emissions are constrained

Geir H.M. Bjertnæs

Energy Economics, 2023, vol. 128, issue C

Abstract: A tax on fuel combined with tax exemptions or subsidies for low- and zero emission vehicles is implemented in many countries to fulfill the Paris agreement and to curb mileage-related externalities from road traffic. The present study however shows that a tax on fuel should be combined with tax exemptions for high-emission vehicles to curb mileage-related externalities and to fulfill emission targets within the transport sector. The emission target is fulfilled by adjusting the CO2-tax component on fuel. The road user charge on fuel is designed to curb mileage-related externalities. The heavier tax on low- and zero emission vehicles prevent motorists from avoiding the road user charge on fuel by purchasing low- and zero emission vehicles.

Keywords: Transportation; Optimal taxation; Environmental taxation; Global warming (search for similar items in EconPapers)
JEL-codes: H2 H21 H23 Q58 R48 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:128:y:2023:i:c:s0140988323006230

DOI: 10.1016/j.eneco.2023.107125

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