Carbon Prices and Incentives for Technological Development

Tommy Lundgren (), Per-Olov Marklund (), Eva Samakovlis () and Wenchao Zhou ()
Additional contact information
Tommy Lundgren: CERE, Centre for Environmental and Resource Economics, Postal: Umeå University and SLU, , Umeå, , Sweden, http://www.cere.se
Per-Olov Marklund: CERUM, Centre for Regional Science, Postal: Umeå University, , Umeå, , Sweden
Eva Samakovlis: National Institute of Economic Research, Postal: Stockholm, , Sweden, http://www.konj.se
Wenchao Zhou: CERUM, Centre for Regional Science, Postal: Umeå University, , Umeå, , Sweden

No 2013:4, CERE Working Papers from CERE - the Center for Environmental and Resource Economics

Abstract: How to significantly decrease carbon dioxide emissions has become one of the largest challenges faced by modern society. The standard recipe prescribed by most economists is to put a price on carbon, either through a tax or through emissions trading. Such measures can reduce emissions cost-effectively and create incentives for technological development. There is, however, a growing concern that the carbon prices generated through the European Union emission trading system (EU ETS) have been too low to create the incentives necessary to stimulate technological development. This paper empirically analyzes how the Swedish carbon dioxide tax and the EU ETS have affected productivity development in the Swedish pulp and paper industry 1998-2008. A Luenberger total factor productivity (TFP) indicator is computed using data envelopment analysis. How the policy measures affect TFP is assessed using a system generalized method of moments estimator. The results show that climate policy had a modest impact on technological development in the pulp and paper industry, and if significant it has been negative. The price on fossil fuels, on the contrary, seems to have created important incentives for technological development. Hence, results suggest that the carbon prices faced by the industry through EU ETS and the carbon dioxide tax have been too low.

Keywords: CO2 tax; EU ETS; Luenberger productivity indicator; GMM (search for similar items in EconPapers)
JEL-codes: D22 D24 Q54 Q55 Q58 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2013-05-02
New Economics Papers: this item is included in nep-eff, nep-ene, nep-env and nep-eur
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www-sekon.slu.se/~gbost/CERE_WP2013-4.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to www-sekon.slu.se:80 (A connection attempt failed because the connected party did not properly respond after a period of time, or established connection failed because connected host has failed to respond.)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:slucer:2013_004

Access Statistics for this paper

More papers in CERE Working Papers from CERE - the Center for Environmental and Resource Economics
Bibliographic data for series maintained by Mona Bonta Bergman ().