The effect of a carbon tax on per capita carbon dioxide emissions: evidence from Finland

Elbaum Jean-David

No 21-05, IRENE Working Papers from IRENE Institute of Economic Research

Abstract: This paper is a quasi-replication of Andersson (2019). I use the synthetic control method to estimate the effect of a carbon tax starting at $1.41 per tonne of CO2 and increased through successive reforms to $20 by 2011. The results show that, one year after the intervention, the tax reduced CO2 emissions from transport by around 10% relative to the synthetic counterfactual, composed from the weighted average of OECD countries. Five years after the intervention, the effect increases to almost 20% and in 2005, the last year of the dataset, the estimated effect is of around 48%. After some robustness checks, the estimated effect is a 15% reduction in 2005. My results are consistent with Andersson (2019), who finds a 12.5% reduction at the end of his studied period. My paper contributes to the thin literature analyzing the the effect of a carbon tax ex post, providing new evidence of the effectiveness of these instruments.

Keywords: Solar systems; Carbon pricing; Emissions reduction; Environmental tax; Greenhouse gas emissions, Synthetic control method. (search for similar items in EconPapers)
JEL-codes: H23 Q54 Q58 (search for similar items in EconPapers)
Pages: 19 pages.
Date: 2021-08
New Economics Papers: this item is included in nep-ene, nep-env, nep-isf and nep-res
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