Cars, carbon taxes and CO2 emissions

Julius Andersson

No 212, GRI Working Papers from Grantham Research Institute on Climate Change and the Environment

Abstract: Is a carbon tax effective in reducing emissions of greenhouse gases, and thereby mitigating climate change? This paper is one of the first empirical analyses of this question and the first to find a significant causal effect on emissions. The author uses a quasi-experimental study of the implementation of a carbon tax and a value added tax on transport fuel in Sweden. The results show that, after the introduction of the taxes in the early 1990s, carbon dioxide emissions from the Swedish transport sector reduced by around 11 percentage points in an average year relative to a comparable synthetic control unit, with the carbon tax alone affecting a 6 percentage point reduction. Importantly, the author also finds that the carbon tax elasticity of demand for petrol/gasoline is three times larger than the price elasticity. This finding suggests that ex-ante policy evaluations of carbon taxes that use existing price elasticities of demand to simulate emission reductions may significantly underestimate their true effect.

Date: 2017-03
New Economics Papers: this item is included in nep-ene, nep-env and nep-tre
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://www.lse.ac.uk/GranthamInstitute/wp-content/ ... update_March2017.pdf

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:lsg:lsgwps:wp212

Access Statistics for this paper

More papers in GRI Working Papers from Grantham Research Institute on Climate Change and the Environment Contact information at EDIRC.
Bibliographic data for series maintained by The GRI Administration ().