Too Hot to Handle? Benefits and costs of stimulating the use of biofuels in the Swedish Heating Sector

Runar Brännlund () and Bengt Kriström ()
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Runar Brännlund: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden

No 518, Umeå Economic Studies from Umeå University, Department of Economics

Abstract: This paper evaluates the impact of changes in current Swedish energy taxation by analyzing a panel of approximately 150 district heating plants in Sweden. We estimate plant-specific production functions and derive the economic repercussions of the tax. We also estimate the resulting changes of emissions of Sulfur, NOx, particulates and CO2 and assess the externality costs. Our results raise the issue of whether or not the Swedish tax system needs to be complemented with additional environmental taxes, covering, say, emissions of particulates. However, because the geographical variation of damages is likely to be substantial, an overall assessment of current regulatory schemes seems preferable. The current system of using both taxes and regulations needs to be re-structured, in particular in the case of global environmental problems.

Keywords: Energy Taxation; Heating Plants; Panel Data; Externalities (search for similar items in EconPapers)
JEL-codes: C23 D21 Q41 Q48 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr and nep-env
Date: 1999-11-01
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