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Greening the vehicle fleet: Norway's CO2-Differentiated registration tax

Shiyu Yan and Gunnar Eskeland ()

Journal of Environmental Economics and Management, 2018, vol. 91, issue C, 247-262

Abstract: In 2007, Norway established its vehicle registration tax linked to vehicle CO2 intensities. In 2009, the tax was modified to a feebate structure but maintained its link to CO2 intensities. Using a panel dataset to exploit the quasi-experimental tax reforms, we estimate that a 1000-NOK (125-USD) tax increment reduces new vehicle sales by 1.06–1.58%. This result yields an elasticity of average CO2 intensity to CO2 price (implied by the tax) of −0.06. With a pass-through of the tax to car prices of 88%, the resulting elasticity of average CO2 intensity to average car price is −0.53. Thus, the tax significantly shifts consumers toward lower-emission vehicles. Our counterfactual simulations suggest that high-emission vehicle segments lose market shares and become less CO2 intensive, while low-emission vehicle segments gain market shares.

Keywords: CO2 intensity; Low-emission vehicle; Vehicle registration tax; Fuel cost; Green tax reform; Greenhouse gas emission reduction (search for similar items in EconPapers)
JEL-codes: L62 Q54 Q41 (search for similar items in EconPapers)
Date: 2018
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Journal of Environmental Economics and Management is currently edited by M.A. Cole, A. Lange, D.J. Phaneuf, D. Popp, M.J. Roberts, M.D. Smith, C. Timmins, Q. Weninger and A.J. Yates

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