The Road to a Low Emission Society: Costs of Interacting Climate Regulations

Brita Bye (), Kevin R. Kaushal (), Orvika Rosnes (), Karen Turner () and Hidemichi Yonezawa
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Brita Bye: Statistics Norway
Kevin R. Kaushal: Statistics Norway
Orvika Rosnes: Vista Analyse
Karen Turner: University of Strathclyde

Environmental & Resource Economics, 2023, vol. 86, issue 3, No 9, 565-603

Abstract: Abstract Transportation is one of the main contributors to greenhouse gas emissions. Climate regulations on transportation are often a mix of sector-specific regulations and economy-wide measures (such as emission pricing). In this paper we consider how different and partly overlapping climate regulations interact and what are the effects on economic welfare, abatement costs and emissions? Our focus is on Norway, a nation where high taxation of conventional fossil-fuelled cars has paved the floor for another pillar of climate policies: promotion of electric vehicles (EVs) in private transport. Our contribution to the literature is two-fold. First, we analyse the costs and impacts of the partly overlapping climate regulations in transportation—the cap on domestic non-ETS emissions and the goal of all new cars for private households being EVs—focussing on the outcome in 2030. Second, we respond to a gap in the literature through a methodological development in economy-wide computable general equilibrium (CGE) approaches for climate policy by introducing EV technologies as an explicit transport equipment choice for private households. We find that, for the case of Norway, combining a specific EV target with policy to cap emissions through a uniform carbon price more than doubles the welfare costs.

Keywords: Climate policy; Carbon pricing; Zero-emission transport policies; Overlapping regulations; Modelling electric vehicles; CGE-model (search for similar items in EconPapers)
JEL-codes: C68 H23 Q54 Q58 (search for similar items in EconPapers)
Date: 2023
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Working Paper: The road to a low emission society. Costs of interacting climate regulations (2021)
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DOI: 10.1007/s10640-023-00804-3

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