The Effectiveness of Carbon Pricing: A Global Evaluation

Suphi Sen, Serhan Sadikoglu, Changjing Ji and Edwin van der Werf

No 11291, CESifo Working Paper Series from CESifo

Abstract: We estimate the effect of the staggered adoption of carbon pricing policies across the globe between 1990 and 2017 on per capita CO2 emissions from fossil fuel combustion. Applying recent econometric techniques robust to treatment effect heterogeneity, we find reductions of 8 to 12 percent on average. Our dynamic treatment effect estimations indicate gradual adjustments after implementation, resulting in a 19 to 23 percent decrease after 10 years. These effects were primarily driven by resource substitution rather than improvements in energy efficiency, largely independent of the potential effects of renewable energy policies, and were not driven by short-term responses to carbon prices. These results highlight the role of carbon pricing policies in steering medium-term expectations and complementing the climate policy mix.

Keywords: carbon pricing; cap and trade; emission trading; carbon tax; staggered design; dynamic treatment effects (search for similar items in EconPapers)
JEL-codes: Q41 Q48 Q54 Q58 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-ene and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_11291

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