Fiscal policy and CO2 emissions of new passenger cars in the EU

Thomas Michielsen, Reyer Gerlagh, Inge van den Bijgaart and Hans Nijland

No 302, CPB Discussion Paper from CPB Netherlands Bureau for Economic Policy Analysis

Abstract: To what extent have national fiscal policies contributed to the decarbonisation of newly sold passenger cars? We construct a simple model that generates predictions regarding the effect of fiscal policies on average CO2 emissions of new cars, and then test the model empirically. Our empirical strategy combines a diverse series of data. First, we use a large database of vehicle‐specific taxes in 15 EU countries over 2001‐2010 to construct a measure for the vehicle registration and annual road tax levels, and separately, for the CO2 sensitivity of these taxes. We find that for many countries the fiscal policies have become more sensitive to CO2 emissions of new cars. We then use these constructed measures to estimate the effect of fiscal policies on the CO2 emissions of the new car fleet. The increased CO2‐sensitivity of registration taxes have reduced the CO2 emission intensity of the average new car by 1,3 percent, partly through an induced increase of the share of diesel‐fuelled cars by 6,5 percentage points. Higher fuel taxes lead to the purchase of more fuel efficient cars, but higher annual road taxes have no or an adverse effect. Key Words: vehicle registration taxes, fuel taxes, CO2 emissions

JEL-codes: H30 L62 Q48 Q54 Q58 R48 (search for similar items in EconPapers)
Date: 2015-02
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 (8)

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Related works:
Working Paper: Fiscal Policy and CO2 Emissions of New Passenger Cars in the EU (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:cpb:discus:302

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