Environmental performance and climate policy

Runar Brännlund, Tommy Lundgren () and Per-Olov Marklund
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Runar Brännlund: Centre for Environmental and Resource Economics, Department of Economics, Umeå University, Sweden
Tommy Lundgren: Centre of Environmental and Resource Economics, Umeå School of Business, Umeå University, Sweden
Per-Olov Marklund: Centre for Environmental and Resource Economics, Centre for Regional Science, Umeå University, Sweden

No 2011/1, Sustainable Investment and Corporate Governance Working Papers from Sustainable Investment Research Platform

Abstract: This study’s ultimate goal is to analyze environmental performance (EP) at firm level and the effectiveness of environmental policy along with other possible determinants. Especially, the empirical analysis aims at exploring the relationship between the actual EP of firms in terms of CO2 emissions per output unit, and one aspect of Swedish environmental policy, the CO2- tax. Since Sweden was the first country to introduce a specific CO2-tax in 1991 we believe that the Swedish case may serve as an appropriate “test bench” for analyzing EP and the effectiveness of environmental policy in general. To achieve our objective we use a panel data of Swedish manufacturing spanning over the period 1990-2004. The results suggest that EP has improved in all sectors of manufacturing. We also see that production increases while emissions decrease in many sectors, indicating a decoupling of economic growth and environmental degradation. Furthermore, firms’ EP responds to changes in the CO2-tax and fossil fuel price, but is more sensitive to the tax, indicating different EP behavior among firms depending on why the cost of fossil fuels change. Several sectors also display a positive tendency over time in EP, which may suggest that EP is to some extent stimulated by an overall boost in environmental awareness in society and firms.

Keywords: CO2 emissions; CO2-tax; environmental performance (search for similar items in EconPapers)
Pages: 33 pages
Date: 2011-08-25
New Economics Papers: this item is included in nep-ene and nep-env
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Citations: View citations in EconPapers (1)

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