Carbon Pricing Efficacy: Cross-Country Evidence
- PDF / 780,039 Bytes
- 26 Pages / 439.37 x 666.142 pts Page_size
- 74 Downloads / 207 Views
Carbon Pricing Efficacy: Cross‑Country Evidence Rohan Best1 · Paul J. Burke2 · Frank Jotzo2 Accepted: 8 June 2020 © Springer Nature B.V. 2020
Abstract To date there has been an absence of cross-country empirical studies on the efficacy of carbon pricing. In this paper we present estimates of the contribution of carbon pricing to reducing national carbon dioxide (CO2) emissions from fuel combustion, using several econometric modelling approaches that control for other key policies and for structural factors that are relevant for emissions. We use data for 142 countries over a period of two decades, 43 of which had a carbon price in place at the national level or below by the end of the study period. We find evidence that the average annual growth rate of CO2 emissions from fuel combustion has been around 2 percentage points lower in countries that have had a carbon price compared to countries without. An additional euro per tonne of C O2 in carbon price is associated with a reduction in the subsequent annual emissions growth rate of approximately 0.3 percentage points, all else equal. While it is impossible to fully control for all relevant influences on emissions growth, our estimates suggest that the emissions trajectories of countries with and without carbon prices tend to diverge over time. Keywords Carbon dioxide emissions · Carbon pricing · Carbon tax · Cross-country · Emissions trading · Fossil fuel policies · Growth rates · Renewable energy policies JEL Classification O57 · Q43 · Q48 · Q50 · Q58
1 Introduction Effective policies to reduce greenhouse gas emissions are vital in order to make substantial progress in addressing climate change. The first tool in the economist’s toolkit for reducing greenhouse gas emissions is for a price to be charged per unit of emissions. That carbon pricing can make an important contribution to reducing emissions has been established in individual case studies for countries such as Sweden (Andersson 2019).
Electronic supplementary material The online version of this article (https://doi.org/10.1007/s1064 0-020-00436-x) contains supplementary material, which is available to authorized users. * Rohan Best [email protected] 1
Department of Economics, Macquarie University, Sydney, NSW 2109, Australia
2
Crawford School of Public Policy, Australian National University, Canberra, ACT 2601, Australia
13
Vol.:(0123456789)
R. Best et al.
Yet to our knowledge there is an absence of large-n international studies on the effect of carbon prices on national emissions. In this paper we use a longitudinal dataset for 142 countries to estimate the contribution of carbon pricing to reducing carbon dioxide (CO2) emissions. We employ econometric techniques that control for other relevant factors, including other policies such as feed-in tariffs and renewable portfolio standards. We focus on emissions from fuel combustion, which account for approximately 80% of global human-induced CO2 emissions and have been the main target of carbon pricing (IEA 2017). From a
Data Loading...
