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The German eco tax and its impact on CO2 emissions

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  • Runst, Petrik
  • Höhle, David

Abstract

Many countries have only recently introduced carbon taxation to reduce emissions and the time series data for evaluating these policies is not available yet. We use the introduction of fossil taxes in the German transportation sector to evaluate the effectiveness of environmental taxation. We employ synthetic control methods in the quantitative section of our analysis. The results indicate that the carbon price increase by about 66 €/t CO2 led to a considerable decline of transport emissions by 0.2–0.35 t per person and year. We also show that the sales share of diesel cars quickly increases after the reform, whereas the fuel efficiency of non-diesel cars increases with a three-year time lag. Most importantly, a qualitative analysis of a German car manufacturer's business reports also suggests that the tax triggered an improvement in engine technology.

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  • Runst, Petrik & Höhle, David, 2022. "The German eco tax and its impact on CO2 emissions," Energy Policy, Elsevier, vol. 160(C).
    • Handle: RePEc:eee:enepol:v:160:y:2022:i:c:s0301421521005206
    DOI: 10.1016/j.enpol.2021.112655
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    Cited by:

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    2. Pier Basaglia & Sophie Behr & Moritz A. Drupp, 2023. "De-Fueling Externalities: How Tax Salience and Fuel Substitution Mediate Climate and Health Benefits," Discussion Papers of DIW Berlin 2041, DIW Berlin, German Institute for Economic Research.
    3. Mahmood, Nasir & Zhao, Yingjun & Lou, Qinqin & Geng, Jinzhou, 2022. "Role of environmental regulations and eco-innovation in energy structure transition for green growth: Evidence from OECD," Technological Forecasting and Social Change, Elsevier, vol. 183(C).
    4. Pierre-Antoine Muselli & Jean-Nicolas Antoniotti & Marc Muselli, 2022. "Climate Change Impacts on Gaseous Hydrogen (H 2 ) Potential Produced by Photovoltaic Electrolysis for Stand-Alone or Grid Applications in Europe," Energies, MDPI, vol. 16(1), pages 1-21, December.
    5. Wang, Tianyang & Umar, Muhammad & Li, Menggang & Shan, Shan, 2023. "Green finance and clean taxes are the ways to curb carbon emissions: An OECD experience," Energy Economics, Elsevier, vol. 124(C).

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    More about this item

    Keywords

    Carbon taxation; Transport sector; Carbon emissions;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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