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Greenhouse gas emissions in Norway: do carbon taxes work?

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  • Bruvoll, Annegrete
  • Larsen, Bodil Merethe

Abstract

During the last decade, Norway has carried out an ambitious climate policy. The main policy tool is a relatively high carbon tax, which was implemented already in 1991. Data for the development in CO2 emissions since then provide a unique opportunity to evaluate carbon taxes as a policy tool. To reveal the driving forces behind the changes in the three most important climate gases, CO2, methane and N2O in the period 1990-1999, we decompose the actually observed emissions changes, and use an applied general equilibrium simulation to look into the specific effect of carbon taxes. Although total emissions have increased, we find a significant reduction in emissions per unit of GDP over the period due to reduced energy intensity, changes in the energy mix and reduced process emissions. Despite considerable taxes and price increases for some fuel-types, the carbon tax effect has been modest. While the partial effect from lower energy intensity and energy mix changes was a reduction in CO2 emissions of 14 percent, the carbon taxes contributed to only 2 percent reduction. This relatively small effect relates to extensive tax exemptions and relatively inelastic demand in the sectors in which the tax is actually implemented.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 32 (2004)
Issue (Month): 4 (March)
Pages: 493-505

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Handle: RePEc:eee:enepol:v:32:y:2004:i:4:p:493-505

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Web page: http://www.elsevier.com/locate/enpol

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References

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  1. Sutherland, Ronald J, 1998. "The impact of potential climate change commitments on six industries in the United States," Energy Policy, Elsevier, vol. 26(10), pages 765-776, August.
  2. Anne Brendemoen & Haakon Vennemo, 1994. "A Climate Treaty and the Norwegian Economy: A CGE Assessment," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 77-93.
  3. Annegrete Bruvoll & Hege Medin, 2003. "Factors Behind the Environmental Kuznets Curve. A Decomposition of the Changes in Air Pollution," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 24(1), pages 27-48, January.
  4. Hoel, Michael, 1996. "Should a carbon tax be differentiated across sectors?," Journal of Public Economics, Elsevier, vol. 59(1), pages 17-32, January.
  5. Sun, J. W., 1999. "The nature of CO2 emission Kuznets curve," Energy Policy, Elsevier, vol. 27(12), pages 691-694, November.
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  7. Jørgen Aasness & Torstein Bye & Hans Terje Mysen, 1995. "Welfare Effects of Emission Taxes in Norway," Discussion Papers 148, Research Department of Statistics Norway.
  8. Jorgenson, Dale W. & Wilcoxen, Peter J., 1993. "Reducing U.S. carbon dioxide emissions: an assessment of different instruments," Journal of Policy Modeling, Elsevier, vol. 15(5-6), pages 491-520.
  9. Brita Bye & Karine Nyborg, 1999. "The Welfare Effects of Carbon Policies: Grandfathered Quotas versus Differentiated Taxes," Discussion Papers 261, Research Department of Statistics Norway.
  10. Goulder, Lawrence H. & Schneider, Stephen H., 1999. "Induced technological change and the attractiveness of CO2 abatement policies," Resource and Energy Economics, Elsevier, vol. 21(3-4), pages 211-253, August.
  11. van der Zwaan, B. C. C. & Gerlagh, R. & G. & Klaassen & Schrattenholzer, L., 2002. "Endogenous technological change in climate change modelling," Energy Economics, Elsevier, vol. 24(1), pages 1-19, January.
  12. Liaskas, K. & Mavrotas, G. & Mandaraka, M. & Diakoulaki, D., 2000. "Decomposition of industrial CO2 emissions:: The case of European Union," Energy Economics, Elsevier, vol. 22(4), pages 383-394, August.
  13. Paul Ekins & Stefan Speck, 1999. "Competitiveness and Exemptions From Environmental Taxes in Europe," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 13(4), pages 369-396, June.
  14. Bye, Brita, 2000. "Environmental Tax Reform and Producer Foresight: An Intertemporal Computable General Equilibrium Analysis," Journal of Policy Modeling, Elsevier, vol. 22(6), pages 719-752, November.
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  1. Australia v Norway: does Garnaut's comparison add up?
    by Ronald Ripple, Professor and Director, Centre for Research in Energy and Minerals Economics at Curtin University of Technology in The Conversation on 2011-06-07 06:12:00
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