IDEAS home Printed from https://ideas.repec.org/p/zbw/ifhwps/192019.html
   My bibliography  Save this paper

Dosis facit effectum: Why the scope of the carbon tax matters - Evidence from the Swedish residential sector

Author

Listed:
  • Runst, Petrik
  • Thonipara, Anita

Abstract

Sweden has gradually increased its carbon tax within the past 25 years and imposes the world's highest tax on carbon dioxide emissions today. This paper examines the impact of the Swedish carbon tax on residential carbon emissions as well as on consumer behavior. We perform Difference-in-Differences (DiD) regressions and Synthetic Control Methods (SCM) in order to evaluate the causal impact of carbon taxation on carbon emissions in the residential sector. Both methods provide evidence for a causal effect of the carbon tax augmentation in the early 2000s on residential carbon emissions. We find that the scope of the reduction of residential carbon emissions due to the carbon tax augmentation range between 200kg (when compared to other countries with a carbon tax of more than 20 Euros implemented) and 800 kg of CO2 per capita per year (when compared to countries without a carbon tax). Hence, the evidence points towards the effectiveness of carbon taxation in reducing residential CO2 emissions and, thus, mitigating climate change.

Suggested Citation

  • Runst, Petrik & Thonipara, Anita, 2019. "Dosis facit effectum: Why the scope of the carbon tax matters - Evidence from the Swedish residential sector," ifh Working Papers 19/2019, Volkswirtschaftliches Institut für Mittelstand und Handwerk an der Universität Göttingen (ifh).
    • Handle: RePEc:zbw:ifhwps:192019
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/201853/1/1671064631.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bureau, Benjamin, 2011. "Distributional effects of a carbon tax on car fuels in France," Energy Economics, Elsevier, vol. 33(1), pages 121-130, January.
    2. Arik Levinson, 2016. "How Much Energy Do Building Energy Codes Save? Evidence from California Houses," American Economic Review, American Economic Association, vol. 106(10), pages 2867-2894, October.
    3. Di Cosmo, Valeria & Hyland, Marie, 2013. "Carbon tax scenarios and their effects on the Irish energy sector," Energy Policy, Elsevier, vol. 59(C), pages 404-414.
    4. Filippini, Massimo & Hunt, Lester C. & Zorić, Jelena, 2014. "Impact of energy policy instruments on the estimated level of underlying energy efficiency in the EU residential sector," Energy Policy, Elsevier, vol. 69(C), pages 73-81.
    5. Alberto Abadie & Alexis Diamond & Jens Hainmueller, 2015. "Comparative Politics and the Synthetic Control Method," American Journal of Political Science, John Wiley & Sons, vol. 59(2), pages 495-510, February.
    6. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March.
    7. Gonzalez, Fidel, 2012. "Distributional effects of carbon taxes: The case of Mexico," Energy Economics, Elsevier, vol. 34(6), pages 2102-2115.
    8. Thonipara, Anita & Runst, Petrik & Ochsner, Christian & Bizer, Kilian, 2019. "Energy efficiency of residential buildings in the European Union – An exploratory analysis of cross-country consumption patterns," Energy Policy, Elsevier, vol. 129(C), pages 1156-1167.
    9. Ó Broin, Eoin & Nässén, Jonas & Johnsson, Filip, 2015. "The influence of price and non-price effects on demand for heating in the EU residential sector," Energy, Elsevier, vol. 81(C), pages 146-158.
    10. Ian Parry, 2015. "Carbon Tax Burdens on Low-Income Households: A Reason for Delaying Climate Policy?," CESifo Working Paper Series 5482, CESifo.
    11. Mori, Keibun, 2012. "Modeling the impact of a carbon tax: A trial analysis for Washington State," Energy Policy, Elsevier, vol. 48(C), pages 627-639.
    12. World Bank & Ecofys, "undated". "State and Trends of Carbon Pricing 2018," World Bank Publications - Reports 29687, The World Bank Group.
    13. Lin, Boqiang & Li, Xuehui, 2011. "The effect of carbon tax on per capita CO2 emissions," Energy Policy, Elsevier, vol. 39(9), pages 5137-5146, September.
    14. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
    15. Shmelev, Stanislav E. & Speck, Stefan U., 2018. "Green fiscal reform in Sweden: Econometric assessment of the carbon and energy taxation scheme," Renewable and Sustainable Energy Reviews, Elsevier, vol. 90(C), pages 969-981.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kasper Vrolijk & Misato Sato, 2023. "Quasi-Experimental Evidence on Carbon Pricing," The World Bank Research Observer, World Bank, vol. 38(2), pages 213-248.
    2. Vrolijk, Kasper & Sato, Misato, 2023. "Quasi-experimental evidence on carbon pricing," LSE Research Online Documents on Economics 118404, London School of Economics and Political Science, LSE Library.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Runst, Petrik & Thonipara, Anita, 2020. "Dosis facit effectum why the size of the carbon tax matters: Evidence from the Swedish residential sector," Energy Economics, Elsevier, vol. 91(C).
    2. Runst, Petrik & Höhle, David, 2022. "The German eco tax and its impact on CO2 emissions," Energy Policy, Elsevier, vol. 160(C).
    3. Runst, Petrik & Höhle, David, 2021. "Quasi-carbon taxation - The German eco tax and its impact on CO2 emissions," ifh Working Papers 29/2021, Volkswirtschaftliches Institut für Mittelstand und Handwerk an der Universität Göttingen (ifh).
    4. Leroutier, Marion, 2022. "Carbon pricing and power sector decarbonization: Evidence from the UK," Journal of Environmental Economics and Management, Elsevier, vol. 111(C).
    5. Marion Leroutier, 2021. "Carbon Pricing and Power Sector Decarbonisation: Evidence from the UK," Working Papers halshs-03265636, HAL.
    6. Arcila, Andres & Baker, John D., 2022. "Evaluating carbon tax policy: A methodological reassessment of a natural experiment," Energy Economics, Elsevier, vol. 111(C).
    7. Lucia Rotaris & Alessandro Gardelli, 2018. "Carbon Tax acceptability: A comparative experimental analysis," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2018(1), pages 117-132.
    8. Marion Leroutier, 2021. "Carbon Pricing and Power Sector Decarbonisation: Evidence from the UK," CIRED Working Papers halshs-03265636, HAL.
    9. Echevarría, Cruz A. & Hasancebi, Serhat & García-Enríquez, Javier, 2022. "Economic Effects of Macao’s Integration with Mainland China: A Causal Inference Study," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 37(2), pages 179-215.
    10. Nicolaj N. Mühlbach, 2020. "Tree-based Synthetic Control Methods: Consequences of moving the US Embassy," CREATES Research Papers 2020-04, Department of Economics and Business Economics, Aarhus University.
    11. Daniel Albalate & Germà Bel & Ferran A. Mazaira-Font, 2020. "Ensuring Stability, Accuracy and Meaningfulness in Synthetic Control Methods: The Regularized SHAP-Distance Method," IREA Working Papers 202005, University of Barcelona, Research Institute of Applied Economics, revised Apr 2020.
    12. Bruno Ferman & Cristine Pinto & Vitor Possebom, 2020. "Cherry Picking with Synthetic Controls," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 39(2), pages 510-532, March.
    13. Manuel Funke & Moritz Schularick & Christoph Trebesch, 2023. "Populist Leaders and the Economy," American Economic Review, American Economic Association, vol. 113(12), pages 3249-3288, December.
    14. Maximiliano Marzetti & Rok Spruk, 2023. "Long-Term Economic Effects of Populist Legal Reforms: Evidence from Argentina," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 65(1), pages 60-95, March.
    15. Chiara Cavaglia & Sandra McNally & Henry G. Overman, 2020. "Devolving Skills: The Case of the Apprenticeship Grant for Employers," Fiscal Studies, John Wiley & Sons, vol. 41(4), pages 829-849, December.
    16. Nimonka Bayale & Pouwemdéou Tchila & Jacques‐Patrick Arnold Yao & Honoré Tenakoua, 2022. "Do tax administration reforms improve tax revenue performance in Togo? Empirical insights from experimental approaches," South African Journal of Economics, Economic Society of South Africa, vol. 90(2), pages 196-213, June.
    17. Chuku Chuku & Mustafa Yasin Yenice, 2021. "Working Paper 356 - Eurobonds, debt sustainability and macroeconomic performance in Africa: Synthetic controlled experiments," Working Paper Series 2482, African Development Bank.
    18. Bibek Adhikari & Romain Duval & Bingjie Hu & Prakash Loungani, 2018. "Can Reform Waves Turn the Tide? Some Case Studies using the Synthetic Control Method," Open Economies Review, Springer, vol. 29(4), pages 879-910, September.
    19. Sadeghi, Ali & Kibler, Ewald, 2022. "Do bankruptcy laws matter for entrepreneurship? A Synthetic Control Method analysis of a bankruptcy reform in Finland," Journal of Business Venturing Insights, Elsevier, vol. 18(C).
    20. Raffaello Bronzini & Sauro Mocetti & Matteo Mongardini, 2020. "The economic effects of big events: Evidence from the great jubilee 2000 in Rome," Journal of Regional Science, Wiley Blackwell, vol. 60(4), pages 801-822, September.

    More about this item

    Keywords

    carbon tax; Sweden; residential building; CO2 emissions;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • P28 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Natural Resources; Environment
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:ifhwps:192019. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/ifgoede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.