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The impact of British Columbia's carbon tax on residential natural gas consumption

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  • Xiang, Di
  • Lawley, Chad

Abstract

We estimate the effect of British Columbia's (BC) carbon tax on per capita residential natural gas consumption using panel data regression and synthetic control models. We use province and state-level data documenting annual natural gas consumption from 1990 through 2014. Results from the panel data regression model suggest that the carbon tax substantially reduced residential natural gas consumption. Our preferred approach is the synthetic control method that we use to select a group of provinces and states against which BC's residential natural gas consumption trends can be compared. Using the synthetic control approach we find that the BC carbon tax reduced per capita residential natural gas consumption by approximately 7%.

Suggested Citation

  • Xiang, Di & Lawley, Chad, 2019. "The impact of British Columbia's carbon tax on residential natural gas consumption," Energy Economics, Elsevier, vol. 80(C), pages 206-218.
    • Handle: RePEc:eee:eneeco:v:80:y:2019:i:c:p:206-218
    DOI: 10.1016/j.eneco.2018.12.004
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    Keywords

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    JEL classification:

    • C19 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Other
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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