Carbon Taxes and CO2 Emissions: A Replication of Andersson (American Economic Journal: Economic Policy, 2019)

Do carbon taxes reduce CO2 emissions in the countries that adopt it? Andersson (2019) provides a clear, affirmative answer. His paper has been widely cited as evidence that carbon taxes “work”. To check whether the estimates from Andersson (2019) are reliable, I replicate his paper using its publicly available data and codes. I modify his synthetic control method (SCM) by using a more restricted set of control units (excluding one potential treated unit). I also use a more efficient methodology to estimate price effects on gasoline consumption. My best estimate is that carbon taxes reduced CO2 emissions in Sweden’s transport sector by 7.7%, even larger than Andersson’s estimate of 6.3%. I then extend Andersson’s approach to Norway to see if I obtain similar results. My estimates indicate that per capita CO2 emissions decreased by a smaller, 2.4% in Norway’s transport sector after the introduction of its carbon tax. When I extend Andersson’s analysis to the national level in Sweden, my results are uninformative due to the difficulty in finding a satisfactory synthetic control counterfactual.