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Effects of carbon pricing and other climate policies on CO2 emissions

Author

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  • Kohlscheen, Emanuel
  • Moessner, Richhild
  • Takats, Elod

Abstract

In this study, we provide ex post empirical analysis of the effects of climate policies on carbon emissions at the aggregate national level, using a comprehensive database of 121 countries. Carbon taxes and emissions trading systems (ETS), and the overall stringency of climate policies are considered. We use dynamic panel regressions, controlling for macroeconomic factors (economic development, GDP growth, urbanisation and the energy mix). Higher carbon taxes and ETS prices reduce carbon emissions. An increase in carbon taxes by $10 per ton of CO2 reduces CO2 emissions per capita by 1.3% in the short run and by 4.6% in the long run.

Suggested Citation

  • Kohlscheen, Emanuel & Moessner, Richhild & Takats, Elod, 2025. "Effects of carbon pricing and other climate policies on CO2 emissions," LSE Research Online Documents on Economics 130125, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:130125
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    File URL: https://researchonline.lse.ac.uk/id/eprint/130125/
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    2. Lavinia Heisenberg & Richhild Moessner, 2025. "Scaling up Renewable Energy Storage with Sodium Ion Batteries and Green Technology Policy," CESifo Working Paper Series 11803, CESifo.
    3. Angela Köppl & Margit Schratzenstaller, 2023. "Carbon taxation: A review of the empirical literature," Journal of Economic Surveys, Wiley Blackwell, vol. 37(4), pages 1353-1388, September.
    4. Schroeder, Christofer & Stracca, Livio, 2023. "Pollution havens? Carbon taxes, globalization, and the geography of emissions," Working Paper Series 2862, European Central Bank.
    5. Richhild Moessner, 2025. "Effects of carbon pricing on inflation," Climate Policy, Taylor & Francis Journals, vol. 25(9), pages 1508-1521, October.
    6. Erbertseder, Thilo & Jacob, Martin & Taubenböck, Hannes & Zerwer, Kira, 2025. "How effective are emission taxes in reducing air pollution? A satellite-based case study for Spain," Economic Analysis and Policy, Elsevier, vol. 86(C), pages 1037-1063.
    7. Emanuel Kohlscheen & Richhild Moessner, 2022. "Changing Electricity Markets: Quantifying the Price Effects of Greening the Energy Matrix," Papers 2208.14650, arXiv.org.
    8. Aleksandra Kuzior & Yevhen Kovalenko & Inna Tiutiunyk & Larysa Hrytsenko, 2025. "Assessment of the Energy Security of EU Countries in Light of the Expansion of Renewable Energy Sources," Energies, MDPI, vol. 18(8), pages 1-24, April.
    9. Niklas Döbbeling-Hildebrandt & Klaas Miersch & Tarun M. Khanna & Marion Bachelet & Stephan B. Bruns & Max Callaghan & Ottmar Edenhofer & Christian Flachsland & Piers M. Forster & Matthias Kalkuhl & Ni, 2024. "Systematic review and meta-analysis of ex-post evaluations on the effectiveness of carbon pricing," Nature Communications, Nature, vol. 15(1), pages 1-12, December.
    10. Khalid S. Al-Abdulqader & Abdul-Jalil Ibrahim & JingKai Ong & Ahmed A. Khalifa, 2025. "Does Carbon Pricing Matter? Evidence from a Global Sample," Energies, MDPI, vol. 18(5), pages 1-19, February.
    11. Tol, Richard S.J., 2023. "The fiscal implications of stringent climate policy," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 495-504.

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    Keywords

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    JEL classification:

    • Q00 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - General
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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