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The effects of energy taxes on energy consumption in Finland between 1995 and 2004 - An historical analysis using the VATTAGE-model

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  • Honkatukia, Juha
  • Marttila, Kimmo

Abstract

This study evaluates the effects of changes in energy taxes on energy consumption between the years 1995 and 2004 using an applied, general equilibrium model for a historical simulation. During this period, Finnish energy taxation was fundamentally changed, going from an up-stream, emission and energy content-based approach to one with a mixed fuel and electricity tax. The change put the burden more closely on the users of electricity and fuels. We find that while the sharp increases in energy prices since 1995 have significantly restricted the growth of energy demand, energy taxes have also been effective in curbing the growth of energy and especially electricity consumption. For transport fuels, the effective tax rate actually fell as the price net of tax increased over time. Nevertheless, for petrol and light fuel oil we do find the taxes to have slowed down overall demand growth.

Suggested Citation

  • Honkatukia, Juha & Marttila, Kimmo, 2011. "The effects of energy taxes on energy consumption in Finland between 1995 and 2004 - An historical analysis using the VATTAGE-model," Research Reports 162, VATT Institute for Economic Research.
    • Handle: RePEc:fer:resrep:162
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    File URL: https://www.doria.fi/handle/10024/148699
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    References listed on IDEAS

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    1. Honkatukia, Juha, 2009. "VATTAGE - A dynamic, applied general equilibrium model of the Finnish economy," Research Reports 150, VATT Institute for Economic Research.
    2. Perrels, Adriaan & Veijalainen, Noora & Jylhä, Kirsti & Aaltonen, Juha & Molarius, Riitta & Porthin, Markus & Silander, Jari & Rosqvist, Tony & Tuovinen, Tarja, 2010. "The implications of climate change for extreme weather events and their socio-economic consequences in Finland," Research Reports 158, VATT Institute for Economic Research.
    3. Usva, Kirsi & Hongisto, Mikko & Saarinen, Merja & Nissinen, Ari & Katajajuuri, Juha-Matti & Perrels, Adriaan & Nurmi, Pauliina & Kurppa, Sirpa & Koskela, Sirkka, 2009. "Towards certified carbon footprints of products - a road map for data production - Climate Bonus project report (WP3)," Research Reports 143:2, VATT Institute for Economic Research.
    4. Marja Riihelä & Risto Sullström & Matti Tuomala, 2005. "Trends in Top Income Shares in Finland," Discussion Papers 371, Government Institute for Economic Research Finland (VATT).
    5. Perrels, Adriaan & Sahari, Anna & Nissinen, Ari, 2009. "Reviewing key building blocks of an integrated carbon footprinting and consumer purchases' monitoring reward system - interaction with the consumer - Climate Bonus project report (WP4)," Research Reports 143:3, VATT Institute for Economic Research.
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