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Environmental Performance and Climate Policy

This study’s ultimate goal is to analyze environmental performance (EP) at firm level and the effectiveness of environmental policy along with other possible determinants. Especially, the empirical analysis aims at exploring the relationship between the actual EP of firms in terms of CO2 emissions per output unit, and one aspect of Swedish environmental policy, the CO2-tax. Since Sweden was the first country to introduce a specific CO2-tax in 1991 we believe that the Swedish case may serve as an appropriate “test bench” for analyzing EP and the effectiveness of environmental policy in general. To achieve our objective we use a panel data of Swedish manufacturing spanning over the period 1990-2004. The results suggest that EP has improved in all sectors of manufacturing. We also see that production increases while emissions decrease in many sectors, indicating a decoupling of economic growth and environmental degradation. Furthermore, firms’ EP responds to changes in the CO2-tax and fossil fuel price, but is more sensitive to the tax, indicating different EP behavior among firms depending on why the cost of fossil fuels change. Several sectors also display a positive tendency over time in EP, which may suggest that EP is to some extent stimulated by an overall boost in environmental awareness in society and firms.

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File URL: http://www-sekon.slu.se/~gbost/CERE_WP2011-6.pdf
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Paper provided by CERE - the Center for Environmental and Resource Economics in its series CERE Working Papers with number 2011:6.

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Length: 34 pages
Date of creation: 06 Apr 2011
Date of revision:
Handle: RePEc:hhs:slucer:2011_006
Contact details of provider: Web page: http://www.cere.se

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  1. Fare, R. & Grosskopf, S. & Hernandez-Sancho, F., 2004. "Environmental performance: an index number approach," Resource and Energy Economics, Elsevier, vol. 26(4), pages 343-352, December.
  2. Färe, Rolf & Grosskopf, Shawna & Pasurka, Carl Jr., 2010. "Toxic releases: An environmental performance index for coal-fired power plants," Energy Economics, Elsevier, vol. 32(1), pages 158-165, January.
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