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Dosis facit effectum: Why the scope of the carbon tax matters - Evidence from the Swedish residential sector

Author

Listed:
  • Runst, Petrik
  • Thonipara, Anita
Abstract
Sweden has gradually increased its carbon tax within the past 25 years and imposes the world's highest tax on carbon dioxide emissions today. This paper examines the impact of the Swedish carbon tax on residential carbon emissions as well as on consumer behavior. We perform Difference-in-Differences (DiD) regressions and Synthetic Control Methods (SCM) in order to evaluate the causal impact of carbon taxation on carbon emissions in the residential sector. Both methods provide evidence for a causal effect of the carbon tax augmentation in the early 2000s on residential carbon emissions. We find that the scope of the reduction of residential carbon emissions due to the carbon tax augmentation range between 200kg (when compared to other countries with a carbon tax of more than 20 Euros implemented) and 800 kg of CO2 per capita per year (when compared to countries without a carbon tax). Hence, the evidence points towards the effectiveness of carbon taxation in reducing residential CO2 emissions and, thus, mitigating climate change.

Suggested Citation

  • Runst, Petrik & Thonipara, Anita, 2019. "Dosis facit effectum: Why the scope of the carbon tax matters - Evidence from the Swedish residential sector," ifh Working Papers 19/2019, Volkswirtschaftliches Institut für Mittelstand und Handwerk an der Universität Göttingen (ifh).
    • Handle: RePEc:zbw:ifhwps:192019
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    References listed on IDEAS

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    Cited by:

    1. Kasper Vrolijk & Misato Sato, 2023. "Quasi-Experimental Evidence on Carbon Pricing," The World Bank Research Observer, World Bank, vol. 38(2), pages 213-248.
    2. Vrolijk, Kasper & Sato, Misato, 2023. "Quasi-experimental evidence on carbon pricing," LSE Research Online Documents on Economics 118404, London School of Economics and Political Science, LSE Library.

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    More about this item

    Keywords

    carbon tax; Sweden; residential building; CO2 emissions;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • P28 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Natural Resources; Environment
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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