Using Vehicle Taxes to Reduce Carbon Dioxide Emissions Rates of New Passenger Vehicles: Evidence from France, Germany, and Sweden
60 Pages Posted: 30 Nov 2012
There are 2 versions of this paper
Using Vehicle Taxes to Reduce Carbon Dioxide Emissions Rates of New Passenger Vehicles: Evidence from France, Germany, and Sweden
Using Vehicle Taxes to Reduce Carbon Dioxide Emissions Rates of New Passenger Vehicles: Evidence from France, Germany, and Sweden
Date Written: July 30, 2012
Abstract
France, Germany, and Sweden have recently linked vehicle taxes to the carbon dioxide (CO2) emissions rates of passenger vehicles. France has introduced a system of CO2-based purchase taxes and subsidies, whereas Germany and Sweden impose annual circulation (i.e., registration) taxes that are linear functions of CO2 emissions rates. This paper (a) compares the effects of vehicle taxes on registrations and average emissions rates across countries and (b) estimates the effect of reducing CO2 emissions rates on manufacturers’ profits. The taxes have had a significant negative short-run effect on new vehicle registrations in all three countries, although the effect is somewhat stronger in France than in Germany and Sweden. We find little evidence that the French tax caused manufacturers to change the emissions rates of individual vehicles, however. The second part of the paper takes advantage of the theoretical equivalence between an emissions rate standard and a CO2-based emissions rate tax. We use the results from the first part to estimate the effect on manufacturers’ profits of reducing emissions rates. Focusing on France, a decrease of 5 grams of CO2 per kilometer (about 3 percent) reduces short-run profits by 10-50 euros per vehicle, depending on the manufacturer. We find considerable heterogeneity across manufactures in these costs.
Keywords: Feebate, Fuel economy standards, Emission rate standards
JEL Classification: L62, Q54
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Designing Climate Mitigation Policy
By Joseph E. Aldy, Alan Krupnick, ...
-
Designing Climate Mitigation Policy
By Joseph E. Aldy, Alan Krupnick, ...
-
Gasoline Prices, Fuel Economy, and the Energy Paradox
By Hunt Allcott and Nathan Wozny
-
New Vehicle Characteristics and the Cost of the Corporate Average Fuel Economy Standard
By Thomas Klier and Joshua Linn
-
The Price of Gasoline and the Demand for Fuel Economy: Evidence from Monthly New Vehicles Sales Data
By Thomas Klier and Joshua Linn
-
By Lawrence H. Goulder, Mark R. Jacobsen, ...
-
By James Sallee
-
Automobile Fuel Economy Standards: Impacts, Efficiency, and Alternatives
By Soren Anderson, Carolyn Fischer, ...
-
Automobile Fuel Economy Standards: Impacts, Efficiency, and Alternatives
By Soren Anderson, Ian W. H. Parry, ...