Carbon pricing efficacy

cross-country evidence

Rohan Best*, Paul J. Burke, Frank Jotzo

*Corresponding author for this work

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

To date there has been an absence of cross-country empirical studies on the efficacy of carbon pricing. In this paper we present estimates of the contribution of carbon pricing to reducing national carbon dioxide (CO2) emissions from fuel combustion, using several econometric modelling approaches that control for other key policies and for structural factors that are relevant for emissions. We use data for 142 countries over a period of two decades, 43 of which had a carbon price in place at the national level or below by the end of the study period. We find evidence that the average annual growth rate of CO2 emissions from fuel combustion has been around 2 percentage points lower in countries that have had a carbon price compared to countries without. An additional euro per tonne of CO2 in carbon price is associated with a reduction in the subsequent annual emissions growth rate of approximately 0.3 percentage points, all else equal. While it is impossible to fully control for all relevant influences on emissions growth, our estimates suggest that the emissions trajectories of countries with and without carbon prices tend to diverge over time.

Original languageEnglish
Pages (from-to)69-94
Number of pages26
JournalEnvironmental and Resource Economics
Volume77
Issue number1
Early online date19 Jun 2020
DOIs
Publication statusPublished - Sep 2020

Keywords

  • Carbon dioxide emissions
  • Carbon pricing
  • Carbon tax
  • Cross-country
  • Emissions trading
  • Fossil fuel policies
  • Growth rates
  • Renewable energy policies

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