Cars, carbon taxes and CO2 emissions

Is a carbon tax effective in reducing emissions of greenhouse gases, and thereby mitigating climate change? This paper is one of the first empirical analyses of this question and the first to find a significant causal effect on emissions, using a quasi-experimental study of the implementation of a carbon tax and a value added tax on transport fuel in Sweden. The results show that, after the introduction of the taxes in the early 1990's, carbon dioxide emissions from the Swedish transport sector are reduced by around 11 percentage points in an average year relative to a comparable synthetic control unit, with a 6 percentage points reduction from the carbon tax alone.

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