Econometric assessment: has the Swedish carbon and energy taxation scheme been effective?
Published in the Renewable and Sustainable Energy Reviews, this paper employs an econometric approach to analyze the effectiveness of energy and carbon taxes in Sweden (one of the first countries that introduced a CO2 tax as well as an extensive environmental tax reform).
The findings confirm the role of environmental taxation in effectively reducing CO2 emissions in Sweden, although they point towards a more nuanced picture. Notably, the results show that taken in isolation a CO2 tax was not sufficient to result in a significant change in CO2 emissions, except in the case of petrol. On the other hand, energy taxes for coal and LPG have been statistically significantly effective. It was also clear that a technological innovation in the form of development of nuclear and hydro energy played a significant role in reducing CO2 emissions and a higher oil price was also important in reducing national CO2 emissions in Sweden.
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