Abstract:During the last decade, Norway has carried out an ambitious climate policy. The main policy tool is a relatively high carbon tax, which was implemented already in 1991. Data for the development in CO 2 emissions since then provide a unique opportunity to evaluate carbon taxes as a policy tool. To reveal the driving forces behind the changes in the three most important climate gases, CO 2 , methane and N 2 O in the period 1990-1999, we decompose the actually observed emissions changes, and use an applied general equilibrium simulation to look into the specific effect of carbon taxes. Although total emissions have increased, we find a significant reduction in emissions per unit of GDP over the period due to reduced energy intensity, changes in the energy mix and reduced process emissions. Despite considerable taxes and price increases for some fuel-types, the carbon tax effect has been modest. While the partial effect from lower energy intensity and energy mix changes was a reduction in CO 2 emissions of 14 percent, the carbon taxes contributed to only 2 percent reduction. This relatively small effect relates to extensive tax exemptions and relatively inelastic demand in the sectors in which the tax is actually implemented.Keywords: Greenhouse gas emissions, carbon taxes, applied general equilibrium model IntroductionThe recognition of the climate change effect from greenhouse gases has led countries to implement regulations and taxes to curb these emissions. Within a few years, we expect that the use of price mechanisms to combat climate gas emissions will be expanded. It is likely that many countries will participate in a quota-based emission trading system for greenhouse gases to fulfill the Kyoto Protocol, cf. the Marrakech agreement. The question of the effect of such tax regimes remains unanswered empirically, and there is a great need for information on the functioning of price-based incentives. Some countries, among them Norway, have implemented Pigouvian carbon taxes. TheNorwegian carbon taxes are among the highest in the world, measured in per ton CO 2 , and the history then provides researchers with a unique opportunity to evaluate the effects of such taxes, and to shed light on the possible effects of a quota-based emission trading system for CO 2 .In Norway, as well as in other OECD countries, the emissions of greenhouse gases exhibited relative decoupling from economic growth over the 1990-99 period: emissions in OECD increased by about 4 percent, whereas GDP grew by almost 23 percent (OECD 2002). This decoupling is a result of relative price changes and several other mechanisms. Particularly, the Norwegian carbon taxes increase fossil fuel prices, which influence climate gas emissions directly and indirectly. The direct effects are energy efficiency and substitution, and the indirect effects come through overall cost transfers, industry competition and labor market adjustments. Relative price changes between input factors further influence the choice of more or less energy efficient techno...

No abstract

No abstract

Abstract:We investigate whether the future relationships between several pollutants and per capita income in rich countries may assume the inverted U-forms of Environmental Kuznets Curves (EKC). The emission-augmenting effect of scaling up aggregate economic activity may be counteracted by greener composition of production and consumption, technological progress, and increased demand for environmental quality and policy. To quantify the importance of these central hypotheses, we use a CGE model with endogenous policy for Norway. Our results suggest significant future effects of all these three counteracting mechanisms. For most local and regional pollutants, they may be strong enough to prolong the falling emission trends. However, we cannot rely on reductions in emissions of climate gases and some transport-related local pollutants. Our results also indicate that pollution leakages abroad are likely to find place.

No abstract