How effective is carbon taxation on residential heating demand? A household-level analysis

Abstract

This paper investigates the impact of the Swiss CO 2 levy on households' heating demand. Using a difference-indifferences approach combined with inverse probability of treatment weighting, we test whether the 2016 and 2018 carbon tax rate increases had a short-run impact on Swiss households' heating and hot water expenditures-i.e. a proxy for heating consumption. Micro-level data from the Swiss Household Energy Demand Survey are used to estimate the models. Our regression analysis shows that heating consumption decreases with time for all households, but it does not detect any clear short-run impact of the CO 2 levy on fossil fuel users in comparison to non-fossil fuel users. We nevertheless find that many factors significantly affect heating consumption, such as setting the thermostat at a lower temperature. Even though further research is needed regarding possible long-run impacts, our findings challenge the relevance of this policy instrument under its current form to lower households' CO 2 emissions. Considering that its rate is regularly increased based on shortrun emission targets, households may have too little time to adapt. The tax design might thus need to be revised to take into account the slow reaction time.

Possibilities for Deep Renovation in Multi-Apartment Buildings in Different Economic Conditions in Europe

“…The carbon tax was or should be introduced as a method for reducing the emissions of CO 2 and other greenhouse gases. CO 2 taxation is also likely to have long-term effects, especially if the rate reaches higher levels; therefore, this can be expected to lead to more renovations in the future [40].…”

The role of carbon pricing in transforming pathways to reach net zero emissions

“…87 For more information on mitigation in forests, please see: (Busch et al, 2019[426]), (Griscom et al, 2020[424]), (Roe et al, 2021[425]), (Doelman et al, 2019[427]), (Bastin et al, 2019[428]), and (FAO, 2020 [429]). 88 For more information on mitigation using peatland, please see: (Page and Baird, 2016 [430]), (Goldstein et al, 2020 [431]), (Humpenöder et al, 2020[432]), (Leifeld and Menichetti, 2018[433]), (Günther et al, 2020[435]) and (Ojanen and Minkkinen, 2020 [434]). 89 For more information on mitigation through coastal wetland, please see: (Griscom et al, 2020[424]), (Bossio et al, 2020[436]), (Kauffman et al, 2020[437]), and (Goldstein et al, 2020 [431]).…”

Systematic Literature Review of Housing Policies in Carbon Emission Reduction: Reflection for Indonesia

“…There needs to be more than a slight tax increase to trigger a change in the short term. On the other hand, significant changes may lead to more significant adaptation steps (Ott & Weber, 2022). However, it is necessary to pay attention to the form of policy coercion so that it is not excessive because it harms household acceptance of the policy.…”