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Road fuel demand and regional effects of carbon taxes in Sweden

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  • Tirkaso, Wondmagegn Tafesse
  • Gren, Ing-Marie

Abstract

This study estimated national and regional-level gasoline and diesel demand elasticities in Sweden using county-level panel data from 2001 to 2018. The estimated elasticities were used to calculate county cost effect of the Swedish CO2 emission reduction policy in the transport sector. The national-level elasticities were estimated by employing general method of moments (GMM) estimators, while county-level elasticities were calculated by considering the weight of each fuel type share at county and national levels. Own prices, per capita income, and per capita vehicle stocks were statistically significant at national level in determining gasoline and diesel demand. The calculated regional price elasticities showed variation between counties, with the highest being almost 4 times higher than the lowest in absolute terms. A simulation of fuel taxes to achieve the Swedish 2030 emission target for the transport sector under the national and regional price elasticities indicated minor differences at the national level with respect to CO2 taxes, costs and regressivity in the taxes. The results showed considerable differences at the regional level where costs and carbon tax payments can be considerably higher for some counties with the use of national price elasticities and the opposite is the case for other counties.

Suggested Citation

  • Tirkaso, Wondmagegn Tafesse & Gren, Ing-Marie, 2020. "Road fuel demand and regional effects of carbon taxes in Sweden," Energy Policy, Elsevier, vol. 144(C).
    • Handle: RePEc:eee:enepol:v:144:y:2020:i:c:s0301421520303803
    DOI: 10.1016/j.enpol.2020.111648
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    2. Nordin, Ida & Elofsson, Katarina & Jansson, Torbjörn, 2024. "Cost-effective reductions in greenhouse gas emissions: Reducing fuel consumption or replacing fossil fuels with biofuels," Energy Policy, Elsevier, vol. 190(C).
    3. Antonín Korauš & Miroslav Gombár & Alena Vagaská & Stanislav Šišulák & Filip Černák, 2021. "Secondary Energy Sources and Their Optimization in the Context of the Tax Gap on Petrol and Diesel," Energies, MDPI, vol. 14(14), pages 1-22, July.
    4. David Bonilla & David Banister & Uberto Salgado Nieto, 2022. "Tax or Clean Technology? Measuring the True Effect on Carbon Emissions Mitigation for Sweden and Norway," Energies, MDPI, vol. 15(11), pages 1-24, May.
    5. Shenhai Huang & Chao Du & Xian Jin & Daini Zhang & Shiyan Wen & Yu’an Wang & Zhenyu Cheng & Zhijie Jia, 2022. "The Boundary of Porter Hypothesis: The Energy and Economic Impact of China’s Carbon Neutrality Target in 2060," Energies, MDPI, vol. 15(23), pages 1-18, December.
    6. Yanxia Yu, 2023. "Carbon Taxes and CO2 Emissions: A Replication of Andersson (American Economic Journal: Economic Policy, 2019)," Working Papers in Economics 23/09, University of Canterbury, Department of Economics and Finance.

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    More about this item

    Keywords

    Fuel demand; Carbon tax; Elasticity; Dynamic panel data; Region; Sweden;
    All these keywords.

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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