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Fuel price control in Brazil: environmental impacts

Author

Listed:
  • Roberto Ivo da Rocha Lima Filho

    (Universidade Federal do Rio de Janeiro - UFRJ)

  • Thereza Cristina Nogueira de Aquino

    (Universidade Federal do Rio de Janeiro - UFRJ)

  • Adriano Marçal Nogueira Neto

    (Universidade Federal do Rio de Janeiro - UFRJ)

Abstract

This paper evaluates carbon dioxide (CO2) emission as a consequence of the intervention in the prices of oil and its substitute fuel, ethanol, in the transport sector. These studies cover price behavior in different phases of the period ranging from 2002 to 2016, when Brazil adopted interventionist policies that impacted the balance between fuel supply and demand and, consequently, the environment. The results of econometric models corroborate the increase in magnitude of CO2 emissions during the periods with government intervention in fuel prices, thereby indicating misalignment of the prices related to the sector, and, subsequently, given this price suppression that this intervention aggravated the inflation instead of reducing it. Our study estimated the effect of this government intervention through a multivariate regression and found that oil prices hugely contributed to the level of CO2 emissions, almost doubling right after January 2009 vis-à-vis 2016. This means that there was a significant increase of approximately 32% in the level of CO2 emissions during the aforementioned period. Had it not been so, the result could have been only 14% percentage points lower following the forecast of our pre-crisis regression.

Suggested Citation

  • Roberto Ivo da Rocha Lima Filho & Thereza Cristina Nogueira de Aquino & Adriano Marçal Nogueira Neto, 2021. "Fuel price control in Brazil: environmental impacts," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(7), pages 9811-9826, July.
    • Handle: RePEc:spr:endesu:v:23:y:2021:i:7:d:10.1007_s10668-020-00896-7
    DOI: 10.1007/s10668-020-00896-7
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    References listed on IDEAS

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    Cited by:

    1. Derick David Quintino & Heloisa Lee Burnquist & Paulo Jorge Silveira Ferreira, 2021. "Carbon Emissions and Brazilian Ethanol Prices: Are They Correlated? An Econophysics Study," Sustainability, MDPI, vol. 13(22), pages 1-18, November.

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    More about this item

    Keywords

    CO2 emissions; Government intervention; Brazilian energy policy; Causality effect;
    All these keywords.

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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