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Is it all about CO2 emissions? The environmental effects of a tax reform for new vehicles in Norway

Author

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  • Ciccone, Alice

    (Dept. of Economics, University of Oslo)

Abstract

In 2007, the Norwegian government reformed the vehicle registration tax in order to reduce the CO2 emissions intensity of the new car fleet by incentivizing the purchase of more fuel efficient cars. This paper identifies the impact of the new tax structure on four dimensions: 1) the average CO2 emissions intensity of new registered vehicles, 2) the relative change between low and high polluting cars, 3) the market share of diesel cars and 4) the average weight of the fleet. A Difference in Difference approach is employed to estimate the short run effects on each outcome variable of interest. The results show that, as a consequence of the tax reform, the average CO2 intensity of new vehicles was reduced in the short run by at least 6 gCO2/Km, which is about half of the overall reduction observed when including supply effects. This reduction is the result of a 12 percentage points drop in the share of highly polluting cars and of an increase of about 23 percentage points in the market share of diesel cars. Lastly, the mass of the average fleet increased by at least 10 Kg.

Suggested Citation

  • Ciccone, Alice, 2014. "Is it all about CO2 emissions? The environmental effects of a tax reform for new vehicles in Norway," Memorandum 19/2014, Oslo University, Department of Economics.
    • Handle: RePEc:hhs:osloec:2014_019
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    File URL: http://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2014/memo-19-2014.pdf
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    References listed on IDEAS

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    Cited by:

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    2. Thomas Michielsen & Reyer Gerlagh & Inge van den Bijgaart & Hans Nijland, 2015. "Fiscal policy and CO2 emissions of new passenger cars in the EU," CPB Discussion Paper 302, CPB Netherlands Bureau for Economic Policy Analysis.
    3. Nkosi, Mfundo & Dikgang, Johane & Kutela Gelo, Dambala & Pholo, Alain, 2021. "Greening the vehicle fleet, how does South Africa’s tax reforms affect new car sales," EconStor Preprints 236726, ZBW - Leibniz Information Centre for Economics.
    4. Alberini, Anna & Bareit, Markus, 2019. "The effect of registration taxes on new car sales and emissions: Evidence from Switzerland," Resource and Energy Economics, Elsevier, vol. 56(C), pages 96-112.
    5. Bergantino, Angela S. & Intini, Mario & Percoco, Marco, 2021. "New car taxation and its unintended environmental consequences," Transportation Research Part A: Policy and Practice, Elsevier, vol. 148(C), pages 36-48.
    6. Anna Alberini & Markus Bareit, 2016. "The Effect of Registration Taxes on New Car Sales and Emissions: Evidence from Switzerland," CER-ETH Economics working paper series 16/245, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    7. Yan, Shiyu & Eskeland, Gunnar S., 2018. "Greening the vehicle fleet: Norway's CO2-Differentiated registration tax," Journal of Environmental Economics and Management, Elsevier, vol. 91(C), pages 247-262.
    8. Fulton, Lew & Schiffman, Gil & Tal, Gil, 2016. "Equity Impacts of Fee Systems to Support Zero Emission Vehicle Sales in California," Institute of Transportation Studies, Working Paper Series qt28s2n32v, Institute of Transportation Studies, UC Davis.
    9. Gerlagh, Reyer & van den Bijgaart, Inge & Nijland, Hans & Michielsen, Thomas, 2015. "Fiscal Policy and CO2 Emissions of New Passenger Cars in the EU," Climate Change and Sustainable Development 202239, Fondazione Eni Enrico Mattei (FEEM).
    10. Davide Cerruti & Anna Alberini & Joshua Linn, 2019. "Charging Drivers by the Pound: How Does the UK Vehicle Tax System Affect CO2 Emissions?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(1), pages 99-129, September.
    11. Reyer Gerlagh & Inge van den Bijgaart & Hans Nijland & Thomas Michielsen, 2015. "Fiscal Policy and CO2 Emissions of New Passenger Cars in the EU," Working Papers 2015.32, Fondazione Eni Enrico Mattei.
    12. Davide Cerruti & Anna Alberini & Joshua Linn, 2017. "Charging Drivers by the Pound: The Effects of the UK Vehicle Tax System," CER-ETH Economics working paper series 17/271, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.

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    More about this item

    Keywords

    CO2 emissions intensity; New vehicles; Vehicle registration tax; Tax reform; Norway; Diesel;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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