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Effective Fuel Price in Reducing Emission Intensity : A Panel Analysis for Brazil

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  • Ayan Qu

Abstract

This paper studies how effective an incremental change in the price of fuel, a proxy for fuel carbon tax, is in reducing the emission intensity of road transportation in Brazil through panel analysis at the federative unit level from 2010 to 2020, after offering descriptive insights into Brazil’s automotive fuel market with respect to its products, actors, and external factors. The paper postulates multiple variations of panel analysis models and focuses on dynamic two-way fixed effects models based on statistical results. The findings show that (1) the price of diesel has the most significant and robust impact on reducing emission intensity; (2) the short-run and long-run elasticities of the price of diesel are -0.74 and -2.06, respectively; and (3) both entity and time effects are significant, with the year of 2020 having a consistent effect in reducing emission intensity across the estimated models.

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  • Ayan Qu, 2024. "Effective Fuel Price in Reducing Emission Intensity : A Panel Analysis for Brazil," Policy Research Working Paper Series 10926, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10926
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    References listed on IDEAS

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    1. Santos, Gervásio F., 2013. "Fuel demand in Brazil in a dynamic panel data approach," Energy Economics, Elsevier, vol. 36(C), pages 229-240.
    2. Ryan, Lisa & Ferreira, Susana & Convery, Frank, 2009. "The impact of fiscal and other measures on new passenger car sales and CO2 emissions intensity: Evidence from Europe," Energy Economics, Elsevier, vol. 31(3), pages 365-374, May.
    3. Frederico Uch a & Cleiton Silva de Jesus & Leonardo Chaves Borges Cardoso, 2020. "Fuel Demand Elasticities in Brazil: A Panel Data Analysis with Instrumental Variables," International Journal of Energy Economics and Policy, Econjournals, vol. 10(2), pages 450-457.
    4. Miria A. Pigato, 2019. "Fiscal Policies for Development and Climate Action," World Bank Publications - Books, The World Bank Group, number 31051.
    5. Mundaca, Gabriela & Strand, Jon & Young, Ian R., 2021. "Carbon pricing of international transport fuels: Impacts on carbon emissions and trade activity," Journal of Environmental Economics and Management, Elsevier, vol. 110(C).
    6. Brännlund, Runar & Lundgren, Tommy & Marklund, Per-Olov, 2014. "Carbon intensity in production and the effects of climate policy—Evidence from Swedish industry," Energy Policy, Elsevier, vol. 67(C), pages 844-857.
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