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Carbon prices and incentives for technological development
Umeå University, Faculty of Social Sciences, Center for Environmental and Resource Economics (CERE).
Umeå University, Faculty of Social Sciences, Centre for Regional Science (CERUM). Umeå University, Faculty of Social Sciences, Center for Environmental and Resource Economics (CERE).
National Institute of Economic Research, Stockholm.
Umeå University, Faculty of Social Sciences, Centre for Regional Science (CERUM).
2013 (English)Report (Other academic)
Abstract [en]

How to significantly decrease carbon dioxide emissions has become one of the largest challenges faced by modern society. The standard recipe prescribed by most economists is to put a price on carbon, either through a tax or through emissions trading. Such measures can reduce emissions cost-effectively and create incentives for technological development. There is, however, a growing concern that the carbon prices generated through the European Union emission trading system (EU ETS) have been too low to create the incentives necessary to stimulate technological development. This paper empirically analyzes how the Swedish carbon dioxide tax and the EU ETS have affected productivity development in the Swedish pulp and paper industry 1998-2008. A Luenberger total factor productivity (TFP) indicator is computed using data envelopment analysis. How the policy measures affect TFP is assessed using a system generalized method of moments estimator. The results show that climate policy had a modest impact on technological development in the pulp and paper industry, and if significant it has been negative. The price on fossil fuels, on the contrary, seems to have created important incentives for technological development. Hence, results suggest that the carbon prices faced by the industry through EU ETS and the carbon dioxide tax have been too low.

Place, publisher, year, edition, pages
Umeå: Department of Economics, Umeå University , 2013. , 29 p.
Series
CERE Working Paper / CERE arbetsrapport, 2013:4
Keyword [en]
CO2 tax, EU ETS, Luenberger productivity indicator, GMM
National Category
Economics
Identifiers
URN: urn:nbn:se:umu:diva-88448OAI: oai:DiVA.org:umu-88448DiVA: diva2:715705
Available from: 2014-05-06 Created: 2014-05-06 Last updated: 2014-05-15Bibliographically approved

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Carbon prices and incentives for technological development(746 kB)116 downloads
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Other links

http://www.cere.se/documents/wp/2013/CERE_WP2013-4.pdfhttp://www.cere.se/sv/forskning/publikationer/116-publications/477-the-role-of-the-forest-in-an-integrated-assessment-model-of-the-climate-and-the-economy.html

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Lundgren, TommyMarklund, Per-OlovWenchao, Zhou
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CiteExportLink to record
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Cite
Citation style
  • apa
  • ieee
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  • de-DE
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  • Other locale
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Output format
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