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Effect of Environmental Taxes on Carbon Dioxide Emissions in Europe
KTH, School of Industrial Engineering and Management (ITM), Industrial Economics and Management (Dept.), Entrepreneurship and innovation.
2012 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

In recent years policymakers and economists have become increasingly concerned about the potential contributions of economic instruments to pollution control and natural resource management. Environmental tax is considered to be one of the most important cost-effective instruments for air pollution control, which can be distinguished by three different categories --- Energy tax, transport tax and tax on pollution/resources. Different from the existing studies, we use the panel data of 28 EU countries from 1995 to 2008 to build fixed effects models in order to analyze the impact of environmental taxes on total green house gas emissions. Our most credible estimates imply that a 1% increase of the revenue from energy tax and transport sector will reduce the total carbon dioxide emissions by around 0.029% and 0.023% respectively. On contrast, tax on pollution/resources plays an adverse impact on emissions reduction. Our empirical results also verified the Environmental Kuznets Curves (EKC) Hypothesis which emphasize environment tend to get better as modern economic growth occurs if average income of a country reaches a certain level.Among the 28 EU countries, UK and Germany are suffering the most serious air pollution, and the atmosphere in Malta is the best.

Place, publisher, year, edition, pages
2012. , 31 p.
Keyword [en]
emissions, environmental taxes, panel data, fixed effects model
National Category
Economics and Business
URN: urn:nbn:se:kth:diva-143879OAI: diva2:709420
Available from: 2014-04-16 Created: 2014-04-01 Last updated: 2014-04-16Bibliographically approved

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