Using Vehicle Taxes to Reduce Carbon Dioxide Emissions Rates of New Passenger Vehicles: Evidence from France, Germany, and Sweden

Resources for the Future DP 12-34

51 Pages Posted: 14 Aug 2012

See all articles by Thomas Klier

Thomas Klier

Federal Reserve Bank of Chicago

Joshua Linn

Resources for the Future

Multiple version iconThere are 2 versions of this paper

Date Written: August 13, 2012

Abstract

France, Germany, and Sweden link vehicle taxes to the carbon dioxide (CO2) emissions rates of passenger vehicles. Based on new vehicle registration data from 2005–2010, a vehicle’s tax is negatively correlated with its registrations. The effect is somewhat stronger in France than in Germany and Sweden. Taking advantage of the theoretical equivalence between an emissions rate standard and a CO2-based emissions rate tax, we estimate the effect on manufacturers’ profits of reducing emissions rates. For France, a decrease of 5 grams of CO2 per kilometer reduces profits by 24 euros per vehicle. We find considerable heterogeneity across manufactures and countries.

Keywords: feebate, fuel economy standards, emissions rate standards

JEL Classification: L62, Q54

Suggested Citation

Klier, Thomas and Linn, Joshua, Using Vehicle Taxes to Reduce Carbon Dioxide Emissions Rates of New Passenger Vehicles: Evidence from France, Germany, and Sweden (August 13, 2012). Resources for the Future DP 12-34, Available at SSRN: https://ssrn.com/abstract=2128954 or http://dx.doi.org/10.2139/ssrn.2128954

Thomas Klier

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604-1413
United States

Joshua Linn (Contact Author)

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States

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