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Carbon prices and incentives for technological development.

https://arctichealth.org/en/permalink/ahliterature266280
Source
J Environ Manage. 2015 Mar 1;150:393-403
Publication Type
Article
Date
Mar-1-2015
Author
Tommy Lundgren
Per-Olov Marklund
Eva Samakovlis
Wenchao Zhou
Source
J Environ Manage. 2015 Mar 1;150:393-403
Date
Mar-1-2015
Language
English
Publication Type
Article
Keywords
Air Pollution - prevention & control
Carbon Dioxide - analysis
Economic development
Humans
Industrial Waste - economics - legislation & jurisprudence
Models, Theoretical
Paper
Sweden
Taxes
Abstract
There is concern that the carbon prices generated through climate policies are too low to create the incentives necessary to stimulate technological development. This paper empirically analyzes how the Swedish carbon dioxide (CO2) tax and the European Union emission trading system (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. The results show that climate policy had a modest impact on technological development in the pulp and paper industry, and if significant it was negative. The price of fossil fuels, on the contrary, seems to have created important incentives for technological development. Hence, the results suggest that the carbon prices faced by the industry through EU ETS and the CO2 tax have been too low. Even though the data for this study is specific for Sweden, the models and results are applicable internationally. When designing policy to mitigate CO2 emissions, it is vital that the policy creates a carbon price that is high enough - otherwise the pressure on technological development will not be sufficiently strong.
PubMed ID
25560661 View in PubMed
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