Does a Carbon Tax Reduce CO2 Emissions? Evidence From British Columbia

41 Pages Posted: 25 Feb 2019 Last revised: 20 Jun 2019

See all articles by Felix Pretis

Felix Pretis

University of Victoria, Department of Economics; University of Oxford - Institute for New Economic Thinking at the Oxford Martin School

Date Written: February 8, 2019

Abstract

Using difference-in-differences, synthetic control, and introducing a break-detection approach I show that, besides a 5% reduction in transportation emissions, the introduction of a carbon tax has not ‘yet’ led to a reduction in aggregate CO2 emissions in British Columbia. Proposing a new method to assess policy based on breaks in difference-in-differences using machine learning, I demonstrate that neither carbon pricing nor trading schemes in other Canadian provinces are detected as significant interventions. Instead, closures and efficiency-improvements in emission-intense industries have reduced emissions. Overall, results are consistent with evidence that current carbon taxes (and prices) are too low to be effective.

Keywords: Carbon Tax, CO2 Emissions, Regulation, Break Detection

Suggested Citation

Pretis, Felix, Does a Carbon Tax Reduce CO2 Emissions? Evidence From British Columbia (February 8, 2019). Available at SSRN: https://ssrn.com/abstract=3329512 or http://dx.doi.org/10.2139/ssrn.3329512

Felix Pretis (Contact Author)

University of Victoria, Department of Economics ( email )

3800 Finnerty Rd
Victoria, British Columbia V8P 5C2
Canada

University of Oxford - Institute for New Economic Thinking at the Oxford Martin School ( email )

Eagle House
Walton Well Road
Oxford, OX2 6ED
United Kingdom

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