The Impact of Carbon Pricing Policies in Reducing CO2 Emissions from Road Transportation: A Meta-Analysis of Empirical Studies

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The Wharton School::Wharton Undergraduate Research::Summer Program for Undergraduate Research (SPUR)
Degree type
Discipline
Economics
Environmental Studies
Subject
Carbon Dioxide (CO2) Emissions
Carbon Pricing
Climate Change
Environmental Policies
Meta-Analysis
Road Transportation
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2023-08-21
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Author
Didrik Wiig-Andersen
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Abstract

To achieve the 2030 climate goals outlined in the Paris Agreement, global carbon dioxide (CO2) emissions must be reduced. Prevailing literature and economic theory emphasize the role of carbon pricing policies as a fundamentally critical and cost-effective approach in mitigating these emissions. However, there is currently limited evidence substantiating this claim, thereby restricting governmental understanding and implementation of effective pricing policies. The paper performs a comprehensive literature review of empirical studies assessing the impact of pricing policies in reducing emissions from road transportation, a sector responsible for over a tenth of the global CO2 emissions. In particular, the paper aims to contribute by 1) presenting existing literature that has studied the influence of carbon pricing policies on emissions from road transportation; 2) exploring the types of carbon pricing policies governments have implemented in their effort to mitigate CO2 emissions; 3) detailing the quantified impacts of these policies; and 4) identifying the contributing factors driving effective policies and understanding the challenges that limit the impact of less effective ones through a discussion. The sample comprised eighteen studies—both peer-reviewed and gray literature—published between 2017 and 2023, analyzing eight different types of pricing policies across forty-six countries. First, the results suggest that there exists a positive relationship between the magnitude of the fee levied as part of the policy and the CO2 emissions reductions, regardless of the type of policy. Second, policies priced continuously and directly—encouraging reduction of every gram of CO2 per kilometer—were found to be more effective in reducing vehicle CO2 emission rates when compared to policies priced according to emission bands and thresholds. Third, the results show that registration and fuel taxes were seen to reduce the prevalence of high-emitting vehicles (>180gCO2/km) in the vehicle fleet, while similar to circulation taxes, promote the adoption of diesel vehicles. This study augments existing literature, reinforcing the established notion that combined policies offer the most potent reduction effects, given their ability to collectively address multiple factors influencing consumer decisions in vehicle selection (extensive margin) and vehicle usage (intensive margin). Further research is recommended to identify effective policy combinations.

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2023-08-21
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Wiig-Andersen, Didrik. "The Impact of Carbon Pricing Policies in Reducing CO2 Emissions from Road Transportation: A Meta-Analysis of Empirical Studies." University of Pennsylvania ScholarlyCommons Working Paper Collection, 2023.
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