The Finnish Experiment: Assessing the Dual Impact of the Carbon Tax on CO2 Emissions and Air Quality
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2024-07-11
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en
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Abstract
This quasi-experimental study is among the first to assess the effectiveness of a carbon tax in simultaneously reducing carbon emissions and air pollutants. Using the synthetic control method, this study compares the carbon and air pollutant emissions of the actual Finnish transportation sector to those of a synthetic control unit constructed from a similar group of OECD countries from 1990 to 2005. Initial results indicate that the Finnish carbon tax led to a significant absolute decrease in emissions per capita by 38.8% for CO2, 24.5% for PM2.5, and 53.4% for NOx by the end of the dataset in 2005. However, subsequent robustness checks reveal no causal effect on PM2.5 emissions and indicate a more modest reduction of approximately 7% for CO2 and 18% for NOx. By demonstrating the effectiveness of the Finnish carbon tax, this study adds to the limited body of ex-post research analysing their impact.
Keywords: Carbon tax, CO2, PM2.5, NOx, Co-benefits, Synthetic control method
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Faculteit der Managementwetenschappen