“Green” fuel tax on private transportation services and subsidies to electric energy. A model-based assessment for the main European countries

• Published in: Energy economics Vol. 40; no. Supp.1; pp. S32 - S57
• Main Authors: Bartocci, Anna, Pisani, Massimiliano
• Format: Journal Article Conference Proceeding
• Language: English
• Published: Amsterdam Elsevier B.V 01.12.2013; Elsevier; Elsevier Science Ltd
• Subjects: Air pollution; Air pollution caused by fuel industries; Applied sciences; Assessments; Carbon dioxide; Carbon dioxide emissions; Carbon emissions; Dynamic general equilibrium modeling; Dynamics; Economic activity; Economic data; Economics; Electric power; Electricity; Electricity generation; Emission measurements; emissions; Emissions control; Emissions trading; Energy; Energy consumption; Energy economics; Energy policy; Energy. Thermal use of fuels; environmental markets; Environmental policies; Environmental tax; Equilibrium; Europe; European Union; Exact sciences and technology; France; Fuel; Fuels; General, economic and professional studies; General. Regulations. Norms. Economy; Germany; Government subsidies; Italy; Macroeconomics; Methodology. Modelling; Motor vehicles; Natural energy; Pollution sources; Power generation; Spain; Studies; Subsidies; Taxation; taxes; Transport; Transportation; Transportation services; Unilateralism; vehicles (equipment); Italy; France; Germany; Spain; Q43; Q56; Q48; Q58; European Union; Dynamic general equilibrium modeling; Environmental policies; Engine fuel; Carbon dioxide; Private transportation; Subsidy; Pollutant emission; Modeling; Renewable energy; Environment impact; Economic impact; General equilibrium model; Electric power production; Taxation; Macroeconomic analysis
• ISSN: 0140-9883; 1873-6181
• DOI: 10.1016/j.eneco.2013.09.019

This paper evaluates the environmental and macroeconomic implications for France, Germany, Italy and Spain of taxing motor vehicle fuels for private transportation, a sector not subject to the Emissions Trading System, so as to reduce taxes on electricity consumption and increase subsidies to renewable sources of electricity generation. The assessment is based on a dynamic general equilibrium model calibrated for each of the four countries. The results suggest that the measures posited will reduce carbon dioxide emissions in the transportation sector and favor the development of electricity generation from renewable sources, thus limiting the growth of emissions from electricity generation. The measures do not jeopardize economic activity. The results are robust whether implementation is unilateral in one country or simultaneous throughout the EU. •The European Union's Agenda 2020 calls for member countries to reduce greenhouse gas emissions and increase renewable energy.•We evaluate implications in the EU of taxing fuels for private transportation, reducing taxes on electricity and increase subsidies to renewable sources of electricity.•The assessment is based on a dynamic general equilibrium model.•The measures reduce emissions, in particular in the transportation sector, favor electricity generation from renewable sources and do not jeopardize economic activity.