Regulating CO2 Emissions of Transportation in Europe: A CGE-Analysis Using Market-Based Instruments

Jan Abrell
2009 Social Science Research Network  
This paper analyzes the use of market-based emission regulation instruments to address the carbon dioxide emissions of transportation. Simulations with a static multi-region computable general equilibrium model show that including transportation into the European emission trading system is superior to a closed emission trading system for transportation or a tax-based approach. Furthermore, we show that exempting transportation from emission regulation is the most favorable approach in terms of
more » ... proach in terms of welfare. This counterintuitive result is due to a large tax-interaction effect caused by high pre-existing fuel taxes in the transport sector. 1 Raux (2004) argue that information and transaction costs can be minimized by using an electronic system compatible to already existing credit card systems for allowance trade: Furthermore, gas station operators or banks could serve as market intermediaries. Transportation Research Part D 15 (2010) 235-239
doi:10.2139/ssrn.1418008 fatcat:cslm5jmayvd3pe7nx57rlkryne