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How effective is carbon pricing?: a machine learning approach to policy evaluation

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While carbon taxes are generally seen as a rational policy response to climate change, knowledge about their performance from an expost perspective is still limited. This paper analyzes the emissions and cost impacts of the UK CPS, a carbon tax levied on all fossil-fired power plants. To overcome th...

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Bibliographic Details
Main Authors: Abrell, Jan (Author) , Kosch, Mirjam (Author) , Rausch, Sebastian (Author)
Format: Book/Monograph Working Paper
Language:English
Published: Mannheim ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung GmbH Mannheim 2021
Series:Discussion paper no. 21, 039 (04/2021)
In: Discussion paper (no. 21, 039 (04/2021))

Subjects:
Graue Literatur
Online Access:Verlag, kostenfrei: https://madoc.bib.uni-mannheim.de/60139
Verlag, kostenfrei: https://ftp.zew.de/pub/zew-docs/dp/dp21039.pdf
Verlag, kostenfrei: https://www.zew.de/publikationen/how-effective-is-carbon-pricing-a-machine-learning-approach-to-policy-evaluation
Resolving-System, kostenfrei: http://hdl.handle.net/10419/233873
Resolving-System: https://nbn-resolving.org/urn:nbn:de:bsz:180-madoc-601395
Langzeitarchivierung Nationalbibliothek: https://d-nb.info/1239558376/34
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Author Notes:Jan Abrell, Mirjam Kosch, and Sebastian Rausch
Description
Summary:While carbon taxes are generally seen as a rational policy response to climate change, knowledge about their performance from an expost perspective is still limited. This paper analyzes the emissions and cost impacts of the UK CPS, a carbon tax levied on all fossil-fired power plants. To overcome the problem of a missing control group, we propose a policy evaluation approach which leverages economic theory and machine learning for counterfactual prediction. Our results indicate that in the period 2013-2016 the CPS lowered emissions by 6.2 percent at an average cost of €18 per ton. We find substantial temporal heterogeneity in tax-induced impacts which stems from variation in relative fuel prices. An important implication for climate policy is that in the short run a higher carbon tax does not necessarily lead to higher emissions reductions or higher costs.
Physical Description:Online Resource

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