Work

Driving innovation? Carbon tax effects in the Swedish transport sector

Year: 2025

Type: article

Abstract: Does a carbon tax stimulate low-carbon innovation in the transport sector? We exploit an environmental tax reform in Sweden that introduced both a carbon and a value-added tax on transport fuels. Synthetic control estimates consistently find that the tax reform caused large and significant increases in low-carbon patents. We provide suggestive evidence that the carbon tax drives the effect while fuel price changes with comparable magnitude did not significantly affect low-carbon innovation. Our findings suggest that salient carbon prices may foster low-carbon innovation more effectively than fuel price elasticity estimates suggest.

Source: Journal of Public Economics

DOI: 10.1016/j.jpubeco.2025.105444

Authors: Nils aus dem Moore, Johannes Brehm, Henri Gruhl

Language: English

Topic: Energy, Environment, and Transportation Policies

Subfield: Renewable Energy, Sustainability and the Environment

Field: Energy

Domain: Physical Sciences

SDGs: Industry, innovation and infrastructure, Climate action

Open Access status: hybrid

Estimated APC paid: $4,510

Funder: Bundesministerium für Bildung und Forschung