Designing Carbon Taxation Schemes for Automobiles: A Simulation Exercise for Germany
Adamos Adamou, Sofronis Clerides, Theodoros Zachariadis
Q5, Q53, Q58
CO2 emissions, German Automobile Market, Feebates, Carbon Taxation
Climate Change and Sustainable Development
Vehicle taxation based on CO2 emissions is increasingly being adopted worldwide in order to shift consumer purchases to low-carbon cars, yet little is known about the effectiveness and overall economic impact of these schemes. We focus on feebate schemes, which impose a fee on high-carbon vehicles and give a rebate to purchasers of low-carbon automobiles. e estimate a discrete choice model of demand for automobiles in Germany and simulate the impact of alternative feebate schemes on emissions, consumer welfare, public revenues and firm profits. The analysis shows that a well-designed scheme can lead to emission reductions without reducing overall welfare.