Effectiveness of climate policies: empirical methods and evidence

This volume was prepared by Julian Dieler while he was working with the Center for Energy, Climate and exhaustible Resources at the Ifo Institute for Economic Research. At the latest since the adoption of the Kyoto Protocol in 1997 climate policies are permanently on the international policy agenda. And the urgency to find effective and feasible strategies to curb greenhouse gas emissions increases as the carbon budget to reach the 2°C goal will be exhausted in 2045 according to current estimations by the Intergovernmental Panel on Climate Change (IPCC). Therefore decision-makers should be provided with thorough knowledge of climate policies and their effects by the scientific community. This thesis contributes to the scientific discourse by analyzing the effectiveness and the development of climate policies. Chapter 1 analyzes the degree of effectiveness of gasoline and diesel taxes in Europe by estimating price and tax elasticities of fuel demand. The price or the tax elasticity is a typical measure to assess the effectiveness of policies which are designed as price mechanisms. Besides the insights into the European motor fuel market the analysis led to the more general finding that anticipation effects have to be taken into account while analyzing the impact of a tax introduction or increase. Chapter 2 makes a further methodological contribution in the area of fuel demand estimation. Especially in case of analyzing micro-data an often encountered problem in demand estimation is the large number of zero-observations which poses problems for standard regression methods. The study which is the basis for Chapter 2 provides alternative empirical methods which constitute a remedy to the problem of zero-observations. Chapter 3 introduces a new climate policy indicator which provides information about the stringency of climate policies in the OECD countries and can serve itself as an input in empirical analyses because of its empirical foundation.