Review of Financial Studies Vol. 37 No. 6 2024

The Effect of Carbon Pricing on Firm Emissions: Evidence from the Swedish CO2 Tax

Gustav Martinsson¹; László Sajtos²; Per Strömberg³; Christian Thomann⁴

¹ Stockholm University, SHoF, and MISUM , Sweden · ² Konjunkturinstitutet and SHoF , Sweden · ³ Stockholm School of Economics, CEPR, ECGI, SHoF, and MISUM , Sweden · ⁴ Royal Institute of Technology, SHoF, and MISUM , Sweden

Abstract

Sweden was one of the first countries to introduce a carbon tax back in 1991. We assemble a unique data set tracking CO2 emissions from Swedish manufacturing firms over 26 years to estimate the impact of carbon pricing on firm-level emission intensities. We estimate an emission-to-pricing elasticity of around two, with substantial heterogeneity across subsectors and firms, where higher abatement costs and tighter financial constraints are associated with lower elasticities. A simple calibration suggests that 2015 CO2 emissions from Swedish manufacturing would have been roughly 30% higher without carbon pricing.

DOI

10.1093/rfs/hhad097

Volume

37

Issue

6

Pages

1848-1886

Language

en

Sources

openalex bibtex:phds-export.bib crossref

Cite

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