The impact of a carbon tax on manufacturing: Evidence from microdata

We estimate the impact of a carbon tax on manufacturing plants using panel data from the UK production census. Our identification strategy builds on the comparison of outcomes between plants subject to the full tax and plants that paid only 20% of the tax. Exploiting exogenous variation in eligibili...

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Bibliographic Details
Published in:Journal of public economics Vol. 117; pp. 1 - 14
Main Authors: Martin, Ralf, de Preux, Laure B., Wagner, Ulrich J.
Format: Journal Article
Language:English
Published: Elsevier B.V 01.09.2014
Subjects:
Carbon emissions
Carbon tax
Climate
Climate Change Levy
Employment
Energy use
Evidence
Manufacturing
Policy analysis
Policy evaluation
Taxation
Taxes
United Kingdom
Q54
D21
Energy use
Climate Change Levy
Q48
UK
Policy evaluation
H23
Manufacturing
Carbon tax
Q41
ISSN:0047-2727, 1879-2316
Online Access:Get full text
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Summary:We estimate the impact of a carbon tax on manufacturing plants using panel data from the UK production census. Our identification strategy builds on the comparison of outcomes between plants subject to the full tax and plants that paid only 20% of the tax. Exploiting exogenous variation in eligibility for the tax discount, we find that the carbon tax had a strong negative impact on energy intensity and electricity use. No statistically significant impacts are found for employment, revenue or plant exit. •First micro-econometric evidence on carbon taxation based on UK flagship policy.•Compare outcomes between plants paying full tax and those paying only 20%.•Exogenous variation in eligibility used to instrument for tax rate.•Carbon tax reduced energy intensity by 18.1% and electricity use by 22.6%.•No evidence of adverse impacts on employment, revenue or plant exit.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0047-2727
1879-2316
DOI:10.1016/j.jpubeco.2014.04.016