Bodil Merethe Larsen

Greenhouse gas emissions in Norway Do carbon taxes work

During the last decade, Norway has carried out an ambitious climate policy. The main policy tool is a relatively high carbon tax, which was implemented already in 1991. Data for the development in CO2 emissions since then provide a unique opportunity to evaluate carbon taxes as a policy tool. To reveal the driving forces behind the changes in the three most important climate gases, CO2, methane and N2O in the period 1990-1999, we decompose the actually observed emissions changes, and use an applied general equilibrium simulation to look into the specific effect of carbon taxes. Although total emissions have increased, we find a significant reduction in emissions per unit of GDP over the period due to reduced energy intensity, changes in the energy mix and reduced process emissions. Despite considerable taxes and price increases for some fuel-types, the carbon tax effect has been modest. While the partial effect from lower energy intensity and energy mix changes was a reduction in CO2 emissions of 14 percent, the carbon taxes contributed to only 2 percent reduction. This relatively small effect relates to extensive tax exemptions and relatively inelastic demand in the sectors in which the tax is actually implemented.

The flexibility of household electricity demand over time

Abstract Empirical estimates of long run effects on residential electricity demand from changes in the electricity price are usually estimated by cross-sectional variation in the current stock of electric household appliances across households at a certain point in time. Here, we use a discrete–continuous approach modeling the long run effects by investments in new appliances. We apply the annual Norwegian Survey of Consumer Expenditure for the period 1975 to 1994 to estimate the short and long run own price elasticities in the two approaches. We find the estimated long run elasticity only slightly more price elastic than the short run. We also find that the long run elasticity does not differ significantly between the two approaches. The reason for both results is that, since there is no alternative source of energy for these appliances, there are no substitution effects.

Norwegian residential electricity demand—a microeconomic assessment of the growth from 1976 to 1993

Abstract The Norwegian residential electricity consumption increased by an average of 3% annually during the period 1976–1993. Political signals indicate that the growth in Norwegian residential energy consumption should be reduced, and that it may be necessary to increase energy taxes. Based on data for the sample of households from the annual consumer expenditure survey, we study factors that are of importance explaining the growth in Norwegian residential electricity demand during this period. Nearly half of the growth is due to an increase in the number of households, while the rest reflects an increase in average consumption per household. The increase in average consumption per household is due to an increasing number of households possessing electric household appliances such as dryers and dishwashers, an increase in real disposable household income and in the floor space of dwellings.

Norwegian emissions of CO 2 1987–1994

Several countries have introduced taxes on fossil fuels with the aim of reducing atmospheric emissions, partly because of local environmental goals (SO2, NOx) and partly to participate in a global effort to reduce emissions of greenhouse gases. Many macroeconomic studies, based on both global and national models, have been made of how emissions can be reduced with the help of taxes and the consequent reduction in GDP following the introduction of such taxes. Norway has had a CO2 tax for five years, thereby providing a unique opportunity to evaluate the effects of this tax on emissions. The paper provides a counterfactual analysis of energy consumption and emissions if no CO2 taxes had been introduced, compared with the actual situation in which such taxes exist. The effect of a CO2 tax on oil consumption, and thus CO2 emissions is studied on the basis of partial economic models for various sectors of the Norwegian economy. The study indicates that the CO2 tax has had an impact on CO2 emissions in Norway.

Norwegian Emissions of CO2 1987–1994 A Study of Some Effects of the CO2 Tax

Several countries have introduced taxes on fossil fuels with the aim of reducing atmospheric emissions, partly because of local environmental goals (SO2, NOx) and partly to participate in a global effort to reduce emissions of greenhouse gases. Many macroeconomic studies, based on both global and national models, have been made of how emissions can be reduced with the help of taxes and the consequent reduction in GDP following the introduction of such taxes. Norway has had a CO2 tax for five years, thereby providing a unique opportunity to evaluate the effects of this tax on emissions. The paper provides a counterfactual analysis of energy consumption and emissions if no CO2 taxes had been introduced, compared with the actual situation in which such taxes exist. The effect of a CO2 tax on oil consumption, and thus CO2 emissions, is studied on the basis of partial economic models for various sectors of the Norwegian economy. The study indicates that the CO2 tax has had an impact on CO2 emissions in Norway.

Revisiting household energy rebound: Perspectives from a multidisciplinary study

In this paper, an interdisciplinary team of economists and anthropologists study the perplexing case of Norwegian households’ heat pump ownership. The heat pump is a technology that has the potential to reduce electricity consumption by up to 25% compared to conventional electric heating, but, as we demonstrate in this study, when taken into use it results in little or no change in electricity consumption. To explain this large rebound effect, we use a quantitative economic analysis combined with qualitative interviews attuned towards examining the effect of heat pumps on people’s everyday practices. We find that, on average, households with and without a heat pump use approximately the same amount of electricity. The main sources of rebound identified was higher indoor temperature and heated living space, less firewood and fuel oil use and less use of night-set-backs or reduced temperature while away from the home.

How serious is the aggregation problem? An empirical illustration

Heterogeneity in consumer behaviour may create problems with aggregation across consumers. If so, we may not be able to make correct inferences about behaviour based on aggregated data. However, using micro estimates to predict aggregate demand responses to policy changes may also create a bias if not aggregated properly. This may sound like a Catch 22 situation, but it is not, as it is possible to calculate both micro and aggregate demand responses based on microdata. The size of the aggregation bias is an empirical question. In this article, we show how to calculate theoretically consistent aggregate demand responses. We use both micro and macro data for Norwegian household electricity consumption to illustrate the magnitude and direction of different aggregation biases. We find considerable aggregation biases, in particular, when estimating with macro data.