Conference Agenda

Fuel taxes are widely used to internalize the externalities of driving, particularly environmental ones. However, the higher upfront price of cleaner, more fuel-efficient vehicles raises concerns about the potentially regressive nature of these taxes, as lower-income households may face greater financial constraints to adopting such vehicles. I examine the efficiency and equity implications of fuel taxes by exploiting substantial temporal and cross-sectional variation in Spain. I find that a 1-cent increase in the fuel tax reduces CO2 emissions from the vehicle fleet by approximately 0.13%, primarily driven by increased adoption of electric-powered vehicles. However, this response is disproportionately concentrated among higher-income households, while lower-income households exhibit little to no change in their vehicle choices. Despite this disparity, I document that the tax savings accruing to wealthier households are modest and are far outweighed by the higher upfront costs of electric-powered vehicles. These findings suggest that while fuel taxes are an effective instrument for reducing emissions, they do not substantially alter the distribution of the burden across income groups.

This paper analyzes the impact of emission standards on the adoption of electric and hybrid vehicles (EVs) using a structural model. Results show that while standards reduce average emissions of new cars, total emissions from new passenger vehicles would be 1% lower without EVs. Manufacturers adopt EVs and hybrids to meet fleet targets and avoid penalties, but these vehicles have not significantly lowered overall emissions. The findings highlight that emission standards drive EV adoption but fail to achieve substantial reductions in total emissions, emphasizing the need for additional policies to address this gap.

Evidence on how support for climate policies is directly tied to their perceived burden remains scarce. This paper employs a survey-based randomized experiment to examine how homeowners perceive the energy efficiency of their homes and how misperceptions affect their attitudes towards ambitious climate policies. Homeowners with less efficient properties tend to overestimate their relative energy efficiency, while those with more efficient homes often underestimate their standing. Learning that a home’s energy performance is worse than expected significantly reduces support for a proposed retrofitting mandate but not for carbon pricing. When we vary the precise scope of the mandate, we observe that homeowners reduce their policy support in response to perceived coverage. By investigating the interplay between subjective standing and attitudes towards climate policy reforms, this research sheds light on a critical barrier to public acceptance and effective policy design.

We implement Pigovian transport pricing in a field experiment in urban agglomerations of Switzerland over the course of 8 weeks. The pricing considers external costs from climate damages, health outcomes and congestion and varies across time, space and mode of transport. The treatment reduces the external costs of transport of the treated individuals by 4.5% in the short run. The main underlying mechanism is a shift away from driving towards other modes, such as public transport, walking and cycling. Providing information about external costs alone changes behavior of altruists, but not for the whole sample. We estimate the welfare improvements from such a policy to be around 90 US dollars per person and year, which is 1.75 times as large as the effects of a fuel tax that generates the same revenue.