Title: Does a Carbon Tax Reduce CO2 Emissions? Evidence from British Columbia
Dr. Felix Pretis, Assistant Professor, UVic Department of Economics
Thursday, February 13, 2020, 3:00 PM
Location: Halpern Centre for Graduate Students (GSC), Room 112 (Boardroom)
Summary: Mitigation of future climate change requires stringent curtailment of CO2 emissions and carbon taxes have emerged as a tool-of-choice to implement these reductions. Despite emission-reductions being their primary aim, few of the existing carbon taxes have been evaluated for their effectiveness in reducing emissions at current tax rates. Using tools for empirical policy evaluation, I show that, besides a 5% reduction in transportation emissions, the introduction of a carbon tax has not ‘yet’ led to a statistically significant reduction in aggregate CO2 emissions in British Columbia. Proposing a new method to assess policy based on breaks using machine learning, I demonstrate that neither carbon pricing nor trading schemes in other Canadian provinces are detected as significant interventions. Instead, closures and efficiency-improvements in emission-intense industries in untaxed provinces have reduced emissions. Overall, the results show that existing carbon taxes (and prices) are too low to be effective in the time frame since their introduction.