Assessment of Fuel Tax Policies to Tackle Carbon Emissions from Road Transport—An Application of the Value-Based DEA Method Including Robustness Analysis
The transport sector has increased GHG emissions making it the second largest emitter in the EU after the energy generation sector. Given its share in total GHG emissions, the transport sector plays a critical role in the mitigation efforts required by the Paris Agreement on Climate Change. Fuel taxation can be used to internalize externalities, including those linked to fuel use as GHG emissions and local air pollution. Road transport policies have relied on fuel efficiency standards. A major outcome of this option was the prevailing preferential tax treatment for diesel fuel. This paper aims to assess the potential of fuel tax reforms to deal with carbon emissions from road transport in some EU countries. For this purpose, the Value-Based Data Envelopment Analysis method is used to obtain robust conclusions in face of sources of uncertainty. The adjustment of diesel excise tax levels towards gasoline taxation levels as well as the potential effects of introducing a carbon content-based tax on both diesel and gasoline are studied. The performance evaluation identifies the countries exhibiting the best practices. This approach offers decision makers the possibility to incorporate their priorities in appraising fuel tax policies considering uncertain factors to obtain robust conclusions.
This work has been supported by FCT—the Portuguese Foundation for Science and Technology under project grant UID/MULTI/00308/2013.
- Coria, J. (2012). Fuel taxation in Europe. In Cars and carbon (pp. 201–222). Netherlands: Springer.Google Scholar
- European Commission. (2003). Restructuring the community framework for the taxation of energy products and electricity. Council Directive 2003/96/EC.Google Scholar
- European Commission. (2007). Communication from the Commission to the Council and the European Parliament Results of the review of the Community Strategy to reduce CO2 emissions from passenger cars and light-commercial vehicles. COM/2007/0019 final. Brussels.Google Scholar
- European Commission. (2011). Road map to a single European Transport Area—towards a competitive and resource efficient transport system. White Paper.Google Scholar
- Flues, F., & Thomas, A. (2015). The distributional effect of energy taxes. OECD. http://www.oecd-ilibrary.org/taxation/the-distributional-effects-of-energy-taxes_5js1qwkqqrbv-en.
- Gouveia, M. C., & Dias, L. C., Antunes, Mota, M. A., Duarte, E. M., & Tenreiro, E. M. (2016). An application of an additive DEA model to identify best practices in primary health care. OR Spectrum, 38(3), 743–767.Google Scholar
- Harding, M. (2014). The diesel differential—Differences in the tax treatment of gasoline and diesel for road use. OECD Taxation paper no. 21.Google Scholar
- Newbery, D. M. (2001). Harmonizing energy taxes in the EU. In Tax Policy in the European Union Conference, Erasmus University, October 17–19, 2001.Google Scholar
- Rodríguez-López, J., Marrero, G. A., & González-Marrero, R. M. (2015). Dieselization, CO2 emissions and fuel taxes in Europe. In Working Papers, November 15, 2015.Google Scholar
- Sterner, T., & Köhlin, G. (2015). Pricing carbon: The challenges. In S. Barrett, C. Carraro, & J. de Melo (Eds.), Towards a workable and effective climate regime (p. 251).Google Scholar
- United States Environmental Protection Agency. (2011). Greenhouse gas emissions from a typical passenger vehicle. www.epa.gov/oms/climate/documents/420f11041.pdf.
- von Winterfeldt, D., & Edwards, W. (1986). Decision analysis behavioral research. New York: Cambridge University Press.Google Scholar
- Zimmer, A., & Koch, N. (2016). Fuel consumption dynamics in Europe—Implications of fuel tax reforms for air pollution and carbon emissions from road transport. https://ssrn.com/abstract=2813534. Available at August 28, 2016.