Comparing the dynamic impact of environmental policies on greenhouse gas emission: Evidence from OECD countries
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Published on: June 12, 2016
1SILC Business School, Shanghai University, China.
Abstract:
The growing threat of climate change has spurred enhanced environmental policy efforts aimed at balancing climate change mitigation with economic development. This study examines the dynamic impact of environmental policies on greenhouse gas emissions in different sectors in 38 OECD countries using parametric and non-parametric methods with time-varying coefficients, offering a comparative analysis to evaluate their effectiveness and investigate the role of environmental policy in mitigating emissions over time. By categorizing environmental policy into technology support, market-based and non-market-based policies, emission tax, and emission trading schemes, we assess their influence on emissions from agriculture, industry, and energy uses. Our results show that market-based policies are generally more effective than non-market policies. Furthermore, emission trading schemes have gained prominence over time, particularly in reducing greenhouse gas emissions from energy use. There was a catch-up pattern in the effect of emission trading schemes compared with the tax on energy use, with the impact of emission trading schemes becoming increasingly larger after 2010. Our results demonstrate that the effectiveness of different environmental policy tools differs across different sectors. While emission taxes remain crucial for controlling greenhouse gas emissions in the agricultural sector, tax and emission trading schemes are equally important in the industrial sector.
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