Greenhouse gas taxation and the distribution of costs and benefits: the case of Norway

Already in 1991, as part of a unilateral greenhouse gas abatement policy, t he Norwegian authorities introduced taxes on emissions of carbon dioxide (c arbon taxes). This paper gives an empirical description of how the differen tiated carbon tax across fuels gives rise to large variations in how the va rious sectors of the economy are affected by this tax scheme. Furthermore, we indicate how a cost-effective regulation of the greenhouse gas emissions in Norway can change the distribution of costs across the various sectors. The primary aim of this article is to explore the advantages and disadvant ages of a uniform regulation scheme for various sectors including all green house gases listed in the Kyoto Protocol. Due to the lack of reliable data on abatement costs our approach is static. keeping emissions constant. The results show in general that private households and firms in the production of oil and gas would gain From such a change, whereas the energy-intensive process industry will experience losses under all circumstances. The findi ngs add support to the explanations of the positions taken by parties that have traditionally sought to protect this industry and that repeatedly oppo se measures that would regulate emissions on a more uniform basis. (C) 2001 Elsevier Science Ltd. All rights reserved.