The impact of fiscal and other measures on new passenger car sales and CO2 emissions intensity: Evidence from Europe

This paper examines the impact of national fiscal measures in the EU (EU15) on passenger car sales and the CO2 emissions intensity of the new car fleet over the period 1995-2004. CO2 emissions and energy consumption from road transport have been increasing in the EU and as a result since 1999 the EU has attempted to implement a high profile policy strategy to address this problem at European level. Less prominent is the fact that Member States apply vehicle and fuel taxes, which may also be having an impact on the quantity of passenger cars sold and their CO2 emissions intensity. Diesel vehicle sales have increased appreciably in many countries over the same period and this study makes a first attempt to examine whether Member State fiscal measures have influenced this phenomenon. This work uses a panel dataset to investigate the relationship between national vehicle and fuel taxes on new passenger car sales and the fleet CO2 emissions intensity in EU15 over a 10-year period. Our results show that national vehicle and fuel taxes have had an impact on passenger car sales and fleet CO2 emissions intensity and that different taxes have disparate effects.

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