Diesel Tax Research Articles

Ensuring a just energy transition: A distributional analysis of diesel tax reform in Spain with stakeholder engagement

Despite the consensus that green taxation is an effective way to accelerate the decarbonization of economies, few countries are implementing ambitious tax reforms. This is the case of diesel for transport in Spain. The arguments against boosting the diesel tax stressed its potential adverse effects on the economy and society, accusing it of being a regressive policy. In this paper, we shed light on the distributional impact of raising the excise tax on diesel to the same level as on gasoline for final consumers in Spain and various compensation schemes jointly designed with several stakeholders. The results confirm that raising the diesel tax without offsets would have slightly regressive effects and that rural and middle-income households would bear the brunt of the increase. However, the effects become progressive when the co-designed offsetting schemes are implemented. These findings may help decision-makers in achieving a just, acceptable, and politically viable energy transition.

The road to electrification: Bus fleet replacement strategies

The public transport market in most global cities is dominated by diesel buses, which can have significant adverse impacts on the environment and human health. To reach carbon neutrality, many public transport operators are attempting to replace their existing bus fleets with electric buses (EBs). This paper develops a generic bus replacement model to help public transit (PT) operators progressively renew their existing bus fleets so as to reach particular electrification goals within a given planning horizon. Unlike existing studies, our model more comprehensively considers the external costs, which include external climate costs, external health costs and used battery recycling costs/profits. Furthermore, by incorporating different incentives, variants on the model can be adopted to investigate how different government incentives can affect the replacement behaviors of PT operators. Finally, our proposed approach is applied to real-world data from a bus operator in Singapore which is aiming to achieve a 100% cleaner energy bus fleet within 20 years. The experiments indicate that an EB subsidy can effectively accelerate the electrification process, and a 25% EB subsidy could achieve full electrification eight years earlier than if no EB subsidy were applied. Moreover, we explore how the diesel tax and diesel bus (DB) tax affect EB replacement. Our experiments suggest a 10% diesel tax rate can achieve good results but imposing a DB tax will not encourage PT operators to purchase EBs earlier.

Technoeconomic comparison of an electric road system and hydrogen for decarbonising the UK's long-haul road freight

Long-haul Heavy Goods Vehicles (HGVs) are a significant source of carbon emissions, accounting for around 5% of the UK's total. If the UK is to meet its net zero mandate, it is vital to have a zero-emissions alternative to the traditional diesel-powered HGVs that is cost-effective and widespread in the 2040s. This paper presents a technoeconomic comparison of two solutions for decarbonising long-haul heavy goods vehicles in the UK: electric HGVs with an electric road system (overhead catenary) along the major road network, and fuel cell HGVs with public refuelling stations supplying green hydrogen. The results of the technoeconomic analysis show that overhead catenaries and compatible HGVs are the more energy-efficient and cost-effective solution to decarbonise the UK's long-haul road freight network and would provide both the infrastructure provider and fleet operators with competitive payback periods. With this approach, there is a potential to reclaim 30–80% of the diesel tax revenue currently earned by the UK government from HGVs, depending on the price of electricity. Conversely, the green hydrogen solution will require substantial government subsidies, particularly during the 2030s, to encourage fleet operators to purchase and use hydrogen fuel cell HGVs.

Pass-through of diesel taxes and the effect on carbon emissions: Evidence from China

As one of the most important instruments for reducing emissions from fossil fuels, taxes have been widely used in government battles against air pollution and climate change across the world. However, the pass-through of taxes and their effect on emissions are not evident in all situations. This study investigates the pass-through of diesel consumption taxes to retail prices and estimates the consequent effect on diesel consumption and carbon emissions in China. The results show that the pass-through rate of diesel taxes in China is around 0.49. Also, there is a significant effect of an oil company's market share on the pass-through rate. Based on the pass-through rate and estimated price elasticity, we conduct further estimations of the impact on diesel consumption and carbon emissions and find that the increase in the diesel consumption tax in 2014/2015 reduces 1.64% of annual diesel consumption and 0.096% of annual carbon emissions in China.

Fuel tax, cross subsidy and transport: Assessing the effects on income and consumption distribution in Brazil

Passenger transport has become a typical item in the household budget in Brazil, and structural changes in this type of service affect households differently. Our paper explores the links between consumption, income and transport in assessing the redistributive and economic effects of the fuel tax in the Brazilian economy, called contribution of intervention in the economic domain (CIDE). To accomplish this task, we developed a dynamic computable general equilibrium model that recognizes a Social Accounting Matrix (SAM). Two scenarios are evaluated: (1) an overall cut of CIDE-fuels to assess its role in economy; (2) the burden of the gasoline tax and reduction of the diesel tax to subsidize public transport services. The main findings indicate a deviation from real GDP above the baseline forecast path, positively affected by internal market and the reduction in income inequality. Typical households in the middle- and lower-income bracket would benefit most from these policy instruments.

Do gasoline and diesel prices co-move? Evidence from the time-frequency domain.

This study investigates the co-movements of gasoline and diesel prices in three European countries (i.e. Germany, France, and Italy) with different fuel tax systems in place. The methodology follows a time–frequency approach, allowing us to analyse the co-movements at different frequencies and moments in time. As a novelty, we study the impact of fuel tax systems and international oil price dynamics on gasoline and diesel price co-movement. Using weekly data spanning the period from January 2005 to June 2021, the wavelet coherence analysis shows co-movements between gasoline and diesel at all frequencies, as well as during specific periods, but stronger in the long run. This evidence is recorded across all three countries, regardless of their tax systems. However, in decoupling the effect of international oil prices, the partial wavelet coherence analysis shows co-movements emerging also in the short run, with them being stronger around the global financial crisis (2008–2009). Although gasoline taxes are generally higher than diesel taxes, the analysis highlights that fuel tax systems do not influence the co-movements of fuel prices. Thus, shedding new light on the co-movement between commodity prices is fundamental, particularly in light of the current international geopolitical scene.

The Effect of Diesel Tax Rates on the Daily Commuting of Us Workers: An Effective Instrument to Promote Sustainable Mobility?

The Effect of Diesel Tax Rates on the Daily Commuting of Us Workers: An Effective Instrument to Promote Sustainable Mobility?

Ensuring a Just Energy Transition: A Distributional Analysis of Diesel Tax Reform in Spain with Stakeholder Engagement

Ensuring a Just Energy Transition: A Distributional Analysis of Diesel Tax Reform in Spain with Stakeholder Engagement

The Effect of Diesel Tax Rates on the Daily Commuting of Us Workers: An Effective Instrument to Promote Sustainable Mobility?

The Effect of Diesel Tax Rates on the Daily Commuting of Us Workers: An Effective Instrument to Promote Sustainable Mobility?

The Effect of Diesel Tax Rates on the Daily Commuting of Us Workers: An Effective Instrument to Promote Sustainable Mobility?

The Effect of Diesel Tax Rates on the Daily Commuting of Us Workers: An Effective Instrument to Promote Sustainable Mobility?

The Gilets Jaunes, A Case of Collective Schizophrenia in France

This paper presents the application of the recently confirmed principles in which schizophrenia can first be diagnosed by actually looking at the discursive regime and observing contradictions i.e. taking schizophrenia to the word, a permanent process of self-breaking of the brain. The Gilets Jaunes self-destroyed their brains with the diesel fumes of the cars while agitating their demands against the government; this is the core of a movement that started with a mobilization order against high diesel taxes. Not only they campaigned both for lower taxes and for a stronger governmental welfare system, an obvious contradiction (first criteria) but they degenerated their brains progressively (second criteria). It is a dynamic, a process as in the pure etymology of schizophrein.

Quantitative analysis of optimum corrective fuel tax for road vehicles in Bangladesh: achieving the greenhouse gas reduction goal

This study estimates optimum corrective fuel taxes for Bangladesh and correlates them with climate change policy. First, we use the European road transport emission model (COPERT IV) to precisely estimate the externalities. Second, using the same model, we also estimate the reduction in greenhouse gas emissions caused by the fuel tax. Finally, we develop a correlation between the fuel tax rate and emissions reduction. Our benchmark calculation of the optimum corrective tax is US$0.94 per gallon for gasoline and US$1.46 per gallon for diesel (in 2016 prices). We find that congestion and accident externalities are the two main fuel tax components for Bangladesh. We also find that the net social welfare gain per year is US$302.11 million and the net revenue gain per year is 3.59% of GDP. The corrective diesel tax reduces fuel consumption by 18.10% and increases fuel efficiency by 12.53%. In the benchmark case, corrective fuel taxes reduce GHG emissions by 5.77%. With the combination of the existing gasoline tax and a diesel tax of US$1.20 per gallon, the country’s greenhouse gas reduction goal can be achieved. Policymakers can use fuel taxes to support climate change policy.

Exploring Cognitive Factors for Transition Management in the Transport Sector: Focusing on Diesel Tax and Oil Price Subsidy System in Korea

Exploring Cognitive Factors for Transition Management in the Transport Sector: Focusing on Diesel Tax and Oil Price Subsidy System in Korea

Taxed to death? Freight truck collision externalities and diesel taxes

This paper decomposes the external accident costs of freight trucking into two components—truck miles traveled and truck weight. The effects of miles traveled and weight on accidents are then applied to an analysis of diesel fuel taxes, which reduce truck miles traveled and increase truck weight. Exploiting a unique data set of 3.5 billion truck-level observations, I find that both measures of trucking activity increase the quantity of collisions, and truck-weight increases skew the collision distribution toward fatal outcomes. Heavier trucks do not alter the truck-only collision severity distribution, suggesting truckers do not experience truck-weight internalities. The increase in fatal collisions caused by levying a diesel tax that prices carbon emissions offsets the gains from reductions in pollution, congestion, and total collisions. The $0.37 per gallon diesel tax increase exacerbates the trucking accident externality to such an extent that it increases the external costs of trucking by $55.7 billion/year while also creating deadweight loss in the trucking industry.

시간가변계수 모형을 적용한 대기오염물질에 대한 경유세 인상 효과

본 연구는 경유세 인상이 대기오염물질 저감효과가 있는지 CES 함수를 통해 나타낸다. 또한 시간가변계수(Time-varying parameter)를 함수에 포함시킴으로써 시간의 흐름에 따른 경유와 휘발유의 대체관계를 나타낸다. 그 결과 2013년부터 2017년까지 경유와 휘발유의 대체관계가 높았다가 2018년 두 연료의 대체관계는 다소 작아진 것으로 나타났다. 경유세 40% 인상 시나리오 분석 결과, 전체 경유 소비량의 10%인 230만 톤의 경유 소비량이 한 해 동안 감소하는 것으로 나타났다. 대기오염물질은 질소산화물(NOSUBX/SUB) 5만톤, 일산화탄소(CO) 8천톤, PMSUB2.5/SUB 1천톤이 감소하는 것으로 나타났다. 본 연구 결과는 대기오염물질 저감 정책 및 친환경 자동차 전환 정책에 도움이 될 수 있다.

Tax compliance and fiscal externalities: Evidence from U.S. diesel taxation

Fiscal externalities across jurisdictions can arise from tax evasion and avoidance. While the tax competition literature has generally focused on base shifting and the resulting positive fiscal externalities, we show theoretically and empirically that negative fiscal externalities can dominate when the tax base is apportioned across jurisdictions. This can lead to a negative relationship between jurisdiction size and the desired tax rate. Interstate truckers in the United States owe state diesel taxes based on diesel consumption, which is apportioned based on the miles driven in each state. We find that own-state diesel sales fall when the diesel tax rates of other states rise, suggesting that tax base evasion is the predominant source of externalities. We then estimate a tax reaction specification, finding that the own-state tax rate is negatively correlated with the tax rates set in other states and with state size, both consistent with the sign of the estimated fiscal externality.

Lots to fume about

Criticism of the UK's weak stance on air quality has been growing. With worries mounting about diesel pollution in particular, hopes were high that last week's budget would tackle this head-on. Instead, the chancellor Philip Hammond fiddled at the margins. What is attracting most attention is his rise in first-year tax for new diesel cars. Vans are exempt. As new vans are driven almost twice as far on average as new cars, this raised concerns. Here, Chatterson talks about the minimum impact of new diesel tax in reducing air pollution

Fuel consumption dynamics in Europe: Tax reform implications for air pollution and carbon emissions

This paper estimates the potential of fuel tax reforms to curb harmful air pollutants and carbon emissions from road transport in Europe. We provide robust estimates for the responsiveness of fuel consumption to changes in prices, which constitute a key determinant for emissions pathways in response to policy interventions. We show that accounting for the manifest shift to diesel in the European vehicle fleet, as well as slow consumption adjustments over time yield strong evidence that petrol and diesel demand are more price elastic already in the short run than previous studies suggest. In particular, we present evidence that diesel demand in Europe tends to be more price elastic than petrol demand, when instrumenting prices with excise taxes to account for endogeneity. Inspired by recent fuel tax reform proposals, we then show that both (i) a repeal of the preferential tax treatment for diesel and (ii) an introduction of a carbon content-based tax, could avoid considerable amounts of health damaging air pollutant exhaust while at the same time contributing substantially to achieving the EU climate policy goals for 2020. In many countries, abandoning the diesel tax advantage has nearly as strong an effect as a 50€/tCO2 tax on fuel. Both reforms have significant revenue potential.

Road fuel taxes in Europe: Do they internalize road transport externalities?

All countries in Europe have road fuel taxes and these account for roughly half of the net fuel price. We compare current road fuel taxes and corrective taxes, estimated on the basis of negative externalities from road transport for 22 European countries, taking into account the effect of fuel taxation on fuel efficiency. We focus on cars running on diesel or petrol and commercial vehicles running on diesel. If fuel taxes were intended to internalize all road transport externalities, then a number of countries could be considered to be on the right path already in what respects petrol taxation. Diesel, on the other hand, seems to be under-taxed in all 22 countries. Petrol tax increases would be in order in some countries and diesel tax increases would be in order in all 22 countries, at least as a bridge until fine-tuned policies, such as widespread peak congestion pricing or pay-as-you-drive insurance can be put in place.

Fuel Consumption Dynamics in Europe - Implications of Fuel Tax Reforms for Air Pollution and Carbon Emissions from Road Transport

This paper estimates the potential of fuel tax reforms to curb harmful air pollutants and carbon emissions from road transport in Europe. We provide robust estimates for the responsiveness of fuel consumption to changes in prices, which constitute a key determinant for emissions pathways in response to policy interventions. We show that accounting for the manifest shift to diesel in the European vehicle fleet, as well as hitherto restricted dynamics of the fuel consumption response over time yield strong evidence that petrol and diesel demand are more price elastic already in the short run than previous studies suggest. In particular, we present evidence that diesel demand in Europe tends to be more price elastic than petrol demand, when instrumenting prices with excise taxes to account for endogeneity. Inspired by recent fuel tax reform proposals, we then show that both (i) a repeal of the preferential tax treatment for diesel and (ii) an introduction of a carbon content-based tax, could avoid considerable amounts of health damaging air pollutant exhaust while at the same time contributing substantially to achieving the EU climate policy goals for 2020. In many countries, abandoning the diesel tax advantage has nearly as strong an effect as a 50€/tCO2 tax on fuel. Both reforms have significant revenue potential.