German eco-taxes takes effect

27 September 2023, by Stephanie Janssen

Photo: Dan senior/Unsplash

Since 1999, gasoline and diesel have been taxed in Germany. Initially planned as an ambitious project, the eco-tax was locked in at 15 cents per liter as early as 2003. Until now, there have been doubts about its benefits. Piero Basaglia and Prof. Moritz Drupp have now shown that the tax has massively reduced CO₂, saving Germany around 80 billion euros. Both climate and health benefit.

Using economic indicators from the transport sector, the researchers programmed a Germany „clone“ that simulates how certain parameters would have developed in Germany without the eco-tax. To do this, they used datasets from industrialized countries that are similar to Germany but did not introduce such a tax.

Basaglia and Drupp were able to clearly refute the widespread assumption that the tax would be ineffective. On the contrary, its effect was resounding: between 1999 and 2009, it reduced CO₂ emissions in traffic by ten percent annually compared to the clone. At the same time, 27 percent less particulate matter and 13 percent less harmful nitrogen oxides were emitted per year.

Publication:
Basaglia P,  Behr SM,  Drupp MA (2023): De-Fueling Externalities: Causal Effects of Fuel Taxation  and Mediating Mechanisms for  Delivering Climate and Health Benefits; CESifo Working Papers (Download PDF)