Distributional effects from policies for reduced CO2-emissions from car use in 2030

We analyze the distributional effects, from car use and car choice adaptation to three car-related policy instruments intended to reduce CO2 emissions in Sweden to 2030: fossil-fuel taxes, a bonus-malus system for new cars, and mandated biofuel blending. The results show that even with a fast introduction of plug-in electric vehicles, many fossil cars remain, which has important distributional consequences. The fuel tax and the bonus-malus scenarios impose further burdens compared to the reference scenario. The fraction of each population group incurring substantial welfare losses is higher the lower the income. In 2030, the highest-income group can avoid some adaptation costs by their car choice. In all scenarios rural areas bear the largest burden, smaller urban areas the second largest burden, and the largest urban areas the smallest burden. Thus, individuals with high incomes and inhabitants in urban areas appear to have more opportunities to adapt and avoid welfare losses.

Automated summary

The study found that despite the introduction of more plug-in electric vehicles, Sweden still has many fossil fuel cars, which leads to greater burdens on lower-income groups. By 2030, high-income groups can avoid adaptation costs through their car choices, while rural areas bear the largest burden.