Economic Growth and Abatement of Carbon Dioxide Emissions in Swedish Transport Policy

Abstract: This thesis examines the Swedish carbon dioxide abatement policy in the transport sector. The purpose is to investigate whether this is done in a cost-efficient way, in particular in a long-term perspective. An underlying objective is to bring thoughts on environmental concern and economic growth together. In order to do this a number of scientific reports, economic articles, and policy documents have been studied. Specific attention is given to the potential of economic instruments to create incentives to invest in research and development. R&D is expected to lead to technological change which in turn is important for economic growth as well as reduced carbon dioxide emissions, particularly in the long-term. The results indicate that there are large short-term efficiency gains to be made from coordinating policy with other countries. But also in the long-run. There are also indications that a strategy that indirectly stimulates R&D investments through adjusting the opportunity cost of carbon dioxide emissions is a safer principle to base policy on than direct subsidies of abatement or governmental investment in R&D. Although it is yet difficult to say anything specific about the effects of including induced technological change when evaluating the carbon dioxide policy in the transport sector, there are strong indications that doing so would lower the long-run costs of abatement policy substantially due to the long-term dynamic technology effects.