The impact of CO2 tax : a simulation analysis for the Norwegian petroleum sector
MetadataShow full item record
- Master Thesis 
In the late March, Norway submitted its climate target to the UN Framework Convention on Climate Change, where it stated its commitment to a target of at least 40 percent of emission reduction by 2030 compared to the 1990 level. As a main policy to reduce the emissions, the CO2 tax has already been implemented in Norway since 1991. In this paper we analyze the impact of CO2 tax on emissions, specially focusing on the emissions from the Norwegian Petroleum sector. We start our analysis with a simple Hotelling-type model to simulate the Norwegian petreolem sector. Following the model, we do simulations using different values of carbon tax rates (represented by the percentage of unit cost). The analysis inicates that there is a linear relationship between the carbon tax rates and the amount of petroleum extracted: each percentage of increase in carbon tax may reduce the emissions by nearly 0.1083 percent in the first year. Besides, the impacts also include a loss of approximately 0.1974 percent of total resource wealth and an 0.0825 percent of extraction period extention. In addition, we conclude that the change of interest rate and total resource reserves have a significant impact on the carbon emissions as well. However, it should be noted that all the results of our analysis are subject to a series of assumptions in the model and the simulations.