SIMEN. Studies of industry, environment and energy towards 2000

Abstract

This paper describes an attempt to analyze the question of how to control air pollution, without hampering further economic growth. The analytical framework is a macroeconomic planning model, extended with a submodel for air pollution. Taxes on petroleum products for heating and transportation purposes are substantially increased, with the aim of stabilizing Norwegian emissions of CO2 and simultaneously decrease the emissions of SO2 and NOS . This policy change is analyzed under the restriction of balanced government budgets. The increase in revenue from the taxation of petroleum products, is counteracted by an equivalent reduction in taxes or wage income. On average this leaves production costs and competitiveness unchanged and contributes to a more efficient use of the labour force and energy.