Regional Differences in CO2 Emissions from the French Residential Sector: Determinants and Distributional Consequences

Abstract

This paper investigates empirically the determinants of the CO2 emissions from the residential and commercial sectors in France. We use panel data on the 22 French administrative regions over the 1995-2009 period. We estimate the relationship between regional CO2 emissions per capita, regional GDP, temperature, the annual number of frost days, heating technology and energy prices. We use these results to assess the regional consequences of implementing a carbon tax of 22€ per metric ton of CO2, and conclude that this policy would increase inequalities between regions. We show that a region-specific carbon tax that equalizes the tax burden among regions, instead of a homogenous national tax, may compensate these inequalities and reduce total CO2 emissions. Last, we show that taking regional specific effects into account in the design of the environmental tax reform may help make this policy more acceptable.