Evaluating the economic effects of environmental regulations in the Swedish trucking industry

Information about the project

Background

Short project facts

Funded by: Trafikverket
Time period: 2024-2027
Project members: INDEK/KTH, SU (Stockholm University), SSES (Stockholm School of Economics)

Sweden's fuel prices, particularly for diesel, have surged due to carbon taxes and biofuel blending requirements, making them the highest in the EU since 2017. In a new study researchers from KTH, SSE and SU are seeking to understand how these costs affect the transportation sector.

Higher fuel costs should push firms to reduce emissions by enhancing fuel efficiency or adopting cleaner technologies. However, these costs can also reduce competitiveness and output, potentially hindering firms' ability to invest in low-emission technologies. Meanwhile, some research suggests that long-term technical advancements could offset the short-term competitive drawbacks.

“Understanding these trade-offs are thus of first-order importance for designing optimal transportation policies,” the authors say.

“In practice, this means analyzing how policy is affecting the truck level response, as well as the firms owning the trucks and ultimately how the sector composition responds.”

The research project will analyze how policies influence individual trucks, their owning firms, and the sector as a whole. Using detailed microlevel data from 2007 to 2022, the researchers will trace how policy-induced fuel cost increases affect the road freight transportation sector. They will use panel regressions to examine how diesel costs influence vehicle kilometers driven, carbon emissions, and various efficiency and productivity measures.