The Effect of Carbon Tax on Norway's Exports

The Effect of Carbon Tax on Norway's Exports

Economics

Stuti Krishnagiri, Rishita Singh and Jessica Tomson

2025

Carbon pricing has gained prominence as a policy to reduce carbon emissions across the world, with 80 carbon pricing instruments currently being implemented. Despite its benefits, scholars and policymakers remain sceptical about the benefits of carbon taxes to the broader economy, particularly their effects on international competitiveness. This study aims to answer the question: “How has Norway’s carbon tax affected its export competitiveness?” We attempt to draw a causal inference using the Synthetic Difference-in-Differences (SDID) method, leveraging Norway’s status as an early adopter of the carbon tax. Our use of this relatively new identification strategy contributes to the literature by improving internal validity. We use national-level data on the export-to-GDP ratio of 23 OECD and European countries from 1980 to 2004 to calculate the average treatment effect on the treated (ATT). 

carbon tax, exports, Norway