Estimating the additionality of the Swedish climate subsidy program : Klimp

• In 2003, Sweden initiated a climate subsidy program known as Klimp, to encourage implementation of projects that reduce carbon emissions. A total grant of 1.8 billion SEK was approved for 912 projects, and 766 of these were implemented. The emission reduction from these projects totals 746,000 tons annually. However, it is criticized that some of the subsidized projects might have been implemented in the absence of financial support from Klimp, i.e., the projects were not additional. This concept of "additionality" brings concerns about the opportunity cost of government spending, and about what the impact of Klimp on emission reduction actually is.This paper compares the implementation outcomes (i.e., whether a project was implemented or not) of Klimp subsidized projects with a control group of projects that were not approved for Klimp subsidies. We use an econometric model to study the treatment effect of the Klimp subsidy, and we estimate the probability that a subsidized project would be implemented with and without the Klimp subsidy. The additionality of Klimp is calculated based on estimated probabilities. The estimation results show that the additionality of Klimp is approximately 60 percent, which means that 60 percent of the Klimp-subsidized projects would not have been implemented had they not been subsidized.

Ämnesord

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business (hsv//eng)

Nyckelord

Additionality

Klimp

climate subsidy program

subsidy

CDM

Företagsekonomi

Business Studies

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