What is a fair CO2 tax increase? On fair emission reductions in the transport sector

We examine how individual preferences for fair reductions of carbon dioxide (CO2) emissions affect the support for increases in the CO2 tax on gasoline and diesel. We assume that people not only care about their own material welfare, but also have preferences for fairness in policy design, and we explore the implications using original data from a mail questionnaire sent to a representative sample of the Swedish population. The main result is that fairness in policy design does matter. Those respondents who adhere to a fairness principle tend to be relatively more positive to increases in the CO2 tax. One possible explanation for this result is that there is a relatively high degree of reciprocity regarding the origin of emissions and the fairness regarding who should bear the burden of CO2 reductions. Via a split sample analysis, we also find that the relative importance of fairness principles is dependent upon whether one uses a car often or not. This sheds light on the potential goal conflict between the importance of fairness principles and self-interest in the form of a need for private car transportation.