| Abstract: |
Carbon labels have been shown to reduce the carbon footprint of consumption
choices in several contexts. But are they also an effective policy tool? This
depends on how the reductions produced by carbon labels relate to what can be
achieved with the alternative policy tools we have available. This paper
establishes a comparison to carbon taxes, using several field experiments in
the student canteen. I estimate that carbon labels reduce carbon emissions by
approx. 4%, and that a carbon tax of €120 per ton would be needed to achieve
similar reductions with price changes alone. This comparison conveys that
carbon labels are relatively effective: €120 per ton exceeds current EU ETS
trading prices by more than 150% and is three times the current German carbon
tax on gasoline. Furthermore, I provide evidence that the main reason carbon
labels are effective is not that they are able to correct consumers’
misperceptions about carbon footprints. Instead, they appear to primarily
influence consumers by directing attention towards carbon emissions at the
moment of choice. |