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Title Understanding regressivity: Challenges and opportunities of European carbon pricing
ID_Doc 63827
Authors Feindt, S; Kornek, U; Labeaga, JM; Sterner, T; Ward, H
Title Understanding regressivity: Challenges and opportunities of European carbon pricing
Year 2021
Published
DOI 10.1016/j.eneco.2021.105550
Abstract We examine how a European carbon price will affect citizens by studying its incidence on households in 23 countries of the EU. At the national level, the distributional impact before revenue recycling is mainly neutral, sometimes progressive. At an aggregate EU level, however, the impact is regressive because some low-income countries would be strongly affected by the carbon price. While national redistribution can yield a progressive EU incidence, we show that European-wide redistribution is more effective for the most affected households. We offer two indicators to offset regressive distributional effects of EU climate policy, such as the recently proposed Green Deal. The first renders the tax burden proportional; the second focuses on compensating the households most severely affected. Including both indicators in European redistribution makes for a better representation of the initial burden of carbon pricing and could increase public acceptability.
Author Keywords Carbon pricing; Distributional effect; Household data; European Union
Index Keywords Index Keywords
Document Type Other
Open Access Open Access
Source Social Science Citation Index (SSCI)
EID WOS:000711152500005
WoS Category Economics
Research Area Business & Economics
PDF https://doi.org/10.1016/j.eneco.2021.105550
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