Policy brief "Climate policies, carbon taxation and distributional compensations"

CHIPS policy brief No 3: Climate policies, carbon taxation and distributional compensations. March 2023. download

The third CHIPS policy brief from March outlines the following key message(s):

  • Energy environmental taxes are crucial to achieve a successful transition to a decarbonized economy.
  • The use of additional tax revenue to establish distributional compensations will be fundamental to achieve a fair transition.
  • It is very important to ensure the salience of the measures through extensive communication efforts. In this way, the public will understand and support the measures, thereby increasing their effectiveness and viability since it could lend trust to the government and make citizens believe in the Pigouvian mechanism, two important motivations for protesters’ opposition in Sweden as recognized in.
  • Compensation should be decoupled from energy consumption to encourage energy savings and efficiency, and should be targeted primarily at particularly affected households, wherever possible.