Policy Briefs

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

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.

CHIPS & SLICE POLICY BRIEF No 2: Damages and social costs of carbon from tropical cyclones. February 2023. download

State-of-the-art models weighing the costs of climate change impacts against the costs of adaptation and mitigation measures do not account for the long-term effects caused by extreme weather events such as floods and tropical cyclones. The intensification of extreme weather events under global warming requires the development of tailored evidence-based adaptation and mitigation strategies to reduce the loss and damage caused by these events. A quantification of climate change induced damages from tropical cyclones pave the way to adequately account for the impacts of extreme weather events in integrated assessment of remaining climate damages along mitigation and adaptation pathways.

The policy brief is a joint result of the CHIPS and SLICE projects.

CHIPS POLICY BRIEF No 1: Distributional effects and acceptability of carbon taxes in the European Union. December 2021. download

Carbon taxes, either implemented directly or through high fuel taxes, have long existed in European jurisdictions. If the European Union were to implement a comprehensive carbon tax across all member states, however, it would disproportionately raise the expenditure of the poorest 40% of European households, mainly from the poorest countries. Recycling revenues through compensation transfers can offset this disproportionate burden, using just 7% of the total carbon tax revenue. The net impact of this scheme would be neutral at the European level, and with equal-per-capita transfers, the carbon tax burden would become progressive.

The paper is based on: Feindt, S., U. Kornek, J.M. Labeaga, T. Sterner, H. Ward (2021). Understanding regressivity: Challenges and opportunities of European carbon pricing. In: Energy Economics, 2021; https://doi.org/10.1016/j.eneco.2021.105550.