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Regional Aspects of a Climate and Energy Tax Reform in Norway—Exploring Double and Multiple Dividends

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  • Ulf Johansen

    (SINTEF Building and Infrastructure, 7465 Trondheim, Norway
    Norwegian University of Science and Technology, Industrial Economics and Technology Management, 7491 Trondheim, Norway)

  • Gerardo A. Perez-Valdes

    (SINTEF Industry, 7465 Trondheim, Norway)

  • Adrian Tobias Werner

    (SINTEF Industry, 7465 Trondheim, Norway)

Abstract

We investigate the potential for double or even multiple dividends arising from a climate and energy tax reform (CETR), using a regional computable general equilibrium model. Such dividends indicate if government revenues raised from energy-related environmental taxes and recycled back to households or industries through (regional) social security contributions will yield welfare gains larger than gross cost. Building on existing double dividend theory, we broaden the scope by considering both social and regional aspects of a CETR. We explore the use of household transfers and regional payroll taxes as recycling instruments and investigate to what extent wage formation on the labor market has an effect. For Norway, our results indicate that a CETR may conflict with sub-national policy goals under all assessed scenarios. In particular, this holds for income inequality. Although our analysis concerns the social, economic and environmental aims of a Norwegian policy, the approach can be generalized to, e.g., a European context.

Suggested Citation

  • Ulf Johansen & Gerardo A. Perez-Valdes & Adrian Tobias Werner, 2018. "Regional Aspects of a Climate and Energy Tax Reform in Norway—Exploring Double and Multiple Dividends," Sustainability, MDPI, vol. 10(11), pages 1-20, November.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:11:p:4175-:d:182460
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    References listed on IDEAS

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    1. Krumm, Alexandra & Süsser, Diana & Blechinger, Philipp, 2022. "Modelling social aspects of the energy transition: What is the current representation of social factors in energy models?," Energy, Elsevier, vol. 239(PA).

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