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Distributional Effects of Carbon Pricing in Germany

Author

Listed:
  • Malte Preuss
  • Wolf Heinrich Reuter
  • Christoph M. Schmidt

Abstract

Using detailed German survey data on the consumption expenditure of households, we look at the distributional effects of a uniform carbon price. While carbon pricing itself results in a regressive effect, various strategies for redistributing the ensuing revenues could reverse this result, generating a progressive effect. The combined effect is less progressive if the revenue is used to reduce electricity taxes - which would spur the desired electrification of the energy system - and more progressive if it is used for per capita lump-sum transfers. However, adjustments to the German income support system could even out these differences.

Suggested Citation

  • Malte Preuss & Wolf Heinrich Reuter & Christoph M. Schmidt, 2021. "Distributional Effects of Carbon Pricing in Germany," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 77(3), pages 287-316.
    • Handle: RePEc:mhr:finarc:urn:doi:10.1628/fa-2021-0011
    DOI: 10.1628/fa-2021-0011
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    Citations

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    Cited by:

    1. Frondel, Manuel & Eßer, Jana & Sommer, Stephan, 2022. "Alternative Finanzierung der erneuerbaren Energien: Experimentelle Evidenz für Deutschland," RWI Materialien 149, RWI - Leibniz-Institut für Wirtschaftsforschung.
    2. Frondel, Manuel & Helmers, Viola & Mattauch, Linus & Pahle, Michael & Sommer, Stephan & Schmidt, Christoph M. & Edenhofer, Ottmar, 2021. "Akzeptanz der CO2-Bepreisung in Deutschland: Evidenz für private Haushalte vor Einführung des CO2-Preises," RWI Materialien 147, RWI - Leibniz-Institut für Wirtschaftsforschung.

    More about this item

    Keywords

    climate policy; carbon pricing; distributional effects;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

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