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The climate change challenge and fiscal instruments and policies in the EU

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  • Avgousti, Aris
  • Caprioli, Francesco
  • Caracciolo, Giacomo
  • Cochard, Marion
  • Dallari, Pietro
  • Delgado-Téllez, Mar
  • Domingues, João
  • Ferdinandusse, Marien
  • Filip, Daniela
  • Nerlich, Carolin
  • Prammer, Doris
  • Schmidt, Katja
  • Theofilakou, Anastasia

Abstract

Fiscal policy plays a prominent role in climate change mitigation and adaptation. An optimal combination of revenue policies, in particular taxes, and expenditure policies, such as subsidies and investment, is essential in order to achieve greenhouse gas emissions targets. This paper analyses the main fiscal instruments in place in European Union Member States, focusing on specific issues, such as the fiscal impact of extreme weather events, the interaction between debt sustainability and climate change, the green investment gap and the distributional impact of climate policies. The paper aims to provide an overview of existing fiscal policies and of the main fiscal challenges for a comprehensive European climate change strategy. JEL Classification: H2, H5, H6, Q54, Q58, D63

Suggested Citation

  • Avgousti, Aris & Caprioli, Francesco & Caracciolo, Giacomo & Cochard, Marion & Dallari, Pietro & Delgado-Téllez, Mar & Domingues, João & Ferdinandusse, Marien & Filip, Daniela & Nerlich, Carolin & Pra, 2023. "The climate change challenge and fiscal instruments and policies in the EU," Occasional Paper Series 315, European Central Bank.
    • Handle: RePEc:ecb:ecbops:2023315
    Note: 1332270
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    Cited by:

    1. Patrick Gruning & Zeynep Kantur, 2023. "Stranded Capital in Production Networks: Implications for the Economy of the Euro Area," Working Papers 2023/06, Latvijas Banka.
    2. Angela Köppl & Margit Schratzenstaller, 2024. "Policy Brief: Budgetäre Kosten und Risiken durch klimapolitisches Nichthandeln und Klimarisiken," WIFO Studies, WIFO, number 70821, April.

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    More about this item

    Keywords

    carbon tax; climate change; debt sustainability; extreme weather events; green investment; redistribution;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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