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Compensating households from carbon tax regressivity and fuel poverty: a microsimulation study

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  • Audrey Berry

    (CIRED - centre international de recherche sur l'environnement et le développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

Abstract

For households, taxing carbon raises the cost of the energy they use to heat their home and to travel. This paper studies the distributional impacts of the recently introduced French carbon tax and the design of compensation measures. Using a microsimulation model built on a representative sample of the French population from 2012, I simulate for each household the taxes levied on its consumption of energy for housing and transport. Without recycling, the carbon tax is regressive and increases fuel poverty. However, I show how compensation measures can offset these impacts. A flat cash transfer offsets tax regressivity by redistributing

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  • Audrey Berry, 2018. "Compensating households from carbon tax regressivity and fuel poverty: a microsimulation study," CIRED Working Papers hal-01691088, HAL.
    • Handle: RePEc:hal:ciredw:hal-01691088
    Note: View the original document on HAL open archive server: https://hal.science/hal-01691088
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    References listed on IDEAS

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    Cited by:

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    2. Thomas Douenne, 2018. "The vertical and horizontal distributive effects of energy taxes," Policy Papers 2018.05, FAERE - French Association of Environmental and Resource Economists.
    3. Laure Baratgin & Emmanuel Combet, 2022. "Quelques pistes pour concilier des objectifs sociaux, économiques et écologiques," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(1), pages 121-146.
    4. García-Muros, Xaquín & Morris, Jennifer & Paltsev, Sergey, 2022. "Toward a just energy transition: A distributional analysis of low-carbon policies in the USA," Energy Economics, Elsevier, vol. 105(C).
    5. Alberto Gago & Xavier Labandeira & José M. Labeaga & Xiral López Otero, 2021. "Transport Taxes and Decarbonization in Spain: Distributional Impacts and Compensation," Hacienda Pública Española / Review of Public Economics, IEF, vol. 238(3), pages 101-136, September.

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    More about this item

    Keywords

    Carbon tax; Distributional impacts; Fuel poverty; Revenue recycling; Microsimulation;
    All these keywords.

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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    This paper has been announced in the following NEP Reports:

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