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Social-environmental-economic trade-offs associated with carbon-tax revenue recycling
[Arbitrages économiques, sociaux et environnementaux pour le recyclage des revenus de la taxe carbone]

Author

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  • Cyril Bourgeois

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

  • Louis-Gaëtan Giraudet

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

  • Philippe Quirion

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

Abstract

As carbon taxes gain traction and grow tighter in OECD countries, the question of their recycling becomes crucial for political acceptance. Considering the impact of the French carbon tax in the residential sector, we examine the trade-offs between fuel poverty alleviation, energy savings and economic leverage for two revenue-recycling options-as a lump-sum payment or as a subsidy for energy efficiency improvement, each restricted to low-income households-defined as those belonging to the first two quantiles of the income distribution. We do so using Res-IRF, a highly detailed energy-economy model that interacts housing features (single vs. multi-family, energy efficiency, heating fuel) with key household characteristics (tenancy status, income of both owners and occupants). We find that the energy efficiency subsidy recycling is superior to the lump-sum payment in all respects; it even fully offsets the regressive effect of the carbon tax from 2025 onwards. No recycling, however, effectively addresses fuel poverty in private, rented housing.

Suggested Citation

  • Cyril Bourgeois & Louis-Gaëtan Giraudet & Philippe Quirion, 2019. "Social-environmental-economic trade-offs associated with carbon-tax revenue recycling [Arbitrages économiques, sociaux et environnementaux pour le recyclage des revenus de la taxe carbone]," CIRED Working Papers hal-02073964, HAL.
  • Handle: RePEc:hal:ciredw:hal-02073964
    Note: View the original document on HAL open archive server: https://hal-enpc.archives-ouvertes.fr/hal-02073964
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    References listed on IDEAS

    as
    1. Louis-Gaëtan Giraudet & Luc Bodineau & Dominique Finon, 2011. "The costs and benefits of white certificates schemes," CIRED Working Papers hal-00866420, HAL.
    2. John Hills, 2012. "Getting the measure of fuel poverty: Executive summary," CASE Briefs 31, Centre for Analysis of Social Exclusion, LSE.
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    More about this item

    Keywords

    carbon tax; revenue-recycling; building sector; fuel poverty; energy efficiency subsidies JEL codes: D63; H23; Q47;

    JEL classification:

    • D - Microeconomics

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