Distributional effects of the European Emissions Trading System and the role of revenue recycling: Empirical evidence from combined industry- and household-level data
We calculate the expected distributional effects of the European Emissions Trading System combining industry and household-level data. By combining data on direct CO2 emissions by production sector from the German Environmental Account with the German Input-Output Accounts, we calculate the CO2 intensity of each sector covered by the EU ETS. We focus on the impact of price increases in the electricity sector, both directly in the form of higher electricity bills for consumers and indirectly through products that use electricity as an input to production. Distributional effects of price increases are analyzed on the basis of the German Income and Expenditure Survey for the year 2008 data and updated to 2013. We confirm the ex-ante expected regressive effect, which is, however, both rather small in magnitude and can be offset and even more than offset by revenue recycling, in particular the reduction of social security contributions on labour income.
|Date of creation:||2012|
|Date of revision:|
|Contact details of provider:|| Postal: Garystr. 21, 14195 Berlin (Dahlem)|
Phone: (030) 838 2272
Fax: (030) 838 2129
Web page: http://www.wiwiss.fu-berlin.de/en/index.html
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Burtraw, Dallas & Sweeney, Richard & Walls, Margaret, 2009.
"The Incidence of U.S. Climate Policy: Alternative Uses of Revenues from a Cap-and-Trade Auction,"
dp-09-17-rev, Resources For the Future.
- Burtraw, Dallas & Sweeney, Richard & Walls, Margaret, 2009. "The Incidence of U.S. Climate Policy: Alternative Uses of Revenues from a Cap-and-Trade Auction," National Tax Journal, National Tax Association, vol. 62(3), pages 497-518, September.
- Callan, Tim & Lyons, Sean & Scott, Susan & Tol, Richard S.J. & Verde, Stefano, 2009.
"The distributional implications of a carbon tax in Ireland,"
Elsevier, vol. 37(2), pages 407-412, February.
- Tim Callan & Sean Lyons & Sue Scott & Richard S. J. Tol & Stefano Verde, 2008. "The Distributional Implications of a Carbon Tax in Ireland," Papers WP250, Economic and Social Research Institute (ESRI).
- Don Fullerton, 2008. "Distributional Effects of Environmental and Energy Policy: An Introduction," NBER Working Papers 14241, National Bureau of Economic Research, Inc.
- Parry, Ian, 2003.
"Are Emissions Permits Regressive?,"
dp-03-21, Resources For the Future.
- West, Sarah E. & Williams, R.C.Roberton III, 2004.
"Estimates from a consumer demand system: implications for the incidence of environmental taxes,"
Journal of Environmental Economics and Management,
Elsevier, vol. 47(3), pages 535-558, May.
- Sarah E. West & Roberton C. Williams III, 2002. "Estimates from a Consumer Demand System: Implications for the Incidence of Environmental Taxes," NBER Working Papers 9152, National Bureau of Economic Research, Inc.
- Nicholas Bull & Kevin A. Hassett & Gilbert E. Metcalf, 1994. "Who Pays Broad-Based Energy Taxes? Computing Lifetime and Regional Incidence," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 145-164.
- Abdelkrim Araar & Yazid Dissou & Jean-Yves Duclos, 2008.
"Household Incidence of Pollution Control Policies: a Robust Welfare Analysis Using General Equilibrium Effects,"
Cahiers de recherche
- Araar, Abdelkrim & Dissou, Yazid & Duclos, Jean-Yves, 2011. "Household incidence of pollution control policies: A robust welfare analysis using general equilibrium effects," Journal of Environmental Economics and Management, Elsevier, vol. 61(2), pages 227-243, March.
- Abdelkrim Araar & Yazid Dissou & Jean-Yves Duclos, 2008. "Household Incidence of Pollution Control Policies: A Robust Welfare Analysis Using General Equilibrium Effects," Working Papers 0805E, University of Ottawa, Department of Economics.
- MacKenzie, Ian A. & Ohndorf, Markus, 2012. "Cap-and-trade, taxes, and distributional conflict," Journal of Environmental Economics and Management, Elsevier, vol. 63(1), pages 51-65.
- Löschel, Andreas & Reif, Christiane & Kesternich, Martin & Koesler, Simon & Osberghaus, Daniel & Korioth, Stefan, 2011. "Lösungsansätze zur systemeffizienten Ausgestaltung der nationalen Mittelverwendung der Einnahmen aus der Versteigerung von Zertifikaten im Rahmen des EU-ETS: Endbericht, März 2011," ZEW Expertises, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research, number 110535.
- Parry Ian W. H. & Williams Roberton C., 2010.
"What are the Costs of Meeting Distributional Objectives for Climate Policy?,"
The B.E. Journal of Economic Analysis & Policy,
De Gruyter, vol. 10(2), pages 1-35, December.
- Ian W.H. Parry & Roberton C. Williams III, 2010. "What Are the Costs of Meeting Distributional Objectives for Climate Policy?," NBER Working Papers 16486, National Bureau of Economic Research, Inc.
- Casler, Stephen D. & Rafiqui, Aisha, 1993. "Evaluating Fuel Tax Equity: Direct and Indirect Distributional Effects," National Tax Journal, National Tax Association, vol. 46(2), pages 197-205, June.
- Cremer, Helmuth & Gahvari, Firouz & Ladoux, Norbert, 2001.
"Environmental Taxes with Heterogeneous Consumers: An Application to Energy Consumption in France,"
IDEI Working Papers
127, Institut d'Économie Industrielle (IDEI), Toulouse, revised 2002.
- Cremer, Helmuth & Gahvari, Firouz & Ladoux, Norbert, 2003. "Environmental taxes with heterogeneous consumers: an application to energy consumption in France," Journal of Public Economics, Elsevier, vol. 87(12), pages 2791-2815, December.
- Tiezzi, Silvia, 2005. "The welfare effects and the distributive impact of carbon taxation on Italian households," Energy Policy, Elsevier, vol. 33(12), pages 1597-1612, August.
- Kevin A. Hassett & Aparna Mathur & Gilbert E. Metcalf, 2009.
"The Incidence of a U.S. Carbon Tax: A Lifetime and Regional Analysis,"
The Energy Journal,
International Association for Energy Economics, vol. 0(Number 2), pages 155-178.
- Kevin A. Hassett & Aparna Mathur & Gilbert E. Metcalf, 2007. "The Incidence of a U.S. Carbon Tax: A Lifetime and Regional Analysis," NBER Working Papers 13554, National Bureau of Economic Research, Inc.
- Kevin A. Hasset & Aparna Mathur & Gilbert Metcalf, 2007. "The Incidence of a U.S. Carbon Tax: A Lifetime and Regional Analysis," Discussion Papers Series, Department of Economics, Tufts University 0714, Department of Economics, Tufts University.
- Kallbekken, Steffen & Kroll, Stephan & Cherry, Todd L., 2011. "Do you not like Pigou, or do you not understand him? Tax aversion and revenue recycling in the lab," Journal of Environmental Economics and Management, Elsevier, vol. 62(1), pages 53-64, July.
- Jos Sijm & Karsten Neuhoff & Yihsu Chen, 2006.
"CO 2 cost pass-through and windfall profits in the power sector,"
Taylor & Francis Journals, vol. 6(1), pages 49-72, January.
- Sijm, J. & Neuhoff, K. & Chen, Y., 2006. "CO2 cost pass through and windfall profits in the power sector," Cambridge Working Papers in Economics 0639, Faculty of Economics, University of Cambridge.
- Chiara Martini, 2009. "The distributive effects of carbon taxation in Italy," Departmental Working Papers of Economics - University 'Roma Tre' 0103, Department of Economics - University Roma Tre.
- Xavier Labandeira & José M. Labeaga, 1999. "Combining input-output analysis and micro-simulation to assess the effects of carbon taxation on Spanish households," Fiscal Studies, Institute for Fiscal Studies, vol. 20(3), pages 305-320, September.
- Wier, Mette & Birr-Pedersen, Katja & Jacobsen, Henrik Klinge & Klok, Jacob, 2005. "Are CO2 taxes regressive? Evidence from the Danish experience," Ecological Economics, Elsevier, vol. 52(2), pages 239-251, January.
- Brannlund, Runar & Nordstrom, Jonas, 2004.
"Carbon tax simulations using a household demand model,"
European Economic Review,
Elsevier, vol. 48(1), pages 211-233, February.
- Brännlund, Runar & Nordström, Jonas, 1999. "Carbon Tax Simulations Using a Household Demand Model," Umeå Economic Studies 508, Umeå University, Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:zbw:fubsbe:20126. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.