Inam Ansari
Postdam, (Germany): If properly designed, a CO2 tax can be both extremely effective and socially just. This is the conclusion of a new study on Global Commons and Climate Change conducted by the Potsdam Institute for Climate Impact Research (PIK) and the Mercator Research Institute (MCC). At the heart of the concept is a targeted return of CO2 pricing revenues, particularly to poorer people who require relatively significant amounts of energy but have little control over it. So far, political concerns about social hardship and potential outrage have stymied CO2 price increases. This study has been published in the Journal of Environmental Economics and Management (JEEM). "It is crucial that the revenues from CO2 pricing are returned, and in a targeted manner: Distributing them back in shotgun mode is only the second-best solution," explains Martin Hansel, an economist at PIK and lead author of the study. "It makes the most sense to support the most affected groups with direct transfers. In the study, we identify these particularly affected groups for the first time: Because they are not simply the poorer segments of the population. Rather, within each income group, there are households with very high energy expenditures - people who rely on their cars to drive to work because they live in the countryside, people who have old oil-based heating, tenants with little to no influence on insulation, and so on. These are the groups that the government needs to identify and compensate for. That's the fairest and economically most sensible solution looking at society as a whole," he adds. According to Max Franks, who is also an economist in Potsdam and author of the study, "Especially in the current crisis, with rising energy costs for eve ...
Continue Reading →