Distributional Impacts of Carbon Pricing on Households
Carbon pricing policies that are aligned with the Paris Agreement objectives will have positive and negative socio-economic impacts on society. Impacts of unabated climate change are expected to disrupt economic development and disproportionally af...
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| Format: | Brief |
| Language: | English |
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/817211588598030616/Distributional-Impacts-of-Carbon-Pricing-on-Households http://hdl.handle.net/10986/33686 |
| Summary: | Carbon pricing policies that are aligned
with the Paris Agreement objectives will have positive and
negative socio-economic impacts on society. Impacts of
unabated climate change are expected to disrupt economic
development and disproportionally affect the poorest parts
of the population, especially in lower-income countries. In
response, through the Paris Agreement, the international
community pledged to limit global warming to well below 2
degrees Celsius above pre-industrial levels. Carbon pricing
has been highlighted as a crucial prerequisite for effective
climate change mitigation. Carbon pricing is essentially a
payment required to emit one ton of CO2 into the atmosphere.
This makes production or consumption of carbon-intensive
goods and services more expensive. While carbon pricing
policies aim to shift behavior towards low-carbon
alternatives, they can also result in unintended
distributional effects for households, especially when
lower-cost alternatives are not available. The negative
distributional impacts can be offset through specific policy
design choices, but efforts to do so should not undermine
the goal of incentivizing emissions reduction. |
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