Carbon pricing: economists question lump-sum payouts to households

illuminem summarizes for you the essential news of the day. Read the full piece on Euractiv or enjoy below:

🗞️ Driving the news: Nobel Prize winner Joseph Stiglitz and colleagues question the effectiveness of the ‘climate dividend’ approach in a recent paper, advocating for alternative uses of carbon pricing revenues
• They argue that lump-sum payments are not appealing to the public and suggest investing the funds in climate action instead

🔭 The context: Economists have supported carbon pricing as an efficient way to reduce CO2 emissions and proposed redistributing the revenues to citizens through a 'climate dividend'
• However, surveys in France, Germany, and Spain show a preference for using these funds for green investments rather than uniform grants

🌍 Why it matters for the planet: Proper allocation of carbon pricing revenues can enhance public support for climate policies and facilitate the transition to sustainable alternatives, especially for low-income households

⏭️ What's next: Researchers call for discounted loans to help low-income households transition to climate-friendly technologies, addressing the high upfront costs
• The introduction of the new European emissions trading system (ETS2) in 2027 underscores the urgency of these measures

💬 One quote: “Support for carbon pricing is highest when revenues are channeled back in the form of green investments,” said Franziska Funke, lead author and researcher at the Potsdam Institute for Climate Impact Research

📈 One stat: Carbon pricing under the new EU scheme for road and heating fuels (ETS2) could lead to higher price hikes than the €45 per tonne of CO2 initially targeted by policy-makers

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