In October 2022, national carbon pricing was introduced in Austria for those sectors not subject to the European Emissions Trading System (EU-ETS) yet (including the buildings and transport sector), with the revenues being reimbursed to all people living in Austria via a regionally differentiated lump-sum payment (climate bonus).
In the FARECarbon project, we, together with WIFO, the University of Graz – Wegener Center, and the University of Natural Resources and Life Sciences, used three different macroeconomic models and a microsimulation model to analyze the effects of carbon pricing in the non-ETS sectors for different revenue recycling schemes.
The first scientific publication from the project was recently published in the renowned journal Energy Economics and deals with the question of the potential for a triple dividend, depending on the revenue recycling scheme. A triple dividend – in this case – is defined as the simultaneous materialization of (i) a reduction in carbon emissions, (ii) positive effects on the gross domestic product and employment, and (iii) positive and distributionally regressive effects in household consumption possibilities, i.e. higher gains for lower-income households. The revenue recycling schemes examined include a reduction in non-wage labor costs, a reduction in the value added tax on essential goods and a lump-sum per-capita transfer (“climate bonus payment”).
The results of the study confirm the tradeoff between equity and efficiency already identified in previous analyses. For the combination of the recycling options of non-wage labor cost reductions and lump-sum per-capita transfers, there is evidence of a triple dividend, although not in all the models considered.
For further details on the project results see the FARECarbon homepage and the article published in the journal Energy Economics:
Kettner, C., Leoni, T., Köberl, J., Kortschak, D., Kirchner, M., Sommer, M., Wallenko, L., Bachner, G., Mayer, J., Splittler, N., Kulmer, V. (2024), Modelling the economy-wide effects of unilateral CO2 pricing under different revenue recycling schemes in Austria – Searching for a triple dividend, Energy Economics, https://doi.org/10.1016/j.eneco.2024.107783
FARECarbon was funded by the Climate and Energy Fund and carried out within the 12th call of the Austrian Climate Research Programme (ACRP).
