Toward a just energy transition: A distributional analysis of low-carbon policies in the USA

Distributional impacts of environmental policies have become an increasingly important consideration in policymaking. To evaluate the distributional impacts of carbon pricing with different revenue recycling schemes for the USA, we integrate national economic model for the USA with household microda...

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Bibliographic Details
Published in:Energy economics 2022-01, Vol.105, p.105769, Article 105769
Main Authors: García-Muros, Xaquín, Morris, Jennifer, Paltsev, Sergey
Format: Article
Language:English
Subjects:
Carbon
Carbon pricing
Computable general equilibrium
Consumption patterns
Distributional impacts
Economic analysis
Economic models
Economics
Efficiency
Energy economics
Energy transition
Environmental impact
Environmental policy
Households
Microsimulation
Policy making
Recycling
Recycling programs
Revenue
Socioeconomic factors
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Summary:Distributional impacts of environmental policies have become an increasingly important consideration in policymaking. To evaluate the distributional impacts of carbon pricing with different revenue recycling schemes for the USA, we integrate national economic model for the USA with household microdata that provides consumption patterns and other socio-economic characteristics for thousands of households. Using this combined model, we explore the distributional impacts and the possible trade-offs between equity and efficiency of different revenue recycling schemes. We find that the choice of revenue recycling scheme has a limited effect on efficiency of the policy, but significant distributional impacts. Our analysis indicates that policy makers can mitigate negative distributional impacts with positive synergies on efficiency. •We integrate a national economic model for USA with household microdata.•We evaluate impacts of carbon-related revenue recycling schemes.•The choice of revenue recycling scheme has significant distributional impacts.•Policy design should consider distributional impacts on different household types.•The right revenue recycling design can ensure a just transition with efficiency gains.
ISSN:0140-9883
1873-6181
DOI:10.1016/j.eneco.2021.105769