June 2018 - Carbon pricing is a key element to cost-effectively achieve emission reductions to combat climate change. However, to be politically feasible and socially acceptable, carbon pricing mechanisms must address distributional and competitiveness concerns. This is all the more relevant in emerging and developing economies, which are increasingly moving towards adopting carbon pricing instruments and where inequality and poverty are especially prevalent.
This new study, commissioned by BMU, looks at key considerations for addressing distributional impacts of carbon pricing policies. It discusses the main distributional concerns for different societal groups – households, local communities and firms – and discusses options to alleviate them.