Climate policy design, competitiveness and income distribution: A macro-micro assessment for 11 EU countries.

ABSTRACT: Concerns about industry competitiveness and distributional impacts can deter ambitious climate policies. Typically, these issues are studied separately, without giving much attention to the interaction between the two. Here, we explore how carbon leakage reduction measures affect distributional outcomes across households within 11 European countries by combining an economy-wide computable general equilibrium model with a household-level microsimulation model. Quantitative simulations indicate that a free allocation of emission permits to safeguard the competitive position of energy-intensive trade-exposed industries leads to impacts that are slightly more regressive than under full auctioning. We identify three channels that contribute to this effect: higher capital and labour income; lowe

SUBMITTER: Vandyck T 

PROVIDER: S-EPMC8594799 | biostudies-literature | 2021 Nov

REPOSITORIES: biostudies-literature