Abstract

Abstract The urgency of effective climate action measures and the practical experience in the context of the existing European Emissions Trading Scheme (ETS) are striking arguments for the introduction of uniform prices on CO₂ emissions: as a minimum price in the ETS and as a reform of existing tax rates on fossil fuels (CO₂ tax) for heating and transport (Non-ETS). In order for CO₂ pricing not to become a mere instrument of rising government revenues, the options currently under consideration are the counter-financing of existing taxes and levies that reduces electricity prices or a per capita refund (climate bonus) for households. Both result initially in very similar distributional effects: the lower the household income, the higher the initial financial relief. Compared to the counter-financing of the EEG levy, climate bonuses are expected to have stronger rebound effects and the reduction of bureaucracy and promotion of the efficient use of renewable energy in heating and transport (sector coupling) would be waived. Thus a counter-financing, in particular the EEG levy in order to lower electricity costs, is a priority. In order to adequately address social hardships, only few socio-political accompanying measures would be needed that are largely independent of the pricing mechanism.

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