ESRI Working Paper - 'The Distributional Implications
of a Carbon Tax in Ireland' - has been published.
Climate policy necessarily increases the price of energy
- either explicitly through taxes or tradable permits, or
implicitly by mandating the use of different fuels from those
that a free market would choose. As energy is a necessary
good, climate policy is regressive - it will disproportionally
harm poorer households.
Therefore, there should be additional policy reform to offset
the negative effects of climate policy on the distribution
of income. The ESRI paper investigates this issue for a carbon
tax and revenue recycling for the Republic of Ireland.
The authors study the effects of carbon tax and revenue recycling
across the income distribution in the Republic of Ireland.
In absolute terms, a carbon tax of €20/tCO2
would cost the poorest households less than €3/week and the
richest households more than €4/week. A carbon tax is regressive,
However, if the tax revenue is used to increase social benefits
and tax credits, households across the income distribution
can be made better off without exhausting the total carbon
To download the paper - 'The Distributional Implications
of a Carbon Tax in Ireland' - Click