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Making carbon pricing work for citizens

  • Author(s)/Creator(s):
    David Klenert
    Linus Mattauch
    Emmanuel Combet
    Ottmar Edenhofer
    Cameron Hepburn
    Ryan Rafaty
    Nicholas Stern
  • Publisher(s)/Producter(s):
    Nature Climate Change

The gap between actual carbon prices and those required to achieve ambitious climate change mitigation could be closed by enhancing the public acceptability of carbon pricing through appropriate use of the revenues raised. In this Perspective, we synthesize findings regarding the optimal use of carbon revenues from both traditional economic analyses and studies in behavioural and political science that are focused on public acceptability. We then compare real-world carbon pricing regimes with theoretical insights on distributional fairness, revenue salience, political trust and policy stability. We argue that traditional economic lessons on efficiency and equity are subsidiary to the primary challenge of garnering greater political acceptability and make recommendations for enhancing political support through appropriate revenue uses in different economic and political circumstances.

Policy Quality
Public Finance
Personal Finance
Corporation Finance