New research led by the University of Leeds has found that using carbon tax revenue to fund free green electricity and public transportation could significantly reduce households’ greenhouse gas emissions. Providing green services for free can help decrease home energy emissions by 13.4 percent and motor fuel emissions by 23.8 percent.
Current carbon taxes on home energy and motor fuel place a substantial financial strain on low-income households, even if such households contribute less to climate change than higher income ones. By comparing two ways of using revenue from carbon taxes to reduce emissions, scientists found that providing free green services can be more effective in mitigating the financial burden of the taxes on disadvantaged people than redistributing the tax revenue among the population.
“Stringent climate policies, including carbon taxes on home energy and motor fuels, are likely to be part of government strategies to achieve climate targets, but they put higher burdens on low-income households than on rich households. Governments urgently need to make climate policies fairer by finding ways that can compensate disadvantaged people,” explained study lead author Dr. Milena Buchs, an associate professor of Sustainability, Economics, and Low Carbon Transitions at the University of Leeds.
“Providing people with green living options, like free green electricity and free public transport, is promising because it’s re-distributive, saves emissions, and reduces fuel and transport poverty.”
Dr. Buchs and her colleagues examined household expenditure data on home energy and motor fuel from 275,614 households across 27 European countries, together with estimates of annual greenhouse gas emissions per household. Using this data, they assessed the impact of introducing two different compensation strategies.
They have found that introducing universal green vouchers with expanded renewable energy generation and public transport would be a much more effective strategy than giving cash back through tax rebates, and would reduce home energy emissions by 13.4 percent and motor fuel emissions by 23.8 percent.
“These findings demonstrate that policies that aim to compensate for unfair distributional impacts of carbon taxes need to be combined with additional environmental interventions. The provision of green goods and services needs to be expanded, and fuel and transport poverty minimized, so that social and environmental objectives can both be met,” Dr. Buchs concluded.
The study is published in the journal Environmental Research Letters.
By Andrei Ionescu, Earth.com Staff Writer