S5 Ep23: Deep Focus: Balancing distributional inequalities of climate policies

Bruegel fellow Georg Zachmann talks through a Bruegel
Blueprint he has co-authored, looking into the potential
distributional effects of climate policies, in another episode of
the Deep Focus series.


Climate change is one of the big questions of this century, and
mitigating its effects remains an enormous challenge.
Decarbonisation will require a massive shift in our economies.
Heating, transport, electricity and industry will have to
transition to a world without fossil fuels. Agriculture and
industry will have to find new ways to reduce emissions. This aim
– as ambitious as it is essential – necessitates intrusive
climate policies.


In this episode of Deep Focus, Sean Gibson interviews Georg
Zachmann, a co-author of a recently published Blueprint on
distributional effects of climate policies. They untangle the
complicated picture of said effects, which may vary depending on
the policy tool and its design, the sector addressed and the
initial socio-economic conditions in the country. Some policy
tools such as carbon taxes may leave low-income households worse
off, while policies such as taxes on aviation may leave them
better off relative to high-income households. Others, like
public investment and agriculture policies, still have unclear
effects.


One thing is for certain: whatever distributional effects climate
policies may have, they constitute no argument against their
implementation. Climate change would leave everyone worse off and
disproportionately hit the poorest part of the population. It is
therefore essential to design policies in a way that minimises
the adverse effects on those most vulnerable.


For further reading, you might consider an opinion piece by
Simone Tagliapietra and Georg Zachmann on what the “gilets
jaunes” movement tells us about environment and climate policies,
as well as their blog post on the EU energy industry
transformation.