Mitigating the negative impacts of carbon pricing in Central and Eastern European countries.
Carbon pricing represents the cornerstone of the EU’s policy to combat climate change and reach carbon neutrality by 2050. While a powerful tool, it also entails a distributional effect, meaning that the benefits associated with it come with economic and social disadvantages for some EU citizens. This has led to a rather sceptical approach towards the EU’s decarbonisation process in some regions. This is also the case for Central and Eastern Europe (CEE), a region with carbon-intensive economies and populations significantly affected by energy poverty. To allow for a more uniform and progressive agenda among EU countries, decision makers have to come up with solutions that mitigate the negative impacts of carbon pricing.
To come up with solutions, a thorough understanding of carbon pricing’ distributional effect of and of the interaction between climate policy and energy poverty is essential. To this end, the project team conducts a study on the effects of increasing carbon costs on economically vulnerable groups. It focuses on four Eastern European EU members (Bulgaria, Hungary, Poland, and Romania) with higher-than-average fossil fuel dependence and energy poverty levels.
The study examines various aspects in which the distributional effect articulates itself, such as price responses, consumer behaviour adjustment, and labour market impacts (especially in carbon-intensive sectors).
Based on the findings, the project team makes policy recommendations on how to mitigate negative effects of carbon taxation, including redistributing additional tax revenues to ensure social justice and optimise social protection for vulnerable groups. To foster an informed debate on the interaction between climate policy and energy poverty, the project team conducts public consultations on key findings with relevant decision-makers at national and EU levels. The project team coordinates its activities with the EUKI project Socially Just Carbon Pricing Policies in CEE.
Updated: March 2022
Countries: Bulgaria, Germany, Hungary, Poland, Romania
Project duration: 10/21 - 09/23
Funding: 548,055 €
Target groups: Cities, towns and municipalities, Civil Society, Governments, Policy makers
Implementing organisation: Energy Policy Group (EPG)
Partners: Center for the Study of Democracy (CSD), Habitat for Humanity International Hungary Non-profit LLC (HFHI HU), ideas into energy gGmbH, Institute for Structural Research (IBS)
Project Website: -
Mr. Radu Dudau
Fibrei Street 18-24 Ap. B1
This project is part of the European Climate Initiative (EUKI). EUKI is a project financing instrument by the German Federal Ministry for Economic Affairs and Climate Action (BMWK). The EUKI call for project ideas is implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH. It is the overarching goal of the EUKI to foster climate cooperation within the European Union (EU) in order to mitigate greenhouse gas emissions.
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