Distributing the Impacts of Carbon Pricing in CEE

The project is completed. Mitigating the negative impacts of carbon pricing in Central and Eastern European countries.

Climate Policy Emissions Trading System (ETS) Energy Policy Energy Poverty

Project info

Countries:

Bulgaria, Germany, Hungary, Poland, Romania

Project duration:

10/21 - 09/23

Target groups:

Non-governmental organisations, Local governments, National governments, Associations

Funding:

548,055.00 €

Contact info

Contact:

Constantin Postoiu

Implementing organisation

Energy Policy Group (EPG)

Email:

constantin.postoiu@enpg.ro

Partner:

Center for the Study of Democracy (CSD Bulgaria)
Habitat for Humanity International Hungary (HFHI HU)
ideas into energy gGmbH
Institute for Structural Research (IBS), Poland

Background

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.

Projekt Team; Photo: © Energy Policy Group

Project

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 conducted a study on the effects of increasing carbon costs on economically vulnerable groups. It focused on four Eastern European EU members (Bulgaria, Hungary, Poland, and Romania) with higher-than-average fossil fuel dependence and energy poverty levels.

The study examined various aspects in which the distributional effect articulated itself, such as price responses, consumer behaviour adjustment, and labour market impacts (especially in carbon-intensive sectors).

Based on the findings, the project team made 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 conducted public consultations on key findings with relevant decision-makers at national and EU levels. The project team coordinated its activities with the EUKI project Socially Just Carbon Pricing Policies in CEE.

Results

Model for analysing distribution effects: For the first time, a methodology and a quantitative model have been developed to analyse the social distribution effects of CO₂ pricing. Policy-makers thus gain a better understanding of who is impacted to a greater or lesser extent by CO₂ prices. This is an important basis for socially just climate policy.
Dissemination of national studies and strategies: Through the publication of national studies and a transnational report, knowledge about fair carbon pricing has been disseminated in several countries (Bulgaria, Hungary, Poland, Germany). This has helped to raise awareness of the issue of distributive justice in climate policy. In addition, a joint final report "Distributional Impact of Carbon Pricing in Central and Eastern Europe" was published for Central and Eastern Europe as a whole. This report also explains how the new model works.
Policy advice:The study was particularly important in Romania, where it was the first study on the impacts of carbon pricing on households. It had a major influence on politicians:
- Experts from the project were allowed to speak about the results in parliament.
- After two years of high energy prices, the studies and events helped to improve information for politicians.
- This also reduced public criticism of the EU climate targets ("net zero").

Bulgaria:

Hungary:

Release of policy paper within the study project on distributional impacts of Carbon Pricing in CEE | www.ideas-into-energy.de

Poland:

Distributional effects of carbon pricing in Poland - IBS - Instytut Badań Strukturalnych

Germany:

Release of policy paper within the study project on distributional impacts of Carbon Pricing in CEE | www.ideas-into-energy.de

Romania:

Last update: February 2026

Success Stories

Socially Just Climate Action: Study has an Effect on Romanian Policy

The EUKI project "Distributing the Impacts of Carbon Pricing in Central and Eastern Europe" provided concrete data on social impacts for the first time in Romania. The results helped to overcome reservations about climate targets and were directly incorporated into policy: experts from the project presented their findings in parliament. The knowledge gathered was later incorporated into Romania's National Social Climate Plan (NSCP), a key basis for the allocation of funds from the Social Climate Fund (SCF) of the European Union. This made an important contribution to the just implementation of the ETS2 emissions trading System for low-income households. With the system the EU intends to make heating and refuelling with fossil fuels more expensive from 2027 onwards.