Distribution Effects of Carbon Pricing in Poland

The report from EUKI Project Distributing the Impacts of Carbon Pricing in CEE examines the potential effects of climate policy and identifies mechanisms to mitigate inequalities resulting from increased energy prices. Using a macroeconomic model and microsimulation, the report assesses the impact of carbon pricing on economic sectors and households over a ten-year period.

The findings indicate that a carbon tax would reduce value added in the service sector and decrease industry employment. For households in Poland, the introduction of a carbon tax by 2033 would result in an average income loss of 2%, with regressive distributional effects.

To address these inequalities, the report advocates for redistribution mechanisms, such as direct cash transfers to low-income households and incentives for pro-climate investments. These measures aim to support climate policy goals while minimising the risk of increasing social inequalities.