Energy Poverty and Decarbonisation: Assessing the Economic Impacts of Carbon Pricing in Central Europe

The report from EUKI Project Distributing the Impacts of Carbon Pricing in CEE assesses the effectiveness of carbon pricing as a policy tool for facilitating an efficient energy transition. It explores its macroeconomic and microeconomic impacts on Central European economies, revealing generally modest negative effects that can be effectively mitigated through strategic policy interventions.

Carbon pricing shows potential to drive a 40% reduction in CO2 emissions across the region over the next decade while enhancing energy and climate security. It aims to shift focus from financially unsustainable, heavily subsidised fossil fuel industries towards more economically viable technologies.

Furthermore, the implementation of appropriate tax redistribution policies could mitigate energy poverty and social inequalities. Central European countries stand to benefit significantly from such measures. The report highlights lump-sum redistribution of carbon pricing revenues as a straightforward mechanism with strong potential to alleviate energy poverty throughout the region.