Climate Dividend (cepInput)

© Shutterstock/M. Schuppich

Pricing CO2 emissions is considered by economists to be the key to decarbonising the transport and building sectors. In order to mitigate social hardship, the Centre for European Policy is calling for a lump sum, income-independent climate dividend - co-financed by EU revenues from 2027. The judgement of the German Constitutional Court on the German Climate Transformation Fund makes this more necessary.

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"It is essential to prioritise carbon pricing in the future. It is equally essential to distribute the revenue back to the population in full and thus minimise the additional costs of the carbon price for low and middle income groups," says cep economist Martin Menner, who has examined the chances of a climate dividend for a new start in climate policy with cep economist Jan Voßwinkel and cep lawyer Götz Reichert. A per capita lump sum payment would be the easiest to implement administratively and would provide net relief far into the middle class.

 

"Together with special relief for hardship cases, the climate dividend would have the potential to increase public acceptance of a sustainable climate policy," emphasises Menner. CO2 pricing for transport and buildings is already being implemented in Germany. It is to be applied throughout the EU from 2027. "After this transition to EU emissions trading at the latest, effective relief for citizens through a climate dividend will be essential, as very high CO2 prices can result in considerable burdens, especially on low and middle incomes," explains Voßwinkel.

 

cep lawyer Reichert is in favour of using the revenue from EU emissions trading to provide relief from 2027. "To this end, Germany should work towards clarifying EU law so that a climate dividend can be financed in a legally secure manner," says Reichert.

 

(in German)

Climate Dividend (cepInput)  (publ. 28.11.2023)