Reviewed by Lexie CornerNov 22 2024
Recent research by LMU Munich, involving a representative sample of 1,100 German citizens, indicates that most of the German population would support increased carbon pricing. The primary determinant of this acceptance is the allocation of the revenue generated. The study was published in the journal Nature Sustainability.
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Carbon pricing, widely regarded by experts as a highly effective climate policy instrument, aims to lower carbon dioxide emissions. However, due to its perceived lack of popularity, it currently applies to only 23 % of global greenhouse gas emissions.
Carbon pricing is the sharpest blade in our economic toolkit against climate change. Our study shows that a clear majority would approve a model where the expected revenues are paid out equally and directly to citizens.
Klaus M. Schmidt, Professor and Chair, Economic Theory, Ludwig-Maximilians-Universität München
73 Percent of Respondents Support Climate Premium
The study examined five distinct models of carbon pricing. The most favored model involved distributing an equal upfront payment to all citizens, corresponding to the anticipated carbon revenues. Over 73 % of participants expressed support for carbon pricing under these terms. This approach, referred to by the researchers as the "climate premium" model, was detailed in their research.
The climate premium makes it very transparent how much money goes straight back into the pockets of citizens from the revenues generated by carbon pricing. The least popular model, by contrast, is when the revenues go into the general government budget.
Klaus M. Schmidt, Professor and Chair, Economic Theory, Ludwig-Maximilians-Universität München
The model was supported by only 47.3 % of the study participants.
The study highlights that the impact of carbon taxation on consumer behavior tends to be underestimated.
Journal Reference:
Woerner, A., et al. (2024) How to increase public support for carbon pricing with revenue recycling. Nature Sustainability. doi.org/10.1038/s41893-024-01466-9.