The project studies the effects of increasing carbon costs including diverse accompanying mechanisms and policies for a socially just redistribution of revenues to support economi-cally vulnerable groups. It focuses on four EU members of the CEE (Bulgaria, Hungary, Poland, and Romania) with higher-than-average fossil fuels dependence and higher-than-average energy poverty, while also drawing on the experience of the German Ener-giewende. The methodology combines a quantitative assessment of the carbon cost im-pact by means of a dynamic general equilibrium model, with a micro-simulation based on household budget surveys (HBS). The examined redistributive channels are price respons-es, consumer behaviour adjustment, and labour market impacts (especially in carbon-intensive sectors). Policy recommendations are made on how to mitigate the negative ef-fects of carbon taxation, including redistributing additional tax revenues to ensure social fairness and maximise protection for vulnerable consumers.

The project conducts public consultations on key findings with relevant decision-makers at national and EU levels. There will be coordination with the EUKI project Facilitating socially just carbon pricing policies in CEE, led by adelphi

EUKI is a project financing instrument by the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU). The EUKI competition for project ideas is implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH. It is the overarching goal of the EUKI to foster climate cooperation within the European Union (EU) in order to mitigate greenhouse gas emissions.

Kick-off event – Distributional Impact of Carbon Pricing in Central and Eastern Europe