Speaker: Radu Dudău

„Distributional Impact of Carbon Pricing in Central and Eastern Europe”, project funded by the Gesellschaft für Internationale Zusammenarbeit (GIZ), studies the effects of the increasing carbon costs in the EU on the economically vulnerable groups of final energy consumers. It focuses on four East-European EU member states (Bulgaria, Hungary, Poland, and Romania)

– with higher-than-EU-average levels of fossil fuels dependence in their economic systems, and higher-than-EU-average energy poverty levels – while also drawing on the experience from the German Energiewende (ongoing transition by Germany to a low carbon, environmentally sound, reliable, and affordable energy supply).

The project will develop and use a methodology for research which combines an economywide quantitative assessment of the carbon costs’ impact by means of a dynamic general equilibrium model, coupled with a micro-simulation based on household budget surveys (HBS) data. The redistributive channels examined in the project are the price responses, the

adjustment of the consumer behaviour, and the labour market impacts (especially in the carbon-intensive sectors). Policy recommendations will be made for effective measures to mitigate the negative effects of carbon taxation, including redistributing the additional tax revenues to ensure social fairness and optimise social protection for the most vulnerable social

groups.