Distributional Effects of Environmental and Energy Policy: An International Perspective

Environmental and energy policies are increasingly recognized as essential tools for addressing pressing global challenges such as climate change, air pollution, and energy security. However, these policies can also have significant distributional effects, impacting different income groups, regions, and industries in distinct ways. Understanding and addressing these distributional effects is crucial for designing policies that are both effective and equitable.

Distributional Effects of Environmental and Energy Policy (The International Library of Environmental Economics and Policy)

by Cindy Arledge

4.4 out of 5

Language	:	English
File size	:	71862 KB
Screen Reader	:	Supported
Print length	:	518 pages

FREE

Theoretical Framework

The distributional effects of environmental and energy policy can be analyzed using a variety of theoretical frameworks. One common approach is to consider the incidence of the policy, or who ultimately bears the costs and benefits of the policy. Another approach is to examine the distributional impacts across different income groups, regions, or industries.

Empirical Evidence

Numerous empirical studies have examined the distributional effects of environmental and energy policy. These studies have found that the distributional impacts can vary widely depending on the specific policy design. For example, carbon pricing policies tend to have a disproportionate impact on low-income households, while renewable energy policies can create employment opportunities in certain regions.

International Case Studies

To illustrate the complexities and challenges of addressing distributional effects, this article draws on case studies from around the world. These case studies provide insights into the diverse approaches that countries have taken to design policies that are both effective and equitable.

Case Study 1: Carbon Pricing in the European Union

The European Union (EU) has implemented a cap-and-trade system for carbon emissions, known as the Emissions Trading System (ETS). The ETS has been successful in reducing emissions, but it has also had a significant impact on the competitiveness of energy-intensive industries. In response, the EU has provided financial assistance to these industries to mitigate the economic impacts.

Case Study 2: Renewable Energy Subsidies in China

China has heavily subsidized renewable energy development in recent years. These subsidies have helped to reduce air pollution and create employment opportunities. However, the subsidies have also led to concerns about the affordability of renewable energy and the potential for corruption.

Case Study 3: Energy Efficiency Programs in the United States

The United States has implemented various energy efficiency programs, including appliance standards, building codes, and tax incentives. These programs have helped to reduce energy consumption and lower energy bills. However, the programs can also be complex and costly to implement, and they may not be equally effective in all regions or income groups.

Policy Implications

The distributional effects of environmental and energy policy must be carefully considered when designing and implementing these policies. Governments can use a variety of policy tools to mitigate the negative distributional impacts, such as targeted financial assistance, tax credits, and energy efficiency programs.

Environmental and energy policy can have significant distributional effects, but these effects can be managed through careful policy design. By considering the incidence of the policy, the distributional impacts across different income groups, regions, and industries, and the lessons learned from international case studies, governments can implement policies that are both effective and equitable.

Distributional Effects of Environmental and Energy Policy (The International Library of Environmental Economics and Policy)

by Cindy Arledge

4.4 out of 5

Language	:	English
File size	:	71862 KB
Screen Reader	:	Supported
Print length	:	518 pages

FREE