EU-wide Carbon Pricing – Macroeconomic Effects and Distributional Implications

We analyse the potential of a uniform EU-wide carbon price in the non-ETS sectors under different revenue recycling options in the EU 27, focusing specifically on the following three research question: (1) What are the effects of carbon pricing policies for the non-ETS sectors on CO2 emissions in the EU 27, Austria, and Poland? (2) What are the macroeconomic impacts of these carbon pricing policies? (3) What are the distributional effects of these carbon pricing policies across household income quintiles and regions? To answer these questions, a model-based analysis with the ADAGIO model is carried out. For two case study countries (Austria and Poland), that differ considerably in terms of the structure of their energy systems and economies, results are discussed along with the EU 27.