Managing the distributional effects of environmental and climate policies

Abstract

Environment Working Paper No. 188 By Francesco Vona (1)(1) OFCE Sciences-Po OECD Working Papers should not be reported as representing the official views of the OECD or its member countries. The opinions expressed and arguments employed are those of the authors.

Measuring environmental policy stringency in OECD countries

“…To address these challenges, countries are pledging more ambitious environmental targets and policy action. In the 2015 Paris Agreement, the international community pledged to limit global warming to well below 2°C (and to pursue efforts to limit warming to 1.5°C) (UNFCCC, 2015 [3]). Countries representing 70% of the world's global carbon emissions have already announced netzero emission targets (IEA, 2020 [4]).…”

“…Understanding the impacts of environmental policies on workers, firms and households is necessary to protect and compensate particularly affected and vulnerable groups and to avoid regressive policy effects (OECD, 2021 [9]; Vona, 2021 [10]). 3…”

“…Full implementation of the pledges and targets, including those from the COP26 in Glasgow may limit global warming to around 2°C. For the emission reductions to be realised itis essential that governments turn targets and pledges into policy action 3. The evaluation of environmental policies across countries is needed because policy effects in one country may not be transferable to other countries.…”

A framework to decarbonise the economy

“…Standards and regulations can also encourage the diffusion of network-based innovation by overcoming coordination failures (Katz and Shapiro, 1994[63]). They can thus effectively complement emission pricing and incentive-based policies (Vollebergh and van der Werf, 2014 [64]; Stiglitz et al, 2017 [6]) especially when they are technology-neutral (e.g. tradable performance standards).…”

Is a fair energy transition possible? Evidence from the French low-carbon strategy

“…Moreover, recycling can be complemented with subsidies (Baranzini et al, 2017), whose non-coercive 'pull' nature has higher public support (Drews and Bergh, 2016). In fact, most national low-carbon strategies consider the simultaneous implementation of several toolstaxes, subsidies, norms, regulations, etc.whose distributional effects may amplify or offset each other (Fullerton, 2011;Vona, 2021). However, the distributive effects of such policy packages are little researched so far (Lamb et al, 2020).…”