Regional Aspects of a Climate and Energy Tax Reform in Norway—Exploring Double and Multiple Dividends

Abstract

We investigate the potential for double or even multiple dividends arising from a climate and energy tax reform (CETR), using a regional computable general equilibrium model. Such dividends indicate if government revenues raised from energy-related environmental taxes and recycled back to households or industries through (regional) social security contributions will yield welfare gains larger than gross cost. Building on existing double dividend theory, we broaden the scope by considering both social and regional aspects of a CETR. We explore the use of household transfers and regional payroll taxes as recycling instruments and investigate to what extent wage formation on the labor market has an effect. For Norway, our results indicate that a CETR may conflict with sub-national policy goals under all assessed scenarios. In particular, this holds for income inequality. Although our analysis concerns the social, economic and environmental aims of a Norwegian policy, the approach can be generalized to, e.g., a European context.

The effects of energy taxes level on greenhouse gas emissions in the environmental policy measures framework

“…These researchers also argue that less environmentally efficient countries should develop their own policies to mitigate the impact of climate change. This view is shared by other papers (Apergis et al, 2018;Johansen et al, 2018) also from 2018. Zioło et al (2020) consider that among the most important challenges facing governments today are climate change and environmental pollution.…”