Effects of Carbon Tax Redistribution Schemes on Energy Welfare of Households in Germany

Increasing carbon taxes have the potential to disproportionately affect lower income households, who lack the financial and decision-making capacity to undertake investments to shift the underlying energy system. Carbon tax redistribution schemes aim to equalise the negative impacts experienced especially in lower income households and tenants. Through the development of a dedicated energy system optimisation model, our assessment evaluated the distributional impacts of carbon tax redistribution schemes on the evolution of energy use, emissions and energy welfare in different household types in Germany.