News Digest Item
30 Jul 2018

Carbon fee and dividend a socially optimal approach to carbon pricing – interview

Spiegel Online

The imposition of a carbon fee and dividend – in which a tax is imposed on fossil fuels, with the revenues being returned back to citizens – would be both socially optimal and build public support for carbon pricing, American economist Gilbert Metcalf said in an interview with Spiegel Online. The scheme would make fossil fuel consumption more expensive, thereby incentivising low-carbon sources of energy, he said. Although the EU sought to introduce a carbon tax in the 1990s, it settled on the much more complex cap-and-trade due to peculiarities in the bloc's structure, Metcalf added.

Read the interview in German here.

For background, read the factsheet Understanding the European Union’s Emissions Trading System.

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