The gap between actual carbon prices and those required to achieve ambitious climate change mitigation could be closed by enhancing the public acceptability of carbon pricing through appropriate use of the revenues raised.
In this Perspective, the findings are put together regarding the optimal use of carbon revenues from both traditional economic analyses and studies in behavioural and political science that are focused on public acceptability. Real-world carbon pricing regimes are then combined with theoretical insights on distributional fairness, revenue salience, political trust and policy stability.
The authors argue that traditional economic lessons on efficiency and equity are subsidiary to the primary challenge of garnering greater political acceptability and make recommendations for enhancing political support through appropriate revenue uses in different economic and political circumstances.
Making Carbon Pricing Work for Citizens by David Klenert, Linus Mattauch, Emmanuel Combet, Ottmar Edenhofer, Cameron Hepburn, Ryan Rafaty and Nicholas Stern, Nature Climate Change, DOI: 10.1038/s41558-018-0201-2