 The equity and efficiency trade-off of carbon tax revenue recycling: A re-examinationEmmanuel Combet, Gaëlle Le Treut, Aurélie Méjean and Antoine Teixeira Energy Economics, 2025, vol. 148, issue C Abstract: This paper examines the macroeconomic and distributive impacts of carbon pricing reforms. We analyse hybrid schemes to recycle carbon tax revenues. Using a computable general equilibrium model, we provide new insights on the efficiency vs. equity trade-offs of carbon pricing policies in the context of an open economy with the case study of France. We show that the terms of the equity-efficiency dilemma and the hierarchy of revenue recycling options crucially depend on the macroeconomic context and on the type of inequalities considered. We show that it is paramount to identify the most vulnerable households and to define the criteria used to award lump-sum transfers accordingly. We conclude that no revenue recycling option is universally superior to another, and that more case studies should be carried out to account for specific macroeconomic and national contexts. Keywords: Carbon tax revenue recycling; Equity; Efficiency; General equilibrium (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:148:y:2025:i:c:s0140988325003603 DOI: 10.1016/j.eneco.2025.108536 Access Statistics for this article Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant More articles in Energy Economics from Elsevier |
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