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

Ulf Johansen (), Gerardo A. Perez-Valdes () and Adrian Tobias Werner ()
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Ulf Johansen: SINTEF Building and Infrastructure, 7465 Trondheim, Norway
Gerardo A. Perez-Valdes: SINTEF Industry, 7465 Trondheim, Norway
Adrian Tobias Werner: SINTEF Industry, 7465 Trondheim, Norway

Sustainability, 2018, vol. 10, issue 11, 1-20

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.

Keywords: climate and energy tax reform; regional CGE analysis; double dividend; labor market (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2018
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