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Can the EU ETS and Its Revenues Tackle the Impact of High Carbon Prices?

Simone Borghesi, Albert Ferrari
CESifo, Munich, 2023

EconPol Forum 24 (6), 28-31
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  • The EU ETS with companion policies is more robust than relying solely on either regulatory or carbon-pricing interventions
  • Policies should be developed to account for the disparate impacts of the EU ETS across firms and regions
  • Acceptability of carbon pricing depends on how the carbon price is communicated and revenues used
  • The EU ETS revenues might decrease at higher carbon prices following a carbon Laffer curve
  • Beyond revenues, policymakers may have to consider additional sources for funding distributional compensations in the long run

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