Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/235349 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 8979
Publisher: 
Center for Economic Studies and Ifo Institute (CESifo), Munich
Abstract: 
We analyse the economic impact of using carbon pricing revenue to fund the EU budget. Such a reform would redistribute from countries with above average carbon intensive production to less carbon intensive countries. Once the reform is implemented, the low carbon countries will prefer a lower carbon price, i.e. laxer climate policy at the EU level, than before the reform. For high carbon countries the opposite is true. As a result, EU climate policy becomes less ambitious and less disputed. We also analyse an extension of the model in which consumption generates carbon emissions that are not covered by the emission certificate regulation, and we consider the impact of changes in EU climate policy on the rest of the world as well as global emissions.
Subjects: 
climate change
global externalities
EU finances
political economy
JEL: 
H23
H27
H87
Q58
Document Type: 
Working Paper
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