Carbon inequality and support for carbon taxation

Abstract

Stringent policies that significantly increase the cost of greenhouse gas emissions, such as CO2, are increasingly necessary for mitigating climate change. Yet while richer individuals in society generate the most CO2 emissions and thus will face the largest absolute cost burden, they also tend to be more supportive of stringent environmental policies. In this paper, we examine how information about the distribution of carbon emissions by income affects support for carbon taxation. While carbon taxation is widely advocated as the most efficient policy for mitigating climate change, it faces significant political hurdles due to its distributional costs. Using original survey data, with an embedded experiment, we find that providing information about the actual distribution of household CO2 emissions by income significantly changes individuals' support for carbon taxation. These effects are particularly pronounced at the bottom of the household income distribution, leading to increased support for costly climate policies. However, individuals who believe that carbon taxes will reduce their income continue to hold their level of support for carbon taxation. Our findings have significant implications for understanding the public's response to the distributional consequences of the green transitions and ultimately their political feasibility.